Changes in Bank Merger and Acquisition Policies: New Opportunities and Challenges

The landscape of bank mergers and acquisitions (M&A) in the United States is undergoing significant changes following new policy announcements. These changes are set against a backdrop of historical skepticism from regulators and the Department of Justice (DOJ), which had previously cast a chill over large and mid-sized bank mergers. Recent leadership shifts, however, signal a newfound openness to M&A activity, with a focus on fostering competition and delivering customer benefits.

Regulatory Shifts and New Guidelines

In recent years, the U.S. banking sector has seen a rigorous approach to merger regulations, with the 2024 policy statements increasing scrutiny on bank M&A. However, in May 2025, the Federal Deposit Insurance Corporation (FDIC) opted to rescind the 2024 policy statement, marking a pivotal shift. Simultaneously, the Office of the Comptroller of the Currency (OCC) reinstated expedited processing for eligible mergers and acquisitions, reintroducing a 15-day pathway for approvals.

The revised 2023 Merger Guidelines have replaced those from 1995, introducing a stricter Herfindahl-Hirschman Index (HHI) threshold for market concentration changes. The new threshold for concern is a change greater than 100 points, down from the previous 200 points. These guidelines emphasize the importance of considering market realities and the community impact of mergers, allowing the DOJ to challenge mergers on qualitative grounds.

Focus on Competition and Technological Innovation

The current administration is actively welcoming new bank merger activities with an emphasis on competition and technological innovation. This shift encourages banks to align their transactions with the priorities of banking agencies. The DOJ now evaluates mergers based on deposit concentration and service levels, with anticipated branch closures potentially affecting M&A approvals.

Moreover, the FDIC and OCC have revised their M&A review policies to stress the importance of anti-money laundering (AML) and sanctions compliance. Deficiencies in these areas could impede approval for mergers, underscoring the increased regulatory focus on compliance.

Streamlining Processes Amid Criticism

The OCC's decision to rescind the bank merger rule on May 8, 2025, has restored expedited merger reviews and applications, aiming to ease the process for banks. This move also rescinded the 2024 final rule on merger procedures. The OCC's authority, as governed by the Bank Merger Act (BMA), requires oversight of business combinations based on factors like market competition, public convenience, and systemic risk.

Despite these changes, the industry has criticized the increased complexity and cost associated with the new regulations. An Interim Final Rule has been introduced to restore a streamlined application process, with the OCC seeking to reduce the burden imposed by the 2024 Final Rule. The FDIC has also rescinded its 2024 Statement of Policy, a step towards simplifying the bank merger process.

Navigating a Shifting Landscape

As the U.S. bank merger policy undergoes significant shifts, the focus remains on reducing merger complexity while ensuring that transactions align with market competition and public interest. The OCC's rescission of previous rules follows Senate disapproval, reflecting the evolving regulatory landscape. With the Final Rule set to take effect in January 2025, banks must navigate these new opportunities and challenges as they pursue mergers that promise to enhance their competitive standing and deliver customer benefits.

In conclusion, the changes in bank M&A policies present both opportunities and obstacles for financial institutions. As regulators balance competition, innovation, and market impact, banks must adapt to the revised guidelines and streamlined processes to achieve successful mergers and acquisitions in this new era.