American Banker interviewed Manatt's Craig Miller, co-chair of the firm's Banking and Financial Services practice, for an article on the impact that Basel III implementation could have on community banks.
American Banker reports that Basel III will be phased in for smaller banks starting in January. While most of those institutions are ready to meet the new capital standards, some uncertainty remains over the ultimate impact of those requirements. Banks will likely endure rising regulatory costs, and industry observers said Basel-related pressure could help push some to sell.
Miller told the publication that some management teams may decide that they can get a better premium by selling, rather than raising more capital. It is much harder for community banks to earn a healthy profit compared to a decade earlier, as margins remain tight and competition for the best loans is fierce.
Basel III will not force M&A on its own, but "it is one of many components that will lead to the long awaited increase in consolidation," Miller said.
Read the article here.