Sullivan & Cromwell Discusses “Day One” Market Reactions to Bank Mergers

There has recently been a pick-up in bank merger and acquisition activity that likely reflects both the increased importance of scale in the banking industry, particularly in the technology area, and regulatory and legislative developments that reduce certain obstacles to approval of bank merger transactions.  Nonetheless, the immediate negative market reaction that has greeted the announcement of several recent mergers may discourage other banks from considering sensible consolidation transactions.  Not only purchasers, but sellers, may be reluctant to engage in transactions, notwithstanding their strong business and financial merits, if concerns over the “day-one” market reaction play an outsized role in … Read more

Sullivan & Cromwell discusses Senate Regulatory Relief Proposal: Banking Committee Chairman Releases Discussion Draft of “The Financial Regulatory Improvement Act of 2015”

Yesterday afternoon, Senate Banking Committee Chairman Richard Shelby (R-AL) released a discussion draft of “The Financial Regulatory Improvement Act of 2015” (the “Discussion Draft”). This proposed legislation would significantly amend certain aspects of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”), in particular the current regulatory framework for designating and regulating so-called systemically-important financial institutions, or “SIFIs.” In addition, the 216-page Discussion Draft would substantially broaden the Dodd-Frank safe harbor for “qualified mortgages” and includes a number of other notable provisions relating to the regulation of insurance companies, the structure and operation of the Federal Reserve System, and … Read more

Sullivan & Cromwell discusses Additional Concentration Limits on Large Financial Companies

On May 8, 2014, the Board of Governors of the Federal Reserve Board (the “FRB”) issued a notice of proposed rulemaking (the “Proposed Rule”) implementing the financial institutions concentration limit provision in new Section 14 of the Bank Holding Company Act of 1956 (the “BHCA”), which was added to that statute by Section 622 of the Dodd-Frank Act. Section 622 generally prohibits financial companies from consummating business combinations if, after giving effect to the consummation, the total consolidated liabilities of the resulting financial company would exceed 10 percent of the aggregate consolidated liabilities of … Read more