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What New Merger Guidelines Might—and Might Not—Mean for Banks

230622 Mergers Insider Blog

‘The Biden administration remains ideologically opposed to large bank M&A.’

The U.S. Justice Department’s antitrust division plans to broaden its bank merger review process, according to Assistant Attorney General for Antitrust Jonathan Kanter. In a speech this week at the Brookings Institution, Kanter made it clear he believes the current guidelines, last updated in 1995, may be too narrow considering technological advancements in financial services. Kanter suggested merger reviews should consider a wider range of factors beyond local depositors and branches to ensure customers maintain “meaningful choice.”

Hopes dashed? Progressive lawmakers and consumer advocates have long opposed allowing larger banks to grow further—and President Biden signed an executive order in 2021 directing heightened scrutiny of such activity. But some in the banking industry had hoped recent rescue deals resulting from the failure of Silicon Valley Bank demonstrated the merits of strategic mergers.

‘Ideologically opposed.’ Kanter's speech, however, suggests the DOJ will approach bank mergers with increased skepticism. “The Biden administration remains ideologically opposed to large bank M&A,” said Isaac Boltansky, policy director at brokerage BTIG.

Silver lining? But because institutions that compete with traditional financial institutions—such as fintechs—might also be met with more scrutiny, TD Cowen analyst Jaret Seiberg struck a hopeful tone for banks. “We believe this policy change will not be as negative for bank mergers as it may first appear,” he said.

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