The Federal Reserve and the Federal Deposit Insurance Corp. (FDIC) approