Bank executives rethink mergers and acquisitions

May 24, 2013 at 10:36 AM   |   Comments

WASHINGTON, May 24 (UPI) -- Bank industry analysts are saying the U.S. Federal Reserve has disrupted mid-sized bank mergers, if not derailed them, with a recent regulatory ruling.

The Wall Street Journal quoted one bank executive as saying, "I am not buying another bank for as long as I can see."

The unnamed official worked at a bank with the potential to purchase other banks, the Journal said.

Industry analysts say a sluggish economy spurs bank mergers, as lending is slow. In addition, the regulatory response to the financial crisis has included new restrictions on standard bank money-makers, such as fees for credit card swipes and penalties for overdrawn accounts.

But regional bank M&T Bank Corp. said last month a $3.8 billion deal to buy Hudson City Bancorp Inc. has stalled as the Fed wants M&T to first address problems with its anti-money laundering program.

As a result, the two banks have extended their deadline for making a deal for five months until the end of January 2014.

Executives now "understand that if we pull the trigger on a transaction, there will be a great deal of regulatory oversight and it will be more complex and take longer than it did in the past," said John Kanas, head of BankUnited Inc., a regional bank based in Florida.

The M&T decision is a "potential cold shower" for mergers, banking attorney Luigi De Ghenghi told the Journal.

M&T is considered a regional bank, but it has more than 700 branch offices and assets of $83 billion, making it the 16th largest bank in the country.

Research firm SNL Financial said there have been 713 bank acquisitions or mergers since mid-2009.

Following the previous recession, in 2001, there were 1,065 transactions over a similar four-year period, SNL said.

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