Trade Groups Urge OCC and FDIC to Align Merger Plans

Bank trade associations have called on the Federal Deposit Insurance Corporation (FDIC) and Office of the Comptroller of the Currency (OCC) to align their merger review proposals.

Earlier this year, both regulators proposed changes to the Bank Merger Act to increase scrutiny of bank mergers to improve transparency and competition within the sector.

Some of the OCC’s proposed changes to the bank merger application process included removing expedited bank merger review procedures and automatic bank merger approvals.

Even though both proposals have faced backlash from across the banking industry, many bank trade groups have urged a unified approach among the federal supervisors.

In a response to a request for comment from the FDIC, the Mid-Size Bank Coalition of America said:  “Inconsistencies between the FDIC Proposal and the OCC Proposal show that the agencies have failed to develop a cohesive, coordinated approach to bank merger policy.”

The group added the lack of interagency coordination meant merging parties may prioritize acquisition structures and bank charters over enhancing competition and product offerings.

Meanwhile, the Conference of State Bank Supervisors (CSBS) said the difference in merger review processes between federal and state regulators creates unnecessary uncertainty, which could potentially prolong an already lengthy and costly merger application process.

These prolonged merger reviews expose institutions to various execution risks, such changes in economic conditions, stock price volatility, employee exits and customer attrition, it said.

CSBS added: “In certain cases, delays in merger decisions have led to banks abandoning proposed transactions, which can negatively impact their stability and safety and soundness.”

Public comments on the OCC’s proposal were due on June 15, while the FDIC’s deadline for comments was June 18.