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US bank M&A: A red flag

A wave of regional mergers will be the nail in the coffin of the small banks and credit unions.


Bank M&A in the US is back and it’s something to be concerned about. When Fifth Third announced it was buying Chicago-based MB Financial in May, it heralded what many had suspected would happen after the Federal Reserve lifted the threshold triggering deeper regulatory supervision from $25 billion to $100 billion in assets – bigger banks.

That may be welcome news for regional players that are now free to expand and compete with the largest banks, but it is bad news for smaller banks. Even with the bank relief bill that passed into law in May, winding back some of the burdens that Dodd-Frank imposed on smaller banks, there is simply not enough time to give them a chance to recalibrate. A wave of regional mergers will be the nail in the coffin for the small banks and credit unions.

Declining numbers

The US doesn’t need larger banks – it needs smaller ones. The country has lost 12,000 banks over the last three decades and since the last recession the three largest US banks by assets, for example, have added more than $2.4