The U.S. Federal Reserve on Thursday made it easier for bigger lenders to merge, by quadrupling its threshold of combined size that would require an extensive regulatory review of a proposed deal.
A merger that creates a bank with total assets of less than $100 billion is not a threat to the financial system, the central bank said in a statement on Thursday. Since 2012, that threshold had been $25 billion.
Mergers that create banks “with less than $100 billion in total assets, are generally not likely to create institutions that pose systemic risks,” the Federal Reserve said.
Industry officials applauded the change, saying it should speed up the approval process for bank deals.
The regulator announced the change in approving People’s United Financial’s acquisition of Suffolk Bancorp. Together, the two lenders will have consolidated assets of around $43 billion.
Bank regulatory lawyers and financial dealmakers have argued that overly tight regulation since the 2008 financial crisis was hindering industry mergers and acquisitions. Under the sweeping Dodd-Frank financial reforms adopted to prevent another crisis, the Fed must consider the extent to which a bank merger would result in risks to the financial system.
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