Ethan Riley
In 2021, U.S. Bancorp announced an 8 billion dollar deal to acquire MUFG Union Bank, with the transaction closing in December 2022. The acquisition brought together two large banking organizations, with U.S. Bancorp inheriting Union Bank's customers and assets, including its branch network and deposit accounts. This merger faced opposition from the California Reinvestment Coalition and caused a decline in U.S. Bancorp's regulatory capital position. However, the combined entity is expected to benefit from increased scale, improved technology, and a larger deposit market share, particularly in California.
| Characteristics | Values |
|---|---|
| Date of the merger | September 2021 |
| Deal value | $8 billion |
| Acquirer | U.S. Bancorp |
| Acquired | MUFG Union Bank |
| Acquirer's parent company | U.S. Bank National Association |
| Acquired company's parent company | Mitsubishi UFJ Financial Group |
| Acquirer's no. of employees | 70,000 |
| Acquirer's assets | $601 billion |
| Acquired company's assets | $82 billion |
| Acquirer's stock price impact | Negative |
| Acquired company's total non-interest-bearing deposits | 40% |
| Acquirer's share of deposit market in California | Fifth-largest |
| Acquirer's no. of consumer bank accounts | 1 million |
| Acquirer's no. of business clients | 190,000 |
| Acquirer's community benefits plan value | $100 billion |
| Acquirer's community benefits plan duration | Five years |
| Opposition to the merger | California Reinvestment Coalition |
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What You'll Learn
U.S. Bancorp acquires Union Bank for \$8 billion
U.S. Bancorp has completed its acquisition of MUFG Union Bank's core regional banking franchise from Mitsubishi UFJ Financial Group, Inc. The $8 billion deal was announced in September 2021 and closed in December 2022. The acquisition brings together two large organizations to serve customers and communities across California, Washington, and Oregon, with a dedicated workforce across the West Coast.
The acquisition of MUFG Union Bank gives U.S. Bank a much bigger presence in California, Oregon, and Washington, where MUFG has about 300 branches. U.S. Bank will now have a larger branch network, greater access to digital banking tools, and increased choice. Union Bank customers will also gain access to thousands of additional branches and ATMs across the 26-state U.S. Bank branch network.
U.S. Bancorp, the parent company of U.S. Bank National Association, is a Minneapolis-based company with approximately 70,000 employees and $601 billion in assets as of September 30, 2022. The company serves millions of customers locally, nationally, and globally through a diversified mix of businesses, including Consumer and Business Banking, Payment Services, Corporate & Commercial Banking, and Wealth Management and Investment Services.
The acquisition of MUFG Union Bank is expected to bring several benefits to customers. U.S. Bank has a top-ranked mobile banking app that offers secure tools for digital banking, such as checking balances, transferring money, and depositing checks. Union Bank customers will also have access to improved technology and a wider range of services, including wealth management, mortgage banking, and business banking. The integration of Union Bank branches is planned for Memorial Day weekend, and systems integration and account conversion are expected to occur in the first half of 2023.
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Union Bank customers gain access to U.S. Bank branches and ATMs
U.S. Bancorp announced in September 2021 that it had agreed to an $8 billion deal to acquire MUFG Union Bank core regional banking franchise from Mitsubishi UFJ Financial Group. The acquisition was completed in December 2024.
The merger will significantly benefit Union Bank customers, who will gain access to thousands of U.S. Bank branches and ATMs across a 26-state network. Union Bank customers in California will have more than double the number of branches available to them, and clients in Washington and Oregon will go from less than 20 combined locations to being part of one of the largest branch networks in those states.
U.S. Bank has stated that it will retain all front-line branch employees, and that customers will continue to see familiar faces serving them. The company has also committed to continuing to serve every city and community where Union Bank is currently located, and is planning to add five new locations in communities where residents have low to moderate incomes.
In addition to increased branch and ATM access, Union Bank customers will also benefit from an improved digital banking experience. The U.S. Bank mobile banking app offers highly secure tools for digital banking, including the ability to check balances, transfer money, and deposit checks securely. Customers can also apply for credit via text messaging and get a decision in seconds.
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U.S. Bancorp sheds consent order inherited from Union Bank
U.S. Bancorp has been freed from a regulatory action that it inherited as part of its acquisition of MUFG Union Bank. The $8 billion deal was closed in December 2022, six months after the initial projection. The consent order, which addressed problems with the Japanese-owned bank's information security and operational risk controls, was terminated by the Office of the Comptroller of Currency (OCC).
The OCC's decision was described as a positive development for U.S. Bancorp by analysts at Piper Sandler. They also noted that the enforcement action had not been a factor in the company's recent stock price. Shares in the $663 billion-asset banking company are down 1.4% this year, while the KBW Nasdaq Bank Index is up 2.2% since January 1.
