M&T's Wilmington Trust reaches deal to end U.S. criminal charges

Reuters News
Posted: Oct 10, 2017 7:13 AM

By Tom Hals

WILMINGTON, Del. (Reuters) - Wilmington Trust Corp reached a $60 million deal to end U.S. criminal charges that the bank concealed its deteriorating condition from regulators and investors in 2009 and 2010, avoiding a trial that was set to begin on Tuesday.

The M&T Bank Corp unit said it is admitting no liability and that the settlement amount includes $16 million it previously paid as part of a related 2014 accord with the U.S. Securities and Exchange Commission.

Acting U.S. District Attorney for Delaware David Weiss, whose office brought the case, said the deal would compensate the bank's former investors and avoids potential job losses if the bank had been convicted. Wilmington Trust operates a wealth advisory business, but some operations were absorbed by M&T following a 2010 acquisition.

As a result of Tuesday's deal, the trial against four former Wilmington Trust executives was postponed until March 12.

"We wanted to avoid collateral consequences for the bank," Weiss said at a news conference on Tuesday.

M&T was not charged and the Buffalo, New York-based bank said resolving the charges was in the company's best interest.

The U.S. government has been criticized for a dearth of prosecutions tied to the fall-out from the 2008 financial crisis, and Wilmington Trust was the only bank receiving federal bail-out funds that has been indicted.

Founded by the du Pont family in 1903, Wilmington Trust received $330 million federal bailout money in 2008 under the Troubled Asset Relief Program (TARP), which was meant to bolster U.S. lenders in the wake of the real estate market crash.

Two years later, Wilmington Trust raised $273.9 million in a February 2010 sale with the intention of repaying the TARP funds. At the time, it reported to regulators just $10.8 million in commercial loans that were 90 days past due, but prosecutors said the real figure was $344 million, and continued to grow.

In November 2010, Wilmington Trust agreed to be acquired by M&T for $3.84 per share, a 46 percent discount to the previous closing price and well below the $13.25 per share sale of stock months earlier.

The other defendants are Robert Harra, former president; David Gibson, a former chief financial officer; William North, former chief credit officer; and Kevyn Rakowski, the bank's former controller.

They have denied the allegations.

(Reporting by Tom Hals in Wilmington, Delaware; Additional reporting by Jonathan Stempel in New York and Nate Raymond in Boston; Editing by Matthew Lewis and Lisa Shumaker)