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The federal agencies treat PE players as "slippery" characters, impose "draconian" limits on them and make the troubled European economy more appealing for bank deals, investor Ross says.
May 22 -
Daryl Byrd, the CEO of Iberiabank (IBKC) says a wave of bank mergers is inevitable and will be larger than expected. Rusty Cloutier, his counterpart at MidSouth Bancorp (MSL), says a lack of able buyers is miring consolidation.
May 21 -
Put aside the bellyaching about the disappointing deals market. Focus instead on creative deals, nontraditional acquisitions and the nuances of what can be done within current regulations and economic realities, experts will advise at American Banker's M&A conference Monday and Tuesday.
May 18
Wall Street may be the province of deal making but Washington still exerts a major hold.
That was clear during discussions on Tuesday among regulators, former regulators and industry officials about the impact that the Dodd-Frank Act and other regulations have on bank merger-and-acquisition activity.
Uncertainty caused by new rules, vacancies in leadership positions at regulatory agencies and new liquidity requirements has suppressed deal activity, panelists said during American Banker's M&A Symposium in New York. Banks have become more cautious because "you can measure risk but you can't measure uncertainty," said Mark W. Olson, co-chair of Treliant Risk Advisors.
Banks are worried because rules are still being written for Dodd-Frank and new requirements for liquidity and capital are still being implemented. Increased apital requirements make it more difficult for banks to earn returns and additional liquidity requirements means banks would have fewer assets that can be put to work, said John Dugan, formerly the Comptroller of the Currency and now a partner at Covington & Burling.
Banks are also concerned about the enforcement role that the Consumer Financial Protection Bureau will take. CFPB's impact — how the agency will regulate products that generate fees for banks, for example — is a topic consistently being discussed by banks, said said John F. Vogel, a deputy regional director of risk management for the Federal Deposit Insurance Corp.
Eventually these concerns will subside. Over time, the CFPB will develop a track record and banks will know what to expect, Vogel said. And once the rules for Dodd-Frank are finalized, banks may feel more certain about the future as it is unlikely there will be such a sweeping legislative change for many years.
"We are not going to see another legislative event like that for at least another decade," Olson said.
In a separate panel, a Federal Reserve official disputed comments that regulators are getting in the way of private equity firms interested in investing in banks.
Wilbur Ross, whose company, WL Ross & Co., has invested heavily in banks in recent years, said Monday at the symposium that the Fed and other regulators "
Amanda K. Allexon, senior counsel in the Fed's legal division, argued that the Fed has been trying to facilitate as many deals as it can with private equity firms and that it "gets a bad rap for discriminating against private equity.
"I think that the head of private equity funds see themselves as individuals making individual investments when really they are corporate investors," Allexon said. "Replace private equity fund with Wal-Mart and then see how you feel about them having a controlling influence over a depository institution."
Private equity firms often own or have interests in other commercial operations, like jewelry retailers and movie theaters, she added. The Bank Holding Company Act of 1956 generally prohibits bank holding companies from engaging in other nonbanking businesses.
"We can't pick and choose winners and losers that can have control," Allexon said. "We've been trying to hold really firm to the policies and procedures for that."
