Orders issued under Bank Holding Company Act - Legal Developments - Allied Irish Banks P.L.C. to acquire share of M&T's subsidiary banks

Federal Reserve Bulletin,  May, 2003  by Robert DeV. Frierson

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Competitive Factors

The Bank Merger Act and section 3 of the BHC Act prohibit the Board from approving a proposal that would result in a monopoly or be in furtherance of a monopoly. (13) The acts also prohibit the Board from approving a proposal that would substantially lessen competition in any relevant banking market unless the anticompetitive effects of the proposal in that banking market are clearly outweighed in the public interest by the probable effect of the proposal in meeting the convenience and needs of the community to be served. (14)

M&T and Allfirst compete directly in seven banking markets. (15) The Board has reviewed carefully the competitive effects of the proposal in each of these banking markets in light of all the facts of record, including the number of competitors that would remain in the markets, the relative share of total deposits in depository institutions controlled by M&T and Allfirst in the markets ("market deposits"), (16) the concentration level of market deposits and the increase in this level as measured by the Herfindahl-Hirschman Index ("HHI") under the Department of Justice Merger Guidelines ("DOJ Guidelines"), (17) and other characteristics of the markets.

Consummation of the proposal would be consistent with Board precedent and the DOJ Guidelines in all relevant banking markets. After consummation of the proposal, one market would remain unconcentrated and six markets would remain moderately concentrated as measured by the HHI. The Department of Justice has reviewed the proposal and advised the Board that its consummation would not likely have a significantly adverse effect on competition in any relevant banking market. In addition, no banking agency has indicated that the proposal raises competitive issues. Based on these and all the facts of record, the Board concludes that consummation of the proposal is not likely to result in any significantly adverse effects on competition or on the concentration of banking resources in the banking markets noted above or in any other relevant banking market.

Financial, Managerial, and Other Supervisory Factors

The Bank Merger Act and section 3 of the BHC Act also require that the Board consider the financial and managerial resources and future prospects of the organizations involved in a proposal as well as certain other supervisory factors under the BHC Act. (18) The Board has considered carefully the financial and managerial resources and future prospects of M&T, Allfirst, and their respective subsidiary banks and other supervisory factors in light of all the facts of record, including comments received on the proposal, reports of examination and other confidential supervisory information assessing the financial and managerial resources of the organizations, and information provided by M&T and Allfirst. Based on all the facts of record, the Board concludes that considerations relating to the financial and managerial resources and future prospects of the organizations involved are consistent with approval, as are the other supervisory factors that the Board must consider under section 3 of the BHC Act.