18 Hoosier Banker December 2015 DIRECTORS / SENIOR MANAGEMENT In merger and acquisition transactions, buyers and sellers should both take care to ensure compliance with regulatory requirements prior to applying for merger approval. Failure to do so may put the acquirer in the position of having to withdraw the application. The regulatory penalty box. The Bank Merger Act1 requires an analysis of the managerial resources and future prospects of the merging entities, compliance with anti-money-laundering laws, and meeting the convenience and needs of the community to be served. Although the law does not explicitly prohibit the approval of a transaction for noncompliance, in practice the regulators typically will not approve a transaction with an outstanding enforcement action or regulatory compliance issue facing the buyer. This has become known as the “regulatory penalty box,” because acquirers are not allowed to participate in merger transactions until these issues have been resolved. Sellers facing noncompliance issues are not necessarily placed into the regulatory penalty box, provided that the buyer is capable of addressing the noncompliance issues without harming the buyer. M&T and Hudson City merger. The approval by the Board of Governors of the Federal Reserve System (Board) of the merger of M&T Bank Corp. (M&T) and Hudson City Bancorp Inc. (Hudson City) M&A Transactions: Avoiding the ‘Regulatory Penalty Box’ About the Author Michael J. Messaglia, a partner with Krieg DeVault LLP, Indianapolis, serves on the firm’s executive committee and formerly chaired the financial institutions practice group. His areas of practice include financial institutions, general corporate matters, joint ventures, mergers and acquisitions, and taxation. Messaglia has been elected to “Indiana Super Lawyers” years 2007-15, was named to the Indianapolis Business Journal “Forty Under Forty” list and was recognized by Chambers USA as a Leader in the Field of Corporate Mergers and Acquisitions. He earned a bachelor’s degree from the University of Notre Dame and a JD from the Notre Dame Law School. The author can be reached at 317-238-6249, email: mmessaglia@ kdlegal.com. Krieg DeVault LLP is a Diamond Associate Member of the Indiana Bankers Association. IS YOUR MERCHANT SERVICE PROGRAM RELEVANT? Jim Fisher • 888.311.7248 ext. 108 • jfisher@apsolutions.net • Are YOU maximizing your Revenue Stream? • Are YOU confidently using your program as an Acquisition & Retention Tool? • We will consult with YOU to tailor a Turn-Key Solution! The Partnership Approval Payment Solutions, Inc has been selected as the “Preferred Service Provider,” for IBA for merchant services/payment processing. APS will collaborate with bank partners to tailor a flexible program that will complement the bank’s goals and business model. APS offers a turn-key solution to bank partners with no liability or underwriting responsibilities while still providing back office support. Most importantly, APS maximizes non-interest revenue stream back to its bank partner and helps solidify existing relationships. Jim Fisher earned his BS in Business Administration from the University of Evansville and his MBA from the University of Southern Indiana. Jim has applied his 14 years’ of experience and in depth knowledge in the financial services industry. He joins Approval Payment Solutions as the Regional Director of Agent Bank Relationships for the Midwest. Jim Fisher, Director of Agent Banks (MW) The time to discuss your current scenario and needs is NOW! 1 12 U.S.C. § 1828(c)
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