U.S. Bancorp's vice chairman of consumer and business banking, Timothy Welsh, highlighted the potential for growth in credit card adoption, noting that the penetration of payments into Union Bank's checking account base was about half of that at U.S. Bank. The acquisition of MUFG Union Bank's core regional banking franchise adds a sizeable branch network, primarily in California, and expands U.S. Bank's presence on the West Coast.
The termination of the September 2021 consent order comes nine months after U.S. Bancorp agreed to settle separate allegations by the OCC regarding deceptive practices related to various fees charged by Union Bank. The bank has achieved its target of $900 million in cost savings through branch and real estate consolidation, technology and systems conversion, and other back-office efficiencies. These savings will help maintain flat expenses in 2024 and fund investments in areas such as payments and its branch network.
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U.S. Bancorp's acquisition of Union Bank adds $82 billion in assets
U.S. Bancorp's acquisition of Union Bank added $82 billion in assets and grew the bank's deposit market share to the fifth-leading position in California. The acquisition also added 1 million consumer bank accounts, 190,000 business clients, and a stream of low-cost deposits. Union Bank, a subsidiary of Mitsubishi UFJ Financial Group, had a strong presence in California, which significantly bolstered U.S. Bancorp's presence in the state.
The acquisition was first announced in September 2021, with U.S. Bancorp paying the equivalent of 130% of Union Bank's tangible book value and a 2% deposit premium. The deal was completed in December 2022, adding Union Bank's core regional banking franchise to U.S. Bancorp's portfolio.
The merger brought together two large organizations serving customers across California, Washington, and Oregon. Customers of both banks benefited from an expanded branch network, greater access to digital banking tools, and increased convenience. Union Bank customers gained access to thousands of additional branches and ATMs across U.S. Bank's 26-state network, with careful planning put into branch consolidations to ensure continued access and convenience for customers.
U.S. Bancorp, the parent company of U.S. Bank National Association, has approximately 70,000 employees and $601 billion in assets as of September 30, 2022. The company is recognized for its approach to digital innovation, social responsibility, and customer service, and has been named one of the World's Most Ethical Companies by Fortune.
The acquisition of Union Bank is expected to positively impact U.S. Bancorp's net interest margin (NIM) and provide a good deposit base. U.S. Bancorp's management guided for a 5 to 10 basis points growth in NIM in the first quarter, outperforming its peers' expectations.
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The merger was opposed by the California Reinvestment Coalition
The merger between U.S. Bancorp and MUFG Union Bank was opposed by the California Reinvestment Coalition (CRC) in November 2021, two months after the merger was announced. The CRC is a coalition of 50 organizations that work to build a fair and inclusive economy in California. They raised several concerns about the merger, including the amount of public subsidy involved and the lack of public benefit. The CRC argued that the merger would benefit investors but not the communities that the banks serve. They also questioned the transparency around the amount of money paid out to investors under shared-loss agreements and the extent to which the banks complied with their obligations to modify mortgages.
The CRC also highlighted OneWest Bank's poor record for community reinvestment and raised concerns about the amount of corporate subsidies provided to the banks. They suggested that the bank leaders should engage with community leaders to understand their needs and create a robust Community Benefit and Reinvestment Plan to outline the bank's commitment to California communities. The CRC's opposition to the merger was based on their belief that it would not adequately serve the interests of the communities involved. They advocated for a more inclusive and equitable economic system that considers the needs of all stakeholders, not just investors.
The CRC's concerns about the merger between U.S. Bancorp and MUFG Union Bank reflect their broader mission to hold banks accountable to the communities they serve. They believe that banks have a responsibility to reinvest in and support the communities that contribute to their success. By opposing the merger, the CRC sought to ensure that the banks would address these concerns and commit to serving the best interests of their customers and the communities in which they operate. The CRC's efforts highlight the importance of community engagement and social responsibility in the banking industry.
The merger between U.S. Bancorp and MUFG Union Bank has raised concerns among community organizations and government agencies in California. The CRC's opposition to the merger is a reflection of their commitment to economic justice and their belief in the power of community investment. By raising these concerns, the CRC hopes to influence the banks' community investment strategies and ensure that the merger will benefit all stakeholders, including the communities that are impacted by the banks' operations. The CRC's efforts have sparked a dialogue about the role of banks in society and the importance of considering the social and economic impact of their decisions.
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Frequently asked questions
Yes, US Bancorp completed its acquisition of Union Bank in December 2023.
The merger was valued at $8 billion.
Union Bank customers will have access to thousands of US Bank branches and ATMs across a 26-state network. They will also benefit from an improved mobile banking app and increased access to digital banking tools.
