Dive Brief:
- Wayne, New Jersey-based Valley National Bank is acquiring the U.S. arm of Israel’s Bank Leumi in a deal worth $1.15 billion in cash and stock, the bank announced Thursday in a press release.
- The transaction, slated to close either late in the first quarter of 2022 or early in the second, would add $8.4 billion in assets, $7.1 billion in deposits and $5.4 billion in loans to Valley’s balance sheet, making Valley the 29th-largest publicly traded U.S. bank by assets, the bank said. The lender claimed $51 billion in assets, $42 billion in deposits and $39 billion in loans as of June 30, according to its press release.
- The deal marks the second time this week a foreign-owned company has sold its U.S. banking assets to a stateside institution. U.S. Bank on Tuesday announced it is buying MUFG Union Bank — the U.S. banking arm of Japanese automaker Mitsubishi — in an approximately $8 billion cash-and-stock deal.
Dive Insight:
Bank Leumi has been considering selling its U.S. arm since May, Bloomberg reported, with Valley rumored as the front-runner late last month.
The tie-up would be at least the second for Valley this year. It announced it would buy The Westchester Bank, a commercially focused institution, in July for about $210 million in stock.
Like the Westchester deal, Leumi’s U.S. arm would enhance Valley’s commercial banking footprint — particularly, in the Chicago, Los Angeles and Silicon Valley markets.
“We are extremely excited about the combination with Bank Leumi and the diverse growth opportunities that we expect the partnership will bring,” Ira Robbins, Valley's CEO, said Thursday. “Bank Leumi’s unique deposit verticals, including the technology and venture capital business, will continue the significant funding improvement that we have driven over the last few years.”
Under the deal, Leumi shareholders will receive 3.8025 shares of Valley National Bank stock and $5.08 in cash for each Leumi share they own. Bank Leumi USA’s parent company, Bank Leumi Le-Israel B.M., would own 14% of Valley once the transaction closes.
Bank Leumi Le-Israel B.M. would also designate two directors to add to Valley’s board. Bank Leumi CEO Avner Mendelson is expected to occupy one of those seats as vice chairman.
“This is a strategic move designed to deepen and expand our exposure to the U.S.,” Hanan Friedman, Bank Leumi Le-Israel B.M.’s CEO, said in Thursday’s press release. “The merger will provide Leumi significant and unprecedented presence and market access for an Israeli bank in the U.S. This is positive news for our commercial and technology customers, who will enjoy a wider range of product offerings and the capabilities of a top and prosperous U.S. bank.”
Bank Leumi Le-Israel B.M. and Mitsubishi UFJ Financial Group aren’t the only foreign companies to spin off their U.S. banking operations in the past year. Spanish lender BBVA sold its U.S. retail arm to PNC Bank in an $11.6 billion deal that closed in June after being announced in November 2020.
