Milbank Financial Institutions Regulatory partner Douglas Landy was quoted in a recent Law360 article titled “Reg Rollbacks Seen As Bit Player in $28B BB&T-SunTrust Deal” on the merger of North Carolina-based BB&T Corp. and Georgia-based SunTrust Banks Inc., the biggest bank tie-up since the financial crisis.
While the transaction has garnered criticism from some who see the merger as a result of the loosening of post-crisis regulations on big banks, others view the merger as more of a strategic move that wasn’t entirely a result of the regulatory reform. As part of the review process, the Fed must consider how a proposed merger could affect competition in the merging banks’ relevant markets as well as the potential impact on financial stability. The Fed also examines how the banks have conducted themselves in their communities, including their Community Reinvestment Act performance and track records of compliance with consumer protection laws, among other considerations.
Mr. Landy, a former Federal Reserve Bank of New York lawyer, commented, “You could make a narrative that … this administration being more favorable to the financial services industry than the prior administration’s perceived views led to the rebound in bank stock prices, which helps this merger come out.” “I think that’s probably a more direct scenario, and strategically there are all kinds of reasons for these two banks to merge.”
“The number of banks in the United States has been shrinking as banks have merged,” Mr. Landy commented. “There was a long pause following the financial crisis, but it’s a perfectly natural thing to have happen. We still have far more banks per capita than do European or Asian countries with similar economies.”
Mr. Landy also notes that Congress could revise and tighten these standards for merger approval going forward if it so desired, though it’s unclear whether such a proposal could garner enough support from moderate Democrats, let alone Republicans, to be viable.
