The Department of Justice has okayed the merger of two banking giants – provided they shed nearly 30 branches first.
The DOJ has announced that SunTrust Bank and BB&T have agreed to divest 28 SunTrust branches in North Carolina, Virginia and Georgia to resolve antitrust concerns arising from the banks’ proposed merger. The branches to be divested represent about $2.3 billion in deposits. The action will constitute the largest divestiture in a bank merger in more than a decade, according to the DOJ.
“Banks and the financial sector are at the hard of our economy,” said Assistant Attorney General Makan Delrahim of the DOJ’s Antitrust Division. “Today’s settlement ensures that banking customers across Virginia, North Carolina and Georgia will continue to have access to competitively priced products, including loans to small business, while preserving the investments in innovation and technology this merger is expected to generate.”
The banks have already found a buyer; First Horizon National Corp. has agreed to acquire all 28 branches, plus two more, BB&T announced. As part of the deal, First Horizon will assume about $2.4 billion in deposits for a deposit premium of 3.4% and purchase about $410 million in loans.
“First Horizon is excited to welcome new employees and customers to our family,” said Bryan Jordan, First Horizon chairman and CEO. “We are proud of the tradition of trust we have earned for more than 155 years, and look forward to working with BB&T and SunTrust to design a seamless onboarding experience.”
“This announcement marks another significant and required step toward the merger of equals between BB&T and SunTrust,” said Kelly King, chairman and CEO of BB&T. “We look forward to working with First Horizon to ensure a smooth transition for these branch teams and clients.”
BB&T and SunTrust announced the intended merger in February. The merger – which still needs approval from the Federal Reserve and the FDIC – would create the sixth-largest US bank.