The Federal Reserve Board on Tuesday approved the application by BB&T Corp. of Winston-Salem, North Carolina, to merge with SunTrust Banks, Inc. of Atlanta, Georgia.
The merged entity will be called Truist Financial Corp. Upon completion of the merger, Truist will be the sixth largest U.S. commercial bank, serving approximately 10 million U.S. households and a range of business clients, with leading market share in many of the most attractive, high-growth markets in the country.
BB&T and SunTrust said they expect to complete the merger on Dec. 6, 2019. The conversion to the Truist brand will occur over the next two years.
The Federal Reserve Board’s 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.
Also, the board issued a consent order against SunTrust for unfair and deceptive practices. According to 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. SunTrust previously terminated these practices and, since 2016, has repaid approximately $8.8 million in fees to customers. As a condition of the merger, BB&T has committed that the resulting bank will comply with the enforcement action, including implementing procedures to verify the refunds and providing additional refunds, if required.
BB&T common shares will become Truist common shares and SunTrust common shareholders will receive 1.295 Truist common shares for each share of SunTrust common stock they own at the closing. Following the closing, Truist common shares will trade on the NYSE under the symbol TFC.
The regulatory approval process also included approvals from the Georgia Department of Banking and Finance and the North Carolina Commissioner of Banks. The U.S. Department of Justice completed its antitrust review earlier in November as part of an agreement to divest branches in North Carolina, Virginia and Georgia. No further regulatory approvals are required to complete the merger.
“We are pleased to have received regulatory approval to merge two strong companies with complementary business models and a high level of cultural alignment. We’ll be even better together for our clients, teammates, communities and shareholders,” said BB&T Chairman and CEO Kelly King, who will serve as chairman and CEO of Truist.
“We will build upon our mission- and purpose-driven cultures and work to ensure a positive experience for our clients,” said SunTrust Chairman and CEO Bill Rogers, who will be president and chief operating officer of Truist prior to succeeding King as CEO in September 2021. “Following months of thoughtful collaborative planning, we are prepared to begin a successful integration.”
A new corporate headquarters will be established in Charlotte, N.C.
Clients will continue to be served through their respective BB&T or SunTrust branches, websites, mobile apps, financial advisors and relationship managers as systems are integrated.
Rep. Maxine Waters (D-Calif.), chairwoman of the House Financial Services Committee, criticized the approval noting that the several days before her committee’s public hearing on the merger, the banks agreed to a three-year $60 billion community benefits plan with community groups that committed financial resources to low-and-moderate income communities.
“While bank regulators placed some conditions on the merger, they should have gone further and made the promises in the community benefits plan binding on the new bank,” Waters said.
She also said she is concerned about the merger “creating yet another megabank that is too big to manage.”
According to the Federal Reserve ruling, based on deposits, the combined organization would become the sixth largest U.S. financial institution, with 2.5 percent of the total deposits, which is below the 10 percent limitation set by Congress.
BB&T is one of the largest financial services holding companies in the U.S. with $236.8 billion in assets and market capitalization of approximately $40.9 billion as of Sept 30, 2019. BB&T offers a range of financial services including retail and commercial banking, investments, insurance, wealth management, asset management, mortgage, corporate banking, capital markets and specialized lending. Based in Winston-Salem, N.C., BB&T operates more than 1,700 financial centers in 15 states and Washington, D.C.
SunTrust Banks Inc. has two business segments: consumer and wholesale. Its flagship subsidiary, SunTrust Bank, operates a branch and ATM network throughout the Southeast and Mid-Atlantic states, along with 24-hour digital access. Certain business lines serve consumer, commercial, corporate and institutional clients nationally. As of Sept. 30, 2019, SunTrust had total assets of $227 billion and total deposits of $168 billion. The company provides deposit, credit, trust, investment, mortgage, asset management, securities brokerage and capital market services.
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