The FDIC today proposed a new rule “to improve the speed, certainty and predictability” of bank merger reviews, including expanding what factors it will examine to determine a merger’s potential competitive effects and establishing a streamlined application process for certain mergers.
The proposed rule would restructure the FDIC’s framework for reviewing merger applications. Proposed changes include:
- Accounting for credit unions and, to some extent, centrally booked deposits in the initial competitive effects analysis;
- Creating a new category of “de minimis merger transactions” eligible for rapid process and streamlined filing requirements;
- Tailoring certain merger filing requirements to reduce burden and processing times based on the size and risk profile of a merger transaction, as well as the attributes of the acquiring and resulting institution;
- Limiting and clarifying the FDIC’s discretion to remove a merger application from expedited processing;
- Clarifying the approach to assessing financial stability risk.
Several proposed changes reflect reforms advocated by FDIC Chairman Travis Hill, who views the current merger review process as taking too long and imposing too much uncertainty on banks.
“A long process is damaging in many ways,” Hill said. “It created uncertainty for employees and customers. It constrains long-term planning and investment. It makes post-merger integration more challenging and costly. And it potentially leaves the merging entities, particularly the seller, in a vulnerable position.”
American Bankers Association President and CEO Rob Nichols welcomed the FDIC’s proposal.
“ABA has long urged bank regulators to modernize outdated competition guidelines for bank mergers, and the FDIC’s proposal is a step in the right direction,” Nichols said. “We look forward to reviewing both proposals in full and sharing our views through the comment process.”
The FDIC will take public comment on the proposed rule for 60 days following publication in the Federal Register.
