Merger of U.S. Bank and Union Bank gets final U.S. approval
U.S. Bank’s $8 billion acquisition of Union Bank has the green light from U.S. regulators, a big step forward for a deal that could make U.S. Bank one of the biggest retail banking companies in the tri-county region.
The deal received its final U.S. regulatory approvals on Oct. 14, more than a year after it was announced. It calls for U.S. Bank’s parent company, Minneapolis-based U.S. Bancorp, to buy Union Bank from its parent company, Mitsubishi UFJ Financial Group of Japan.
The transaction still must be approved by Japanese regulators. If that happens, Mitsubishi Financial will receive $5.5 billion in cash and about $2.5 billion in stock, which amounts to a 2.9% stake in U.S. Bancorp.
The deal is expected to close before the end of 2022, U.S. Bancorp said in an Oct. 14 statement. That’s six months later than the banks anticipated when they first announced the deal.
Union Bank is a regional chain in the western United States, with branches in California, Oregon and Washington. Its acquisition will bring about 1 million consumer banking customers and about 190,000 small business customers into the U.S. Bank fold, and will move U.S. Bank from the 10th biggest bank in California, by total deposits, to fifth.
In the tri-county region, Union Bank had 29 branches and U.S. Bank had 20, as of February, when the Business Times last updated its list of the biggest banking companies in the region. A big chunk of Union Bank’s presence in the region comes from its 2012 acquisition of the former Santa Barbara Bank & Trust.
If U.S. Bank keeps all 49 combined branches, it would become the biggest banking company in the tri-county region, ahead of Wells Fargo’s 45 branches and JP Morgan Chase Bank’s 44 branches.
U.S. Bank is likely to close some branches as it folds Union Bank into its operations. U.S. Bank CFO Terrance Dolan said when the deal was announced that his bank “will not be exiting any markets or reducing availability to branches or banking services in any low- and moderate-income neighborhoods,” but that still leaves room for downsizing, since around 80% of Union Bank’s branches are within three miles of a U.S. Bank branch.
As part of the acquisition, U.S. Bank has announced a five-year, $100 billion “community benefits plan” to support the ability of low-income communities and communities of color to access capital. Sixty percent of that will be spent in California.
Goldman Sachs & Co. LLC is serving as exclusive financial advisor on the acquisition and Simpson Thacher & Bartlett LLP is the legal advisor to U.S. Bancorp, U.S. Bank’s parent company.