Changes in Bank Merger and Acquisition Policies
Local banks anticipate further M&A activity in 2025, suggesting a positive outlook for regional consolidation and growth. The 2023 guidelines introduce a stricter Herfindahl-Hirschman Index threshold and emphasize technological innovation and compliance with Anti-Money Laundering standards. The bank completed its first acquisition since a merger in 2021, expanding its presence in the Georgia market.
The recent announcement of changes in bank merger and acquisition (M&A) policies marks a significant shift in the regulatory landscape, with new guidelines introduced to promote competition and customer benefits while ensuring compliance with banking agency priorities.
Regulatory Shifts and New Leadership
Historically, bank mergers and acquisitions have faced skepticism from regulators and the Department of Justice (DOJ), particularly concerning large and mid-sized banks, which had been effectively frozen out of M&A activities. However, the emergence of new leadership within regulatory bodies signals a change, showing openness towards M&A under specific conditions.
This shift in stance emphasizes the importance of competition and the tangible benefits for customers. Additionally, the new policies encourage technological innovation and ensure that transactions align with the overarching priorities of banking agencies. The current administration has notably expressed a welcoming attitude towards new bank merger activities.
Policy Changes and Increased Scrutiny
The 2024 policy statements introduced increased scrutiny of bank M&A activities, focusing on market realities, community impact, and the potential consequences of branch closures. In May 2025, the Federal Deposit Insurance Corporation (FDIC) rescinded the 2024 policy statement, while the Office of the Comptroller of the Currency (OCC) reinstated expedited processing for eligible mergers and acquisitions, allowing for a 15-day pathway for approvals once again.
The 2023 Merger Guidelines replaced those established in 1995, featuring a stricter Herfindahl-Hirschman Index (HHI) threshold, where a change greater than 100 points is now significant, compared to the previous threshold of 200 points. This adjustment aims to better reflect market realities and community impact, with the DOJ evaluating factors such as deposit concentration and service levels. Furthermore, the guidelines now allow for challenges on qualitative grounds.
Compliance and Technological Innovation
Revised M&A review policies from the FDIC and OCC highlight the importance of Anti-Money Laundering (AML) and sanctions compliance. Any deficiencies in these areas may impair approval for mergers. The new policies also place a strong emphasis on encouraging technological innovation within the banking sector, aligning transactions with the broader priorities of banking agencies.
These regulatory changes create an environment where banks are encouraged to pursue mergers and acquisitions that not only solidify their market position but also bring about advancements in banking technology and service delivery, ultimately benefiting customers.
Case Study: Banco BPM's Merger Exploration
Amid these policy changes, Banco BPM, Italy's third-largest bank, is actively exploring merger and acquisition deals. CEO Giuseppe Castagna has confirmed that multiple options are available, including potential partnerships with Banca Monte dei Paschi, Bper Banca, and Credit Agricole Italia. Although UniCredit withdrew its offer for Banco BPM, speculation regarding a tie-up between BPM and MPS has been revived.
Banco BPM's exploration of extraordinary operations is set to wait until the end of summer, with any acquisitions needing approval by regulators. The bank completed its first acquisition since a merger in 2021, expanding its presence in the Georgia market. Local banks anticipate further M&A activity in 2025, suggesting a positive outlook for regional consolidation and growth.