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FDIC board adopts final statement of policy on bank mergers after split vote
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Summary
The FDIC board approved a final statement of policy on bank merger transactions that clarifies jurisdiction, embraces a principles-based approach to statutory factors, signals additional scrutiny for very large transactions, and retains coordination with DOJ; the vote was split with several directors opposed.
The Federal Deposit Insurance Corporation board approved publication of a final statement of policy on bank merger transactions that updates the agency's approach to evaluating statutory factors under the Bank Merger Act, clarifies jurisdictional scope, and emphasizes substance over form when determining whether a transaction requires FDIC approval.
Ben Klein, supervisory counsel in the FDIC legal division, told the board the final statement supersedes the FDIC's existing guidance (initially adopted in 1998 and revised in 2008) and incorporates changes informed by public comments and recent regulatory developments. "Today, staff recommends that the FDIC board approve for publication in the federal register a final statement of policy on bank merger transactions," Klein said.
The final statement is framed as principles-based and addresses jurisdiction, the FDIC's approach to each statutory factor, and additional considerations for interstate transactions and nontraditional applicants. Staff described several substantive changes from the proposed statement, including removal of language that would have categorically found a merger "unfavorable" where the transaction resulted in a "weaker" insured depository institution, and added clarity on the FDIC's approach to assessing financial resources and managerial capacity.
On competition, staff said the FDIC will consider concentrations in local deposit and product markets, may take nonbank competitors (credit unions, thrifts, farm credit institutions) into account where appropriate, and will coordinate with the Department of Justice. The final statement also notes heightened scrutiny for transactions resulting in institutions with $100,000,000,000 or more in total assets and signals that public hearings may be held for mergers that would result in institutions with $50,000,000,000 or more in assets.
The board's vote was not unanimous. Vice Chairman Hill explained he would vote no, saying the final statement "deemphasiz[es] the use of HHI thresholds" and therefore adds unpredictability to the competitive analysis; he also voiced continued concerns about rural-market treatment and the burden the approach imposes on applicants. Director McKiernan likewise opposed the final statement, saying the document reflects a bias against mergers. Director Hsu and Director Chopra voted in favor, and Chairman Gruenberg cast an affirmative vote. The motion passed on a roll call: Chairman Gruenberg — aye; Vice Chairman Hill — no; Director McKiernan — no; Director Hsu — aye; Director Chopra — aye.
Staff said the final statement would be published in the Federal Register and would supersede the prior statement 30 days after publication. The statement aims to improve transparency about filing expectations and to update the FDIC's evaluative methods in coordination with its sister federal banking agencies.
Board members also used the public discussion to air broader governance concerns: Vice Chairman Hill said he had proposed an independent board committee to oversee the FDIC's action plan and cultural transformation, and objected to consideration of that proposal in closed session. Director McKiernan raised similar concerns about transparency and the Sunshine Act; these governance points will be reflected in statements filed for the record.
