The merger between two banking giants from North Carolina and Georgia was approved by two federal banking agencies Tuesday – but it came at the cost of divestiture of branches and north of $2.4 billion in deposits, and a consent order against one of the behemoths.
The Federal Reserve said its board met Tuesday and approved the merger of BB&T Corporation of Winston-Salem, N.C., to merge with SunTrust Banks, Inc. of Atlanta, Ga. The Federal Deposit Insurance Corp. (FDIC) Board, meeting separately, also approved the merger.
The resulting new bank will operate under BB&T’s charter and will be called Truist Bank, the FDIC said. Truist Bank will be headquartered in Charlotte, NC.
The Fed said that it evaluated the merger application “under the factors it is required to consider under the Bank Holding Company Act, including the financial and managerial resources of the companies, the convenience and needs of the communities to be served by the combined organization, and the competitive and financial stability impacts of the proposal.”
However, the Fed said its approval is conditioned on several actions, including that BB&T must divest 30 branches and more than $2.4 billion in deposits “to mitigate the competitive effects of the merger,” the Fed said.
Additionally, the Fed said it had issued a consent order against SunTrust for unfair and deceptive practices. “As detailed in the order, SunTrust made misleading or inaccurate statements between 2013 and 2017 to certain business customers about the operation and billing for certain add-on products,” the Fed said in a release.
The central bank said SunTrust had previously terminated the practices. ”Since 2016, (SunTrust) has repaid approximately $8.8 million in fees to customers,” the Fed said.
It added that as a condition of the merger, BB&T has committed that the resulting Truist Bank will comply with the enforcement action, including implementing procedures to verify the refunds and providing additional refunds, if required.
The Fed also said that it will not object to the updated capital plan submitted by BB&T to reflect the merger.
The FDIC pointed out that the transaction may be completed no sooner than 15 days after Tuesday’s approval and no later than six months after Tuesday, unless extended by the FDIC.