A sign at the entrance to a House Financial Services Committee room in Washington, D.C. (Image: Shutterstock).
The proposed merger of BB&T and SunTrust may create a megabank that is too large to manage and could pose a risk to the nation's financial system, House Financial Services Chairwoman Maxine Waters (D-Calif.) warned Wednesday.
"I am concerned that this proposed merger would ultimately not be beneficial for consumers, or the communities that these two banks currently serve," she said at a hearing on the proposed merger.
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The two banks announced their $66 billion merger in February; it would create the sixth-largest bank in the U.S. The banks plan to call the new company Truist.
However, Truliant Federal Credit Union has filed suit to try to stop the banks from using that name, saying it is too similar to its own name. The banks have not responded to that lawsuit.
And that's not the only concern that credit unions have expressed about the proposed merger.
"While size should not be the sole factor in increased scrutiny, Congress is right to examine the riskiness and impact on consumers, community institutions and competition that such a merger would have," Carrie Hunt, NAFCU's executive vice president and general counsel wrote, in a letter to the committee this week.
CUNA President/CEO Jim Nussle earlier this year said that when banks merger, the winners are the institutions' shareholders.
Waters said that she had asked the FDIC and Federal Reserve to delay approval of the merger until the committee had time to examine it.
Committee ranking Republican Patrick McHenry of North Carolina said that big-bank mergers are the result of Dodd-Frank and the hundreds of new financial regulations financial institutions must follow.
"It is my colleagues on the other side of the aisle that have made the largest banks larger while suffocating smaller institutions," he said.
During the Wednesday hearing, officials from the two banks attempted to allay the fears of House members, pointing out the benefits that the combined institutions could provide to the communities they serve.
"The combined company will maintain a culture of delivering superior customer service, preserve the community banking model and maintain close ties to our communities," Kelly King, chairman/CEO of the BB&T Corporation told the committee. "Both of our institutions are strong, and together we can create tremendous value for our clients, associates, communities, and shareholders."
"While the merger will increase the total asset size of the legacy entities, such assets of the combined company will continue to be comprised of lower risk small- and middle market business loans, farm loans, student loans and mortgage loans," King added.
And William Rogers Jr., the chairman of SunTrust Banks said the merger could increase competition.
"The combined BB&T/SunTrust entity will actually increase competition by creating a stronger regional bank that reduces concentration of systemic risk at the top of the market," he said.
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