Magazine article American Banker

Who Would Buy Hudson City If Sale to M&T Fell Through?

Magazine article American Banker

Who Would Buy Hudson City If Sale to M&T Fell Through?

Article excerpt

Byline: Robert Barba

Mark Fitzgibbon of Sandler O'Neill is often asked what he thinks will happen if M&T Bank's (MTB) deal to buy Hudson City Bancorp (HCBK) falls apart. He gets the question so much that he decided to put his thoughts in writing.

On Wednesday the analyst published a research note entitled "HCBK -- What Happens if the Deal Breaks?" The $3.7 billion agreement was originally scheduled to close in the second quarter but was delayed in April when M&T, of Buffalo, N.Y., announced it had to sort through compliance issues involving anti-money-laundering laws first.

The deal is now expected to close by Jan. 31, but the $83 billion-asset M&T has said there can be no assurances that it will complete it by that date.

Fitzgibbon walked through several scenarios, though he says high up in the detailed note that he expects the deal to close in "due time."

The most common questions he gets about the $44 billion-asset Hudson City, in Paramus, N.J., are: who else would buy it if the deal collapses, or could the company restructure its balance sheet away from residential mortgages and stay independent?

The pool of other buyers is limited, but Fitzgibbon sees New York Community Bancorp (NYCB) and Toronto-Dominion Bank's TD Bank unit as potential suitors.

The $44.6 billion-asset New York Community has been preparing itself to cross the $50 billion-asset threshold, which would make it a systemically important financial institution under Dodd-Frank. While going substantially over the threshold with Hudson City could present some hiccups, Fitzgibbon says, the "strategic rationale for the combination is crystal clear."

"In one fell swoop," New York Community "would become a major player in New Jersey, gain a toehold in Fairfield County, and meaningfully deepen its presence" in the New York metro market, with a pro forma deposit market share of 4%, Fitzgibbon says. …

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