There may be a merger on the horizon for M&T Bank, as Banco Santander SA looks primed to take a majority stake in the company. The banks are currently in negotiations with the U.S. Federal Reserve to iron out details of the deal, according to Bloomberg.
Banks Discuss Changes
The transaction is far from formally closed, and it will be another two weeks before we can expect to hear anything official. Bloomberg received information on the potential merger through “people with knowledge of the matter” who wished to remain anonymous.
If the banks reach an agreement, Santander would be able to put Sovereign Bank, a unit of the larger bank, under the management of M&T. More specifically, there were talks of M&T Chief Executive Officer Robert Wilmers and his team being the group that would oversee Sovereign Bank.
M&T to Save the Day
M&T has a strong reputation when it comes to banking matters, considering the institution did not post one loss during the financial crisis. A merger would combine the two banks, similar in size, to become the ninth-largest U.S. savings institution by deposits.
M&T is hesitant, not wanting Santander to have complete control, yet it still wants to combine with Sovereign. This dilemma, mainly over what the “informal talks” revolve around, will require compromise on both sides. The final step in the transaction could take place in the form of a stock merger. Santander would need to trade shares of the Sovereign unit for shares in M&T. It would be a gradual exchange in which Santander would increase its ownership level within the first few years.
Santander Collects Acquisitions
This year Santnder has acquired:
- $4 billion of car loans from HSBC.
- A 70% Stake in Allied Irish’s Polish Bank, at a cost of $3.7 billion
- More than 300 bank branches from the Royal Bank of Scotland Group Plc.
Santander has been on an acquisition roll and it looks like this next merger will be no different. A more finalized explanation on exactly what is expected to take place should be issued in upcoming weeks.