The regulatory reforms meant big banks could pursue greater scale against already-sizable competitors, invest in more technology and serve even larger commercial clients with fewer regulatory burdens. And it did indeed lead to more institutions crossing $50 billion: There were 33 such banks in calendar year 2021. Pasadena, California-based East West Bancorp and San Juan, Puerto Rico-based Popular joined through organic growth. Some institutions, like North Carolina-based First Citizens Bancshares, joined through M&A.
There have also been transactions among institutions that were already on the list — the list is getting bigger, and there are more frequent changes to the roster in recent years. The subset of SIFIs with more than $250 billion in assets has also grown, if slower. In 2016, there were eight banks with more than $250 billion in assets; in 2021, there were 10.
But the regulatory environment has changed under President Joe Biden. In response, regulators may make it harder for the next big bank deal to get approved.
“[O]ur approval of such mergers could increase financial stability and [too big to fail] risks,” read a May 2022 speech from Acting Comptroller of the Currency Michael Hsu about potential changes to how bank merger applications are considered. “These risks give me significant pause, and are ones I would need to consider very carefully before approving a large bank merger.”
• Kiah Lau Haslett, managing editor of Bank Director
A version of this piece appeared in the recently released first quarter 2023 issue of Bank Director magazine. Read the rest of the magazine here or learn more about subscribing here.