FDIC to Bank Mergers: Never Mind, Back to Old Rules!
Published Date: 3/11/2025
Proposed Rule
Summary
The FDIC wants to bring back its old rules on bank mergers and drop the new ones from 2024. They’re asking the public to share thoughts by April 10, 2025, before making big changes to how bank mergers get reviewed. This affects banks planning to merge and anyone interested in how these deals get approved.
Analyzed Economic Effects
7 provisions identified: 5 benefits, 2 costs, 0 mixed.
FDIC to Reinstate Prior Merger Policy
The FDIC proposes to rescind its September 27, 2024 Statement of Policy on Bank Merger Transactions and reinstate the prior Merger Policy Statement (originally adopted in 1998 and last amended in 2008) as an interim policy while it develops a comprehensive revision. The agency is requesting public comments by April 10, 2025.
Reaffirmed Use of HHI Thresholds
Under the reinstated Merger Policy Statement, the FDIC will normally not deny a proposed bank merger on antitrust grounds where the post-merger Herfindahl-Hirschman Index (HHI) is 1,800 points or less, or where the post-merger HHI is more than 1,800 but the increase is less than 200 points. Transactions that fail this concentration test will receive closer competitive scrutiny.
Community Reinvestment Act Evaluations Matter
When evaluating merger applications, the FDIC will note and consider each institution's Community Reinvestment Act (CRA) performance evaluation record, and an unsatisfactory CRA record may form the basis for denial or conditional approval of a merger application. The FDIC will consider CRA records as part of the convenience and needs factor.
Anti‑Money‑Laundering Record Can Block Mergers
The FDIC will consider each institution's effectiveness at combating money-laundering, including program adequacy and supervisory history, and significantly adverse findings may require corrective action before consent is granted or may form the basis for denial of a merger application.
Branch Closing Notices Will Be Reviewed
If bank offices will be closed in connection with a merger, the FDIC will review whether the merging institutions followed the notice requirements of section 42 of the Federal Deposit Insurance Act and the Interagency Policy Statement on Branch Closing Notices and Policies.
Scrutiny of Legal Fees and Insider Payments
The FDIC will closely review legal fees and other expenses related to merger applications for signs of self-dealing. The FDIC will not approve an application where the payment of a fee is contingent upon any act or forbearance by the FDIC or another federal or state agency or official.
Interim Institutions Usually No Deposit-Insurance Filing
The Merger Policy Statement says that a merger involving an insured depository institution and a federal interim depository institution will generally not require a separate application for deposit insurance, except in purchase-and-assumption transactions.
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Key Dates
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