BB&T to buy SunTrust in biggest bank deal since 2009

[Eugene]

Source: Reuters

(Reuters) - BB&T Corp will buy SunTrust Banks Inc for about $28 billion in an all-stock deal, the companies said on Thursday, creating the sixth largest U.S. lender in the biggest bank deal since the 2007-2009 financial crisis.

The two companies called it a merger of equals, valued at $66 billion.

The combined company will operate under a new name and have around $442 billion in assets, $301 billion in loans and $324 billion in deposits, and will rival Citigroup Inc and Bank of America Corp.

The deal comes at a time when the Trump administration is pushing for easing crisis-era regulations that restricted expansion and added increased regulatory scrutiny on big banks.

-snip-

BUSINESS NEWS FEBRUARY 7, 2019 / 6:15 AM / UPDATED 25 MINUTES AGO


Read more: https://www.reuters.com/article/us-suntrust-banks-m-a-bb-and-t/bbt-to-buy-suntrust-in-biggest-bank-deal-since-2009-idUSKCN1PW156

[zipplewrath]

1. Dodd-Frank

Does Dodd-Frank still allow this kind of merger? Seems like just another "too big to fail" kinda problem.

[sandensea]

2. Definitely.

BBT was itself on the brink of failure a decade ago.

With this administration, it - and big banks in general - will probably be in trouble again before too long.

[FBaggins]

8. Untrue

They never even had a single money-losing quarter. There’s no question that the entire financial services industry is going to suffer when unemployment skyrockets and collateral values plummet, but they were one of the few bright stars (as they were during the GD.)

You’re correct, however, that Dodd Frank doesn’t forbid the merger. Combined they become the 6th largest bank, but the top four are massive compared to the next banks on the list. These two could merge and then get the next three banks on the list to join them and they still wouldn’t be as large as Wells Fargo (which is the baby if the too-big top 4.

[BumRushDaShow]

3. I think the "stress tests" are still in effect

at least for the most part.

[zipplewrath]

4. Before mergers?

It would seem that there should be a "stress test" as part of determining if the combined bank would pass prior to approving the merger.

[BumRushDaShow]

5. I would think that if both pass "before"

they would let them go with it. This little article seems to imply that -

Impacts of Stress Testing

Stress tests give regulators the information needed to evaluate bank funding and liquidity, and regulators can also penalize banks that risk becoming insolvent.

Public information: Banks must publish stress test results annually, so that information is available to the public. As a result, anybody interested in working with financially stable banks can easily identify which banks are strongest. Depositors with deposits that exceed insurance limits can try to reduce the likelihood of losing money by avoiding weak banks.

Consequences: Regulators can intervene and prevent weak banks from paying dividends to shareholders and participating in mergers and acquisitions. They can even impose fines.

<...>

https://www.thebalance.com/what-is-a-bank-stress-test-4165161

But afterwards when combined and they fail, there would probably be some similar mechanism that would go into play that dealt with the aftermath, although with the "deregulation fever" in place in the aftermath of the 2016 election, then that will probably end up happening at the Federal Reserve vs from the government. I.e., banks "borrow money" from the Federal Reserve and not the federal government, so the Fed may start putting some (minimal) restrictions in place!

[soryang]

6. If one is about to become a bank customer...

...I think they should have duty to tell the customer that they are in the market for a merger, especially one like this.

[Calista241]

7. This will go through most likely

At the end of the process, there will be 5 banks in the US that are larger than SunTrust / BB&T will be. For most industries, 6 different options would seem to give consumers choice.