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US regional banks gear up for M&A bonanza

The case for smaller deals is clear, but pressure is building higher up the food chain as well.


One of the most anticipated trends in US banking began this month not in Wall Street or San Francisco but in Salt Lake City, Utah.

On Wednesday, Zions Bancorp, a regional player with $66 billion in assets, saw its proposal to shed federal oversight approved by the Financial Stability Oversight Council (FSOC).

Ever since the US Senate passed a bill raising the key threshold for US banks to be considered to be systemically important financial institutions (Sifis) earlier this year, the market has been expecting a slew of players in the $50 billion to $100 billion size range to eagerly throw off all of the Fed’s enhanced prudential standards.

The new rules state that banks with assets within this range are no longer subject to Sifi rules with immediate effect.

This change was always expected to benefit the smaller banks first, because under the terms of the bill those larger banks with assets of between $100 billion and $250 billion will only be released from the standards 18 months after their smaller peers. They will also still be subject to periodic stress tests.

Regulatory easing

There could, however, be even more regulatory easing ahead: Randal Quarles, the Fed’s vice-chairman for bank supervision, has recently suggested that Sifi regulations should be eased for banks that have more than $250 billion in assets but are not global.

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