With President Donald Trump’s White House relaxing financial regulations, it is expected to usher in a new wave of mergers and acquisitions among medium-sized banks in the U.S.
That’s according to Reuters, which reported that since the 2007 to 2009 financial crisis, M&A has slowed because of stricter rules on what lenders with more than $50 billion in assets can do on the M&A front — as well as rules preventing banks from expanding if they have any compliance issues. According to Reuters, the number of bank deals that took place in the U.S. declined 23 percent between 2014 and 2017. At the same time, overall M&A activity was increasing.
That is changing, with lawmakers gearing up to raise the amount of assets a bank has before it is deemed systemically important — which will result in lenders that had been capping growth to avoid compliance issues now able to combine operations. The bill, which raises the threshold for the big banks to $250 billion, is expected to pass in the Senate in the next few weeks, which is expected to then spur the M&A activity.
“To the extent that $50 billion gets up to $250 billion, as is being talked about, that will certainly help take a very large impediment out of the way, and you’ll likely see more M&A activity,” said Rajinder Singh, chief executive of BankUnited, in an interview with regulators. Regulators, noted the report, are also looking at ways to speed up the approval of deals. Singh told Reuters the deals that will come from the lax rules will be between ones with $20 billion to $200 billion in assets. The executive noted that the bank has been getting close to the $50 billion in assets mark, and that any deal would bring it there more quickly. “If it goes to $250 [billion], that’s the pressure off,” he said, a noting that if BankUnited engaged in any buys, it would likely be a small purchase.