H&R Block Inc. (HRB)’s plan to sell its bank and exit Federal Reserve oversight stalled as Republic Bancorp Inc. said it rescinded a plan to buy the unit.
The decision to abandon the deal, which had been pending before the U.S. Office of the Comptroller of the Currency, was disclosed yesterday in a regulatory filing by Louisville, Kentucky-based Republic. H&R Block said in a statement that it would hold a conference call today to discuss the matter.
H&R Block, the biggest U.S. tax preparer, said last year it was seeking strategic alternatives for the bank unit to avoid being subjected to the Fed’s capital requirements. The Kansas City, Missouri-based company probably will wait six months to find another buyer to avoid disrupting sales of bank products during the 2014 tax season, according to Gil Luria, an analyst at Wedbush Securities Inc. in Los Angeles.
“H&R Block is going to move on and probably approach suitors No. 2 and 3 for the bank,” Luria said in a phone interview. “I’d call it an inconvenience.”
Selling the bank unit may allow H&R Block to increase its dividend and repurchase more stock, Luria said.
“Dealing with regulators is a cumbersome process,” he said. “Because they’re regulated by a bank regulator, they’re very much constrained.”
H&R Block said in a Sept. 3 statement that the deal would be delayed after Republic told the tax preparer that the bank wasn’t expecting a decision from the OCC before the end of that month.
To contact the reporter on this story: Zeke Faux in New York at firstname.lastname@example.org