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Banks (Finance)

Union Bank to Acquire Bank of California in $950 Million Deal

Strategic Insights

— 1 min read

Union Bank, a 72% owned subsidiary of Bank of Tokyo Ltd., has announced plans to acquire Bank of California, a subsidiary of Mitsubishi Ltd., for approximately $950 million. The deal, expected to be completed by April 1, will create the fourth largest California bank, with assets of over $25 billion. The merged entity will retain the Union Bank name and remain headquartered in San Francisco, led by president and CEO Kanetaka Yoshida and deputy chairman and COO Hiroo Nozawa.

Key Takeaways:

  • The acquisition will result in the creation of the fourth largest California bank, with assets of over $25 billion.
  • The merged entity will retain the Union Bank name and remain headquartered in San Francisco.
  • The deal is expected to be completed by April 1, following the merger of the Bank of Tokyo and Mitsubishi Bank.
  • Union Bank will issue 18.1 million shares to complete the acquisition.
  • The combined bank will cut 850 jobs, representing approximately 9% of the current 9,900 employees.
  • The Japanese banks, Bank of Tokyo Ltd. and Mitsubishi Ltd., had previously announced plans to merge in March 28 and later said they would merge California operations in May 19.
  • Upon completion of the deal, the Bank of Tokyo-Mitsubishi Ltd. will own 81% of the common stock of the new California bank, while public shareholders will hold 19%.
  • The new California bank will have a diverse branch network, with over 46 branches in California, Oregon, and Washington.
  • Union Bank will switch its accounting method and re-state its financial results since the 1988 acquisition of California First Bank, resulting in a $12 million reduction in profits for each year.

Statistics:

  • Estimated cost savings from the deal: $90 million by 1998 (9% of the combined organization's estimated non-interest expenses for 1995)
  • Targeted cost savings by year: $10 million in 1996, $60 million in 1997, and $20 million in 1998
  • Current assets held by Bank of California: over $7 billion
  • Current assets held by Union Bank: over $18 billion
  • Number of offices operated by Union Bank: more than 200 in California, with five overseas facilities
  • Number of branches operated by Bank of California: over 46 in California, Oregon, and Washington

Sources:

  • The Associated Press, "Union Bank of California to buy Bank of California for $950 million," September 28 (no publication date listed)
  • Union Bank press release, "Union Bank Announces Plan to Merge with Bank of California" (no date listed)

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