M&T Bank's pending acquisition of a major financial company in New Jersey is once again being delayed as M&T continues to address regulatory concerns about its anti-money laundering compliance program.
The Buffalo bank (NYSE: MTB) announced Tuesday that the termination date - the date by which either M&T or Hudson City Bancorp Inc. can walk away from the transaction if it has not closed - has been pushed back to Dec. 31, 2014. The bank said it plans to close the deal "as soon as possible" once all regulatory approvals are secured.
This marks the second time the termination date has been extended. M&T initially expected to close the $3.7 billion deal in mid-2103, but pushed back the termination date to Jan. 31, 2014 when it realized it would need more time to secure regulatory approval from the Federal Reserve.
In April, M&T announced that the Fed, during its review of M&T's latest acquisition plans, "identified certain regulatory concerns" regarding the bank's Bank Secrecy Act and anti-money laundering compliance program.
In response, M&T formed a "major initiative" to improve policies, procedures and technology related to the compliance program. It hired an outside consulting firm and created several new compliance-related positions.
The details of the Fed's concerns and the specific enhancements the bank has put in place remain unknown, but M&T said Tuesday that it is "devoting substantial resources towards this initiative" and "believes that it is making significant progress" in fixing its compliance program.
It also said it does not expect the Fed to make a decision about the acquisition before the latter part of next year.
"We continue to believe strongly that a merger with Hudson City is beneficial to both institutions, their shareholders and the communities we serve," M&T CFO Rene Jones said in a release. "We could not have asked for a better partner than Hudson City as we continue to work towards a successful outcome."
The acquisition of Paramus, N.J.-based Hudson City, parent company of Hudson City Savings Bank, is expected to be a transformative deal for M&T by filling in a large gap in its existing footprint. The Tri-state deal would involved 97 branches in New Jersey, 29 branches in downstate New York and nine branches in Connecticut - plus an estimated $25 billion in deposits and $28 billion in loans.