The Federal Reserve has approved M&T Bank’s application to acquire Bridgeport, Connecticut-based People’s United, the central bank announced late Friday afternoon.
The two banks last month extended until June 1 the timeline to complete the $7.6 billion deal, which would expand M&T’s footprint in New England and boost its asset total to roughly $216 billion.
M&T, which is on a two-year stress test cycle, will receive a new stress capital buffer this year, the Fed said. However, a recalculation will be required for 2023 because this year's test will not include the effects of the acquisition.
The timing of the Fed’s sign-off raised eyebrows at Better Markets.
“This is becoming a disturbing pattern that undermines the credibility of the Federal Reserve. It opens the question — what is it trying to hide by releasing such important information at a time when it will get the least attention, media coverage, and scrutiny?” Phillip Basil, the nonprofit’s director of bank policy, said in a press release, noting that when the Fed green-lighted three other bank deals in December, the notice also came late on a Friday afternoon. “Such end-of-week, late-in-the-day announcements are a disservice to the public and beneath the proper role of the Fed."
Basil added that the merger approval "highlights the need for the Fed to follow the lead of the [Federal Deposit Insurance Corp.] and the Department of Justice in requesting public feedback on sensible reforms to the review process, which simply must be much more transparent."
Consolidation in the banking industry, Basil asserted, reduces financial products and services to families, including low-income individuals, small businesses and communities of color.
President Joe Biden in July issued an executive order requiring the Justice Department, Fed, FDIC and Office of the Comptroller of the Currency (OCC) "to provide more robust scrutiny" of the deals.
The Fed is one of two regulators — along with the OCC — to call a virtual public hearing, set for Tuesday, to discuss U.S. Bank’s proposed $8 billion acquisition of MUFG Union Bank.
The central bank’s nod marks the final approval the M&T deal needed. State regulators in New York and Connecticut signed off on the acquisition in October. Shareholders of both banks approved the transaction last May, M&T said.
The M&T deal drew fire when M&T said last July it would cut 747 People’s United jobs, including 661 at the bank’s Bridgeport headquarters. M&T later pledged to retain at least 80% of the Connecticut bank’s workforce and employ at least 1,000 people in Bridgeport within a year of completing a systems conversion, according to American Banker.
