Fed approves M&T’s acquisition of People’s United

Two weeks after delaying the deadline to close its acquisition of People’s United Financial, M&T Bank on Friday received the Federal Reserve’s approval.

The central bank’s blessing, announced late Friday afternoon, was the final regulatory thumbs-up that Buffalo, New York-based M&T needed to complete the $7.6 billion deal, which was originally expected to wrap up during the fourth quarter of 2021.

The Fed board's vote was unanimous, and the central bank said in a press release that M&T, which is normally on a two-year stress test cycle, will receive a new stress capital buffer this year.

Once the acquisition closes, M&T will have more than $200 billion of assets, up from $155 billion in December. M&T will have more than 1,100 branches, and its reach will extend into greater Boston and across New England into states like Vermont, New Hampshire and Maine.

Bank regulators in New York and Connecticut, where People’s United is based, signed off on the acquisition in October. But in February, the two banks formally delayed the deadline for the deal to close until June as they continued to wait for the Fed’s approval.

Regulators have been under pressure to scrutinize large-bank mergers more closely after a White House executive order last year that instructed agencies to examine their criteria for reviewing deals.

The Department of Justice is currently reviewing comments from the public on the issue, and members of the Federal Deposit Insurance Corp.’s board clashed over merger policy in December.

The M&T-People’s United deal drew some pushback last summer after M&T disclosed plans for post-acquisition layoffs that would mostly affect employees of Bridgeport, Connecticut-based People’s United.

In response to the criticism, M&T said that it would retain about 80% of the People’s United workforce and employ at least 1,000 people in Bridgeport within a year of completing a systems conversion. The upstate New York bank also said that the People’s United headquarters would become its New England regional headquarters.

In October, M&T announced its first-ever agreement with the National Community Reinvestment Coalition — a deal that is slated to provide $43 billion of loans, investments and other financial support over five years in the communities in which M&T will operate. M&T has not said how the amount will be distributed, dollars- or percentage-wise, throughout its footprint.

The late-Friday timing of the Fed’s approval of the M&T-People’s United deal drew criticism from Better Markets, a nonprofit group that supports more regulatory scrutiny of bank mergers. The Fed previously announced three regional-bank mergers, including the long-delayed First Citizens BancShares-CIT Group combination, late on a Friday last December.

“This is becoming a disturbing pattern that undermines the credibility of the Federal Reserve. It opens the question — what is it trying to hide by releasing such important information at a time when it will get the least attention, media coverage, and scrutiny?” Phillip Basil, director of bank policy at Better Markets, said in a press release.

“The race to create ever-larger banks must be balanced with increasing better, broader, and less expensive services and products to the public, while ensuring sufficient competition, and preventing the buildup of systemic risks,” Basil added.

A Fed spokesperson declined to comment.

While M&T is no longer waiting on the Fed’s approval, some other large and regional banks are. U.S. Bancorp in Minneapolis is seeking regulators’ go-ahead to close its deal for MUFG Union Bank in San Francisco. On Monday, the $8 billion acquisition, announced in September, will be the subject of a public hearing held by the Fed and the Office of the Comptroller of the Currency.

New York Community Bancorp, which announced plans in April to buy Troy, Michigan-based Flagstar Bancorp, is also waiting for the Fed’s approval. In January, New York Community Chairman and CEO Thomas Cangemi said he expects the $2.6 billion deal, originally expected to close by the end of last year, to be completed sometime in 2022.

M&T is no stranger to waiting an extended time for a deal to close. Its 2015 acquisition of Hudson City Bancorp in Paramus, New Jersey, took three years and three months to get the green light after the Fed identified deficiencies in M&T’s Bank Secrecy Act/anti-money-laundering systems.