By Aman Shah (Reuters) - U.S. tax preparer H&R Block Inc is planning to terminate the sale of its banking assets to a unit of Republic Bancorp Inc , sending shares down 6 percent in extended trading. H&R Block in July said it would sell its banking unit to avoid a sharp rise in costs associated with the introduction of stricter banking rules by the U.S. Federal Reserve. Shares of the company were down 5.5 percent at $25.75 in trading after the bell. They closed at $27.26 on Tuesday on the New York Stock Exchange. "The termination of the bank sale is a setback for H&R Block and will disappoint investors who had been hoping that the sale would pave the way to a levering transaction and significant share buyback next year," BTIG analyst Mark Palmer said in an email to Reuters. Republic Bank & Trust Co has withdrawn its pending applications with the Office of the Comptroller of the Currency (OCC) to close the deal with H&R Block Bank, Republic Bancorp disclosed in a regulatory filing late on Tuesday. (http://r.reuters.com/vaw63v) H&R Block said in a statement that it would discuss developments on its bank deal in a conference call on Wednesday morning. The company said during its first-quarter results last month that it did not expect a decision from the OCC regarding the sale by the September 30 deadline. "It is an inconvenience for H&R Block... they'll now go to the other suitors they had for the bank from before and try to negotiate a deal," Wedbush Securities' Gil Luria said. (Reporting by Aman Shah in Bangalore; Editing by Ken Wills)