The
Minnesota Department of Commerce has rejected the sale of Lake Area Bank in
Lindstrom, Minn., to Royal Credit Union in Eau Claire, Wis.
The
agency determined that, in Minnesota, “a state-chartered bank is not authorized
to transfer its assets and liabilities to a credit union for the purpose of
consolidating or merging out of existence,” according to the Minnesota Bankers
Association.
Royal
agreed to buy the $424 million-asset Lake Area in August.
At least six states – either by law or agency intervention
– have stood in way of credit union-bank mergers.
The decision comes a month after lawmakers in Mississippi approved a law that would severely limit credit unions' abilities to buy banks in that state.
Would a deal involving a state-chartered credit union buying a federal-chartered bank affected by this type of ban?
ReplyDeleteGreat question. Since the agency singled out state-chartered banks I would assume (a dangerous word to use) that CUs could still try and buy a federally chartered bank in the state.
ReplyDeleteI am curious how many banks in Minnesota are federally chartered vs. state-chartered.
ReplyDeleteI used SNL to screen. Of 257 banks in MN, 51 are federally-chartered and 206 are state-chartered. There might be a reg loophole that a bank that would like to maximize shareholder value would convert to a federally-chartered first and sell to credit union (assuming the state would have no authority in this case).
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