Takeaways
- Several Congressional aides and financial advocacy groups told Reorg M&A that the Congressional hearing on BB&T’s acquisition of Suntrust does not indicate a political risk to the deal. Rep. Maxine Waters, D-CA, will conduct the hearing on July 24 at 10 a.m. ET.
- However, the hearing, entitled The Next Megabank? Examining the Proposed Merger of SunTrust and BB&T, may cause greater scrutiny to any possible divestitures or packages of community commitments stemming from the potential new bank, two Congressional aides told Reorg M&A.
- One of those aides said the hearing could spark a public debate and mobilize opposition to the merger. The deal is the biggest bank merger since 2008.
- Community financial advocacy groups are hopeful the hearing will result in more concessions benefiting rural and low-income populations. Jen Giovannitti, president of the Claude Worthington Benedum Foundation, said she has met with BB&T bank officials to discuss the possibility of small business investment in rural areas.
An upcoming Congressional hearing examining BB&T’s acquisition of SunTrust to form Truist Bank does not indicate significant risk to the deal, but could signal greater scrutiny of potential divestitures and the need for enhanced community investment packages, two Congressionals aides told Reorg M&A.
Earlier this week, Rep. Maxine Waters, D-CA, who serves as chair of the Financial Services Committee, scheduled the hearing entitled
The Next Megabank? Examining the Proposed Merger of SunTrust and BB&T, for July 24 at 10 a.m. ET. Though details have yet to be announced, Congressional aides and others say that the hearing could shine a spotlight on community stakeholders’ concerns without derailing the banks’ plan to merge.
One of the Congressional aides who spoke to Reorg M&A also noted that the hearing could spark a public debate and mobilize more opposition to the merger. The deal is the largest bank tie-up in the U.S. since 2008 and has been the subject of criticism from rural community financial advocacy organizations that foresee potential harm in rural and low-income areas that already have limited choices for small business loans.
Jen Giovannitti, president of the Claude Worthington Benedum Foundation, previously critiqued the merger in a public
hearing before the Federal Reserve, FDIC and bank regulators from Georgia and North Carolina on April 25. According to Giovannitti, SunTrust closed all of its branches in West Virginia, while BB&T has closed 10 branches in the state - a trend Giovannitti called concerning in a conversation with Reorg M&A. “We know that when branches close and banks transition into a tech-driven platform, small business lending goes down,” she said.
Giovannitti said she is aiming for strong conditions to be imposed on the potential merged bank in order to protect small business lending, particularly through investing in the Community Development Financial Institutions Fund, or CDFI. Giovannitti said that she has discussed this particular concern with BB&T and the bank seemed open to the idea, but overall “there is not enough discussion on the impact the transaction will have on rural communities,” she said.
Al Pina, chair of the Florida Minority Community Reinvestment Coalition,
supported the merger in his testimony during a public hearing before the Federal Reserve in May, saying the merger will create more competition between large national players.
Commenting on the merger to Reorg M&A, Pina said that the upcoming Congressional hearing could force the banks to outline more details on the proposed entity’s new Community Reinvestment Act, or CRA, plan. “This hearing will also send a signal to all major banks that they must play by new rules on CRA investments after the past few years of attempts to minimize Frank Dodd,” Pina said. “This hearing has great symbolic value for minority and [low-to moderate income] communities.”
Reorg M&A’s previous coverage of this transaction can be found
HERE.
-- Kathryn Haake