Fed approves Citizens acquisition of New Jersey-based Investors
The Federal Reserve has approved Citizens Financial Group’s $3.5 billion acquisition of Investors Bancorp in Short Hills, New Jersey.
The Fed’s board of governors approved the deal by a 4-0 vote, but said citizens will need to participate in the 2023 stress tests to recalculate its capital buffer of resistance.
The Fed imposed a similar condition in early March when it approved M&T Bank’s acquisition of People’s United Financial.
The Citizens had $188.4 billion in assets as of Dec. 31, and the investor deal would push the Providence, Rhode Island company to $214.9 billion in assets.
As it has between $100 billion and $250 billion in assets, Citizens is subject to a two-year stress test cycle. Because the company is participating in this year’s cycle, it would have had the option of opting out of next year’s cycle had it not been for the Fed’s decision.
This year’s round of stress tests will not include the effects of the Investors Bancorp acquisition, according to the Fed.
Federal banking regulators are reviewing their merger approval processes after the White House issued an executive order last summer encouraging closer scrutiny of consolidation deals.
Maxine Waters, House Financial Services Committee Chair, D-California, asked the agencies in December to establish a moratorium on approving mergers that would result in a bank holding companies with more than $100 billion in assets until the policy review is completed.
For Citizens, securing regulatory approval for the deal is a major step in gaining traction in North East markets.
After concluding the agreement for the investors, which was announced in July 2021Citizens will have a top-10 deposit share in the New York metro area, according to the company.