Connecticut probes First Niagara-NewAlliance deal

* Blumenthal seeks justification for NewAlliance buy

* AG seeks information about impact on jobs, economy

* First Niagara up 2 pct, NewAlliance up 2.3 pct

NEW YORK, Sept 1 (BestGrowthStock) – Connecticut is probing First
Niagara Financial Group Inc’s (FNFG.O: ) proposed $1.5 billion
takeover of NewAlliance Bancshares Inc (NAL.N: ) and has asked
the banks to justify the merger, throwing a potential roadblock
to the largest U.S. bank deal in nearly two years.

The state’s banking department may only approve bank deals
that benefit Connecticut’s economy and the public, Attorney
General Richard Blumenthal said on Wednesday.

“I believe the proposed merger raises significant and
far-reaching legal and public policy issues, including its
effect on Connecticut jobs, and our economy, as well as
community banking,” Blumenthal wrote in a letter to the banks.

Blumenthal, who is running for a U.S. Senate seat, has
requested information from the banks — including potential job
losses and branch closures, new products and services that the
merged bank would offer Connecticut consumers and plans for
providing credit to consumers.

A representative for First Niagara and NewAlliance was not
immediately available for comment.

First Niagara announced the deal earlier this month. The
combined bank would have more than $29 billion in assets,
including $18 billion in deposits, ranking it among the 25
biggest U.S. banks. [ID:nSGE67I0HC]

Blumenthal said he wants to find out whether the deal would
help the state’s economy or just make “First Niagara an
attractive target for yet an even larger bank with even less
connection and commitment to Connecticut consumers and
communities.”

First Niagara’s shares were up 2.0 percent at $11.52 on
Nasdaq, while NewAlliance shares were up 2.3 percent at $12.52
on the New York Stock Exchange, both during afternoon trading.
(Reporting by Paritosh Bansal, editing by Gerald E.
McCormick)
(For more M&A news and our DealZone blog, go to
http://www.reuters.com/deals)

Connecticut probes First Niagara-NewAlliance deal