U.S. Bancorp’s retail arm will make a major push further into the West Coast market.
Luke Sharrett/Bloomberg
U.S. Bancorp said Tuesday it will push further into the West Coast retail banking market with an $8 billion cash and stock deal to buy MUFG Union Bank’s core regional banking franchise.
Shares in U.S. Bancorp (ticker: USB) rose 1.3% in U.S. premarket trading, while U.S.-listed shares of Mitsubishi UFJ Financial Group (MUFG)—the owner of MUFG Bank—slipped 0.4% before markets opened in New York.
The $8 billion deal comprises $5.5 billion in cash and approximately 44 million shares of U.S. Bancorp common stock.
The acquisition will allow U.S. 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 around 190,000 small businesses. The deal excludes MUFG Union Bank’s corporate and investment banking operations, as well as some 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 U.S. Bancorp’s deposit position among California retail banks from 10th to fifth.
“The acquisition of MUFG Union Bank underscores our commitment to strengthen and grow our business on the West Coast, make investments to serve customers and local communities and enhance competition in the financial services industry,” said Andy Cecere, the chair, CEO, and president of U.S. Bancorp, in a statement.
On its part, MUFG said the deal, which will see it take a 2.9% minority stake in U.S. Bancorp, will allow it to focus on other areas like corporate and investment banking, global markets, and Japanese banking businesses.
Write to Jack Denton at [email protected]
