WASHINGTON––The nation’s banking industry is expressing some cautious optimism following proposed new regulations around bank mergers and acquisitions.
The Office of the Comptroller of the Currency (OCC) said the objective is to increase transparency around such deals and to ensure proper scrutiny is provided. The plan comes as more small banks are expected to merge in a process similar to what’s occurring in credit unions.
Michael Hsu, the acting comptroller, told Reuters he believes the new rules will increase transparency around the process and could even speed up good deals by helping banks seeking to merge to steer clear of transactions that may hit regulatory roadblocks,
‘Problematic’ Issues
Hsu told Reuters that some mergers are problematic because the banks involved have supervisory issues, whereas banks that have a high supervisory rating with no lingering enforcement concerns are more likely to get the green light for a merger or acquisition.
"A lot of this was unwritten, the point of this is to just write it down," he was quoted as saying.
Banks Respond
The banking industry is being cautious and hopeful in its response.
“(The) announcement from Acting Comptroller Hsu on bank mergers offers an important opportunity to update this critical policy area. ABA has long supported making regulatory processes and standards clear and transparent,” ABA President and CEO Rob Nichols said in a statement. “At the same time, regulators should ensure that the scope of required application information is tailored to each bank’s specific circumstances. In addition, bank mergers should not be evaluated based on arbitrary asset thresholds – regulators must consider holistically financial, competitive, managerial and other relevant factors involving banks of any size. The key objective of this initiative should be timely, efficient decisions on mergers under clear standards and with a transparent process. We look forward to coordinated action by bank regulators and the Department of Justice to complete the update of the competitive factors aspects of the bank merger guidelines.”
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