Big bank deals are taking longer to close: Janney

A new report from Janney Montgomery Scott shows that it is taking much longer for big bank acquisitions to make their way through the regulatory approval process.

The percentage of deals that took more than 250 days to close has increased to 18% this year from 10% in 2021. 

Acquisitions with a deal value of more than $500 million have taken, on average, 260 days to close this year. That’s up from 44% from 2021. 

Janney Montgomery Scott chart

The timing for deals valued between $100 million and $500 million rose by roughly 20%, to about 180 days. Deals with valuations of $100 million or less have taken less time to close in 2022 than they did a year earlier. 

“We have seen larger deals taking longer to close given tougher regulatory scrutiny,” Brian Martin, a Janney analyst, wrote in a note to clients. 

“Notably, little impact has yet been seen on the timing to close smaller deals, though industry experts believe increased scrutiny could trickle down to smaller bank deals over the next 12-18 months,” Martin added. 

The results are telling, given the recent announcement by acting FDIC Chairman Martin Gruenberg that he wants federal banking regulators to conduct a comprehensive review of how bank mergers are evaluated.

TD Bank announced earlier this week that it plans to buy First Horizon in Memphis, Tenn., in a deal valued at $13.4 billion. The companies said they are targeting a Nov. 27 closing date. 

If the transaction does not close before Nov. 27, First Horizon shareholders will receive an additional 65 cents per share, on an annualized basis, for the period from that date through the day immediately prior to the closing.