March 28, 2019

Brown Demands BB&T and Suntrust Answer Merger Impact on Employees, Consumers and Communities

WASHINGTON, D.C. — U.S. Sen. Sherrod Brown (D-OH) – ranking member of the U.S. Senate Committee on Banking, Housing, and Urban Affairs – is calling on BB&T Corporation and Suntrust Banks, Inc. to provide information on the impact the banks’ proposed merger will have on the employees, customers and communities the banks serve.  BB&T Corporation and SunTrust Banks, Inc. filed a merger application with the Federal Reserve Board and the Federal Deposit Insurance Corporation (FDIC).

“This announcement is concerning because it comes shortly after Congress provided significant giveaways to institutions with under $250 billion in assets.  The merger also deserves scrutiny because it would be of a magnitude that we have not seen since the financial crisis, creating the sixth largest bank in the country,” Brown wrote.

 

Sen. Brown also tells the banks’ CEOs, “You did not provide information on how the proposed merger would affect employees, bank branches, or the communities your banks serve.  Specifically, you did not describe how innovation, automation, overlapping footprints, and operational efficiency would impact the banks’ workforce.  Nor did you describe how an increased focus on technology would influence brick and mortar branches.  You did not mention the consequences to consumers and small businesses of reduced competition in shared markets.  You also failed to make clear the anticipated effects of the merger on the people who rely on your banks in their daily lives.”

 

Read the full letter below.

 

 

 

March 28, 2019

 

 

Kelly S. King                                                              William H. Rogers Jr.

Chair and CEO                                                           Chair and CEO

BB&T Corporation                                                     SunTrust Banks, Inc.

200 West Second Street                                              SunTrust Plaza

P.O. Box 1250                                                            303 Peachtreet Street Northeast

Winston-Salem, NC 27102-1250                               Atlanta, GA 30308-3201

 

Dear Messrs. King and Rogers:

 

BB&T Corporation and SunTrust Banks, Inc. recently announced their intention to merge, and the merger application has now been filed with the Federal Reserve Board and the Federal Deposit Insurance Corporation.  This announcement is concerning because it comes shortly after Congress provided significant giveaways to institutions with under $250 billion in assets.  The merger also deserves scrutiny because it would be of a magnitude that we have not seen since the financial crisis, creating the sixth largest bank in the country.

 

It is critical that we understand this merger’s impact on employees, consumers and the communities you serve.  When announcing the proposed merger, your banks touted the combined entity’s large size, the location and core functions of a new headquarters and current home markets, the expected dividends and other returns to shareholders, and the potential for increased technological innovation.  The banks also noted that they expected the proposed merger to deliver approximately $1.6 billion in annual net pre-tax cost savings, primarily from facilities, information technology, shared services, retail banking, and third-party vendors. 

 

You did not provide information on how the proposed merger would affect employees, bank branches, or the communities your banks serve.  Specifically, you did not describe how innovation, automation, overlapping footprints, and operational efficiency would impact the banks’ workforce.  Nor did you describe how an increased focus on technology would influence brick and mortar branches.  You did not mention the consequences to consumers and small businesses of reduced competition in shared markets.  You also failed to make clear the anticipated effects of the merger on the people who rely on your banks in their daily lives.

 

Accordingly, I request more information to understand the proposed merger’s impact on your employees, customers, and communities you serve.  Please answer the following questions by April 15, 2019.

 

1.      What are the effects of the proposed merger on the banks’ workforce?  How many SunTrust and BB&T employees will be retained by the combined entity?  What efforts will be made to relocate or reassign employees whose jobs are eliminated or modified by the merger? 

2.      How will the approximately $1.6 billion in annual cost savings in the categories listed above be allocated?  How will the cost savings from “facilities” and “retail banking” be generated? How much of that will be directly reinvested in the communities you serve?

3.      How will legacy information technology systems supporting core banking functions be integrated and at what cost? How will this affect the bank’s other proposed investments in technology?

4.      SunTrust and BB&T currently compete in many of the same markets.  What changes in the provision and costs of financial services are anticipated for the banks’ current customers, and how will these changes be achieved?

5.      How many brick and mortar branches will be eliminated, immediately and over the next ten years?  Approximately how many branches in rural and LMI areas?

6.      Which products or services, if any, will be eliminated after the merger?  What are the combined entity’s plans to expand into new product lines or services?

7.      What steps will the combined entity take to maintain close ties to customers and communities within the existing bank footprints?

8.      What will be the benefits of the proposed merger to families and small businesses?

 

In your announcement, you highlighted enormous benefits to your shareholders.  The benefits of the merger to employees, and working families and their communities, are less clear.  Your responses to this letter will be helpful in evaluating the full effect of this proposed merger.

 

                                                                 Sincerely,

 

 

 

 

                                                                 Sherrod Brown

                                                                 Ranking Member

 

 

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