Kroll Bond Rating Agency Publishes Comment on Surging Bank Acquisitions; Stable to Positive for Ratings

NEW YORK--()--Kroll Bond Rating Agency (KBRA) releases comment: Surging Bank Acquisitions Stable to Positive for Ratings.

The report makes the following key points:

  • Bank merger and acquisition activity, driven by rising interest rates and equity market valuations, has surged since the U.S. presidential election.
  • Higher stock prices have improved the “currencies” of acquiring banks and motivated target banks to sell at more attractive valuations compared with just a few months ago.
  • The rating implications generally have been stable to positive for rated banks
  • Acquiring banks will benefit from improved share in core markets, increased product diversification, and/or expansion into economically vibrant contiguous markets.
  • Pro forma capital ratios, asset quality and other financial metrics are expected to remain solid.
  • Integration risks are always present in acquisitions, but are largely mitigated by deep merger experience by management teams of acquirers.
  • For target banks, the rating implications are generally positive as acquired banks will be part of a more diversified and oftentimes higher rated institution.

The ratings are based on KBRA’s Global Bank and Bank Holding Company Rating Methodology published on February 19, 2016.

Please click here to view the report.

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About Kroll Bond Rating Agency

KBRA is registered with the U.S. Securities and Exchange Commission as a Nationally Recognized Statistical Rating Organization (NRSRO). In addition, KBRA is recognized by the National Association of Insurance Commissioners (NAIC) as a Credit Rating Provider (CRP).

Contacts

Analytical Contacts:
Kroll Bond Rating Agency
Joe Scott, Managing Director
(646) 731-2438
jscott@kbra.com
or
Chris Whalen, Senior Managing Director
(646) 731-2366
cwhalen@kbra.com

Contacts

Analytical Contacts:
Kroll Bond Rating Agency
Joe Scott, Managing Director
(646) 731-2438
jscott@kbra.com
or
Chris Whalen, Senior Managing Director
(646) 731-2366
cwhalen@kbra.com