Washington, D.C. – The Bank Policy Institute (BPI) has emphasized the importance of clear and objective standards in mergers and acquisitions (M&A) for the benefit of bank customers and the economy. In a statement for the record presented at the House Financial Services Subcommittee on Financial Institutions and Monetary Policy hearing, the BPI highlighted the significance of a healthy M&A pipeline with defined timelines and expectations for merger approvals.
According to the BPI, uncertainties created by recent federal proposals could have detrimental effects on the M&A process, ultimately impacting bank customers and the broader economy. The statement urged the Subcommittee to consider the economic advantages of bank M&A activity, stating, "A predictable path forward for bank mergers promotes a healthier banking system and a more stable U.S. economy."
Addressing the competitive landscape in the banking sector, the BPI pointed out the diverse marketplace for banking services in the United States, which includes various financial institutions and non-banking entities offering similar services. Against a backdrop of intense competition and regulatory requirements, banks are facing challenges in meeting the evolving needs of their customers.
The BPI highlighted that customers are increasingly seeking comprehensive financial services from a single provider with advanced technological capabilities and robust cybersecurity. Meeting these demands necessitates investments that may require the scale and resources achievable through M&A activities. However, the current M&A oversight process is already burdened with delays and uncertainties, which could be exacerbated by recent proposals from the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC).
The BPI cautioned that the proposed policies from the OCC and FDIC could deter transactions that benefit both customers and the banking system, potentially leading to challenges in retaining customers and employees. Moreover, these proposals were noted to deviate from the Bank Merger Act, raising concerns about their compatibility with existing laws governing bank M&A activities.
In conclusion, the BPI emphasized the importance of regulators adhering to established statutes rather than introducing subjective requirements that hinder banks from making sound growth decisions. A clear and transparent path for bank M&A activities was underscored as essential for fostering a thriving banking system and supporting economic growth.
For more information about the Bank Policy Institute and its work on M&A, interested parties can visit their website or contact Tara Payne at tara.payne@bpi.com.