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BANKING

No season of goodwill among US bank regulators as outlook clouds for domestic mergers

A spat among directors of the Federal Deposit Insurance Corporation has led to the resignation of its chair and thrown the prospects for domestic bank M&A into murky waters.

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US regional banking franchises are still getting plenty of attention from would-be acquirors. On December 20, 2021, Canada’s Bank of Montreal announced its acquisition of Bank of the West from BNP Paribas for $16.3 billion in cash.

Among others under way is US Bancorp’s $8 billion acquisition of most of MUFG Union Bank, announced in late September.

The deals follow a string of mergers involving regional banks that was kicked off by the purchase of BBVA’s US banking network by PNC Financial Services in an eye-catching $11.6 billion transaction announced in November 2020.

But all has not been well in the world of US bank regulation during the season of peace and goodwill. As a result, the scope for domestic deals might be rapidly narrowing. At the very least, they are likely to be subject to ever more intense scrutiny. Regulatory demands in return for approval could well get a lot heavier.

Back in October, Euromoney noted that politics was soon likely to interfere with financial sector deal-making as the Democrat administration of president Joe Biden began to replace appointees of former Republican president Donald Trump in key banking regulatory posts.

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