American Banker, September 1, 2021, Regulators Are Rethinking Bank M&A Rules. It’s About Time
Any bank merger revision should also demonstrate that it would not create or sustain so-called banking deserts — communities that lack reasonable access to a bank branch. Having merging firms explain how they plan to address branch redundancies — and how those choices might affect communities that already have limited banking options — seems like important data for regulators to consider.
Banks could manage some of this themselves and make this process less onerous by engaging with vulnerable communities on their own. Although not part of the formal regulatory process, many banks and communities have entered into so-called community benefits agreements, which provide merging banks the opportunity to explain how the post-merger entity will meet its Community Reinvestment Act requirements. The agreements outline lending, investments and philanthropy strategies in low- and moderate-income neighborhoods affected by a merger. Since 2016, the National Community Reinvestment Coalition has facilitated the creation of CBAs worth $338 billion with 15 banking groups.