Daily Management Review

M&A deals of US banks peaked heights of 2009


08/19/2016


US regulators have introduced a set of rules to avoid collapse of systemically important credit institutions. However, smaller banks have to merge to cope with costs of meeting these requirements.



www.thebluediamondgallery.com
www.thebluediamondgallery.com
The largest banks in the country are actually not allowed to make big deals, yet regional banks are free to unite. Mergers and acquisitions among US banks last year amounted to about $ 18 billion, which is highest since 2009.

This Thursday, United Bankshares Inc. reached an agreement to purchase Cardinal Financial Corp. to expand its presence in Washington. The acquisition price is approximately $ 912 million. In the past month, FNB Corp. from Pittsburgh agreed to acquire Yadkin Financial Corp. for $ 1.4 billion to expand its presence in the Carolinas.

Bankers say M&A is the only way to deal with the increased regulatory burden. According to SEC, low interest rates are increasing pressure on the banks, and are reducing their profits.

Of course, it is unlikely that even the current rate transactions would lead to creation of new financial giants, like in series of mergers in the 1990s, which created giants such as Citigroup Inc. and Bank of America Corp.

This is partly obliged to the fact that these financial giants with assets in excess of $ 1 trillion left other market participants far behind. Many small banks would not seek to increase assets to more than $ 10 billion, $ 50 billion or $ 250 billion as it would cause additional regulatory supervision in accordance with rules adopted after the financial crisis.

In April, Chairman of the Federal Deposit Insurance Corporation (FDIC) Martin Gruenberg said that the smaller banks consolidate due to a combination of slow economic growth and low interest rates. With regard to the rules, he said, regulators try to adapt supervisory requirements, so that the costs would not hit small lending institutions.

The number of transactions continues to grow, as interest rates begin to rise, said Bill Hickey of Sandler O'Neill. "We see activity in the second half of this year, which is will be bigger than in the second half of last year - he said. - If shape of the yield curve does not change significantly, I think that 2017 will be an important year for bank M&As." 

source: bloomberg.com






Science & Technology

A Way To Unlock Wannacry Without Ransom Found By French Researchers

China to introduce face recognition payment system

Clues To Ransomware Worm's Lingering Risks Found By Security Experts

Nasdaq Brings ‘Analytics Hub’ To Provide Enhanced Trading Experience

Through XFi Launch, Comcast Moves Closer To Home Connectivity

Is SWIFT really safe?

Uber To Take The Skies To Fly Its Cars

Virtual reality market reaches point of disillusion

Newly Developed ‘Artificial Photosynthesis’ Device Converts CO2 Into Car Fuel

30,000 Fake Accounts Cracked Down Upon In France by Facebook

World Politics

World & Politics

Germany and France set up to stabilize the eurozone

Greek parliament adopts new austerity measures

Academic Says, Trump's Downfall Is Kept At Bay By White Identity Politics

Germany Will Not Sign Any Statement On ‘China's Belt and Road Forum’ Without Equal Rights On Free Trade

The Fear Of Renewed Large-Scale Cyber ‘Ransomeware Threat’ On Monday Grip The World

ASEAN's Next 50 Years Could Be Shaped By These Three Ideas

US to expand the airline electronics ban

South Korea chooses new President