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UPDATE 1-New York Community Bancorp to buy Flagstar Bancorp for $2.6 bln

(Updates with transaction details, background on regional banking M&A)

April 26 (Reuters) - New York Community Bancorp Inc agreed to buy Flagstar Bancorp Inc for $2.6 billion in an all-stock deal, as U.S. regional banks look to consolidate to compete better against larger lenders in a low interest rate environment.

The banks said on Monday Flagstar shareholders would receive around 4.02 shares of New York Community for each share they own. That implies an offer price of $48.14 per share, which represents a premium of about 6% to Flagstar’s last close, per Reuters calculations.

The ultra-low interest rate environment hurts regional banks more as they rely on interest income from loans and do not have big investment banking and trading arms like large Wall Street lenders.

Last year, regional lender First Citizens BancShares Inc said it would acquire peer CIT Group Inc for $2.2 billion, while PNC Financial Services agreed to buy the U.S. business of Spain’s BBVA for $11.6 billion.

As part of the deal, New York Community shareholders will own about 68% of the combined company after the transaction closes, while Flagstar shareholders will own the rest, the banks said. refini.tv/2QYISyO

Thomas Cangemi, the chief executive officer of New York Community, will lead the combined company and the deal has been unanimously approved by the board of directors of both companies, the banks said.

Piper Sandler and Goldman Sachs served as financial advisors to New York Community, while Morgan Stanley and Jefferies acted as financial advisors to Flagstar. (Reporting by Sohini Podder in Bengaluru; Editing by Amy Caren Daniel)

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