A proposed merger between US banking giants BB&T and SunTrust cleared another hurdle this week as lawmakers questioning the companies' chief executives showed little interest in holding up the deal.
If approved by regulators the combined bank,to be called Truist, will be the largest U.S. bank merger since the 2008 financial crisis.
Democrats on the legislative US House Committee on Financial Services Committee questioned BB&T CEO Kelly King and SunTrust CEO William Rogers on how the merger would impact branch closures and jobs, and the quality of service for the combined bank’s customers, but stopped short of any calls to block the deal.
However, committee chair Maxine Waters, a California Democrat raised concerns that the $66 billion deal was “too big to manage” and said the merger would make the new bank larger than Countrywide and Washington Mutual, two banks that failed during the crisis.
“I’m concerned that if this merger goes forward it will create another mega-bank that is too big to manage and poses a risk to our financial system,” Waters said.
However, Rogers denied that the combined bank would be too big to fail. “With this merger, bigger doesn’t mean riskier,” he said.
Several other Democrats suggested that big mergers don’t attract sufficient regulatory scrutiny. “The regulators seem to be acting only as rubber stamps by simply approving every merger that comes before them,” said Carolyn Maloney, a Congresswoman from New York.
King defended the deal by saying that it has become increasingly challenging for banks like BB&T and SunTrust to compete with larger institutions.
He said the merger will allow the banks to compete, and to make a greater investment in technology for customers. “We are competing against very large Wall Street firms and they have the scale and capacity, particularly in technology,” he said.
The planned union was announced on June 12 as a “merger of equals”. Both BB&T and Sun Trust have said they expect to receive regulatory approvals by the end of the year. The deal would create the sixth-largest bank in the US by assets and deposits.
The new Charlotte, North Carolina-based bank is expected to have about US$442 billion in assets and $324 billion in deposits. The head office will house around 2,000 employees, although plans have been outlined to save around $1.6 billion post-merger, by eliminating jobs and overlapping branches.
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