New closing target set for U.S. Bancorp-MUFG Union deal

Citing a protracted regulatory approval process, the parent company of MUFG Union Bank said Monday that it now expects the bank’s sale to U.S. Bancorp to close in the second half of 2022.

When the $8 billion cash-and-stock deal was announced last September, the companies had expected to finalize the merger by the end of June.

“While significant progress has been made by both parties in planning for the closing and integration, the U.S. regulatory approval process remains ongoing and … the expected closing date has shifted,” Tokyo-based Mitsubishi UFJ Financial Group said in a news release.

U.S. Bancorp, of Minneapolis, had suggested in a recent regulatory filing that a delay was possible.

Under pressure from President Biden, federal regulators last year began looking closer at deals, industry observers say. Several large-bank mergers were delayed in recent months amid the added scrutiny.

“Ongoing delays in the U.S regulatory approval process for larger banks reduce the odds that superregional banks will seriously evaluate bank M&A, in our view, and creates additional uncertainty in the closing process of pending deals,” Stephens analyst Terry McEvoy said in a report Monday.

McEvoy said U.S. Bancorp’s announcement last week that it made a large financial commitment to lower-income neighborhoods and communities of color likely bodes well for the its deal with San Francisco-based MUFG Union Bank. The $587 billion-asset U.S. Bancorp designed the five-year, $100 billion community benefits plan as part of a pact with activists who previously withheld their support for the pending acquisition.

The plan “implies progress on receiving regulatory approvals, in our view,” McEvoy said.

The acquisition of MUFG Union Bank would create a $690 billion-asset company and give U.S. Bancorp greater market share in California.