Newspaper article The Record (Bergen County, NJ)

Sale of Hudson City Closer

Newspaper article The Record (Bergen County, NJ)

Sale of Hudson City Closer

Article excerpt

M&T Bank Corp., which delayed its $3.7 billion purchase of Hudson City Bancorp of Paramus because the Buffalo bank's money-laundering controls failed to pass regulatory muster, has entered into an agreement with the Federal Reserve Bank of New York to revise its compliance programs.

Wall Street has known since April about M&T's regulatory issue, and industry observers say they expected some kind of enforcement action. The action announced on Tuesday, called simply a "written agreement," is not as serious as a "cease and desist" order.

"The fact that we know now it's a written agreement and not the more severe form, that has actually laid the groundwork for the timing [of the merger]," said analyst Brian Klock at Keefe Bruyette & Woods. "It's removed some of the uncertainty. I think there is a higher probability that it closes by the end of January."

M&T's and Hudson City's stock rose Tuesday on the news as investors see the agreement as a sign that the deal will likely be completed. M&T shares climbed $1.09, or 1.1 percent, to $104.13, and Hudson City added 20 cents, or 2.4 percent, to $8.57.

The 10-page enforcement action that took effect Monday and was made public Tuesday by the federal regulator requires the bank to submit to the New York Fed a revised program within 60 days that ensures compliance with the law's requirements.

The agreement said that the regulator found deficiencies in M&T's compliance risk management program, including internal controls, customer due-diligence procedures and transaction monitoring.

Michael Zabel, spokesman for M&T, said Tuesday that satisfying the regulator's requirements remains the company's primary focus.

"This is the next step in a process we started talking about in April," he said. "Other than the fact that there is a written agreement now in place, there is really no new developments here. It doesn't really change the timing one way or the other at this point. It is still the thing we need to get done first. Once we complete it to the full satisfaction of the Federal Reserve, then we hope to be in a position to move forward with the proposed merger."

Hudson City did not respond to requests for comment. …

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