Hudson City Bancorp, the target of the biggest pending bank takeover in the U.S., said it's planning to reduce interest rate risks and that the effort will produce an unspecified loss.

"Management is currently considering a variety of different restructuring alternatives, including whether to restructure all or various portions of our borrowed funds and various alternatives for replacement funding," the Paramus, New Jersey-based firm said today in a statement.

The exact timing hasn't been decided and any transaction isn't expected before the second half, Hudson City said. While the effort will result in a loss and a decline in stockholder equity, the bank expects better net interest margins and earnings prospects.

Hudson City agreed in August 2012 to be acquired by Buffalo, New York-based M&T Bank Corp. The deal stalled after the Federal Reserve pushed M&T to bolster money-laundering controls, and the banks have pushed back the deadline to the end of this year. Regulators haven't given any assurance they'll approve, so Hudson City has said it will proceed with its own strategic plan.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.