said on Tuesday it would push further into the West Coast retail banking market with an $8 billion cash and stock deal to buy MUFG Union Bank’s main regional banking franchise.
(symbol: USB) rose 1.3% at noon, while U.S.-listed stocks of
Mitsubishi UFJ Financial Group
(MUFG)—the owner of MUFG Bank—advanced 2%.
the $8 billion contract includes $5.5 billion in cash and approximately 44 million shares of US Bancorp common stock.
The acquisition will allow US Bancorp to focus on retail banking markets in California, Washington and Oregon, where MUFG Union Bank has more than one million retail customers and serves approximately 190,000 small businesses. The agreement excludes MUFG Union Bank’s corporate and investment banking activities, as well as certain other middle and back office functions.
MUFG Union Bank also has some $58 billion in loans and $90 billion in deposits on its balance sheet as of June 30, the groups said, and the combination will improve US Bancorp’s deposit position among California retail banks in the 10th to 5th place.
“The acquisition of MUFG Union Bank underscores our commitment to strengthen and grow our West Coast business, invest to serve customers and local communities, and enhance competition in the financial services industry,” said Andy Cecere. , Chairman, CEO and Chairman. of US Bancorp, in a report.
The acquisition of US Bancorp marks a wave of financial mergers over the past year, with banks and other financial institutions clamoring for scale to stay competitive with big banks.
Citizens Financial Group
(CFG), for example, ripped off Investors Bancorp as well as
‘ (HSBC) East Coast Operations. Based in Buffalo, NY
announced its intention to acquire
People’s United Financial
In Tuesday’s deal, MUFG will take a 2.9% minority stake in US Bancorp. MUFG said the deal will allow it to focus on other areas such as corporate and investment banking, global markets and Japanese banking.
Analysts were generally optimistic about the deal.
“The deal increases USB’s focus on an attractive market with household income and household income growth above the national average, as well as large addressable customer segments, including affluent households (12% of the US total of 7 million) and small businesses (13% of the US total of 33m),” Wolfe Research analyst Bill Carcache wrote on Tuesday, maintaining his Outperfrom rating on stocks as well as a price target of 73. $.
Wall Street also seemed indifferent that MUFG received a consent order Monday from the Office of the Comptroller of the Currency for “unsafe or unsound practices” in its operations. The bank is said to have already started processes to correct these problems.
“The Company believes that it can successfully resolve the issues applicable to MUFG Union Bank in connection with the transaction, and that the order will not limit USB’s ability to operate and grow its business as planned,” noted John Pancari, analyst at Evercore ISI. . He rates InLine shares with a price target of $61.
Write to Jack Denton at [email protected]