Federal Reserve Expands Presumed Exceptions to Financial Stability Analysis: The Federal Reserve Increased Significantly the Transaction-Size and Firm-Size Thresholds at Which a Merger or Acquisition Proposal is Presumed Not to Present Material Financial Stability Concerns

Sullivan & Cromwell LLP - March 17, 2017
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In its order  approving People’s United Financial, Inc.’s acquisition of Suffolk Bancorp, the Board of Governors of the Federal Reserve System (“FRB”) revised the presumption it will apply when analyzing whether a proposed bank acquisition transaction would result in greater or more concentrated risks to the stability of the United States banking or financial system.  A 2012 order  approving the acquisition of ING Bank, fsb by Capital One Financial Corporation first established the FRB’s presumption that a transaction that involves an acquisition of less than $2 billion in assets or results in a firm with less than $25 billion in total assets would not raise material financial stability concerns.  In the People’s United order, the FRB revised this presumption to apply to a transaction that involves an acquisition of less than $10 billion in assets or results in a firm with less than $100 billion in total assets, absent evidence that the transaction would result in a significant increase in interconnectedness, complexity, cross-border activities or other risk factors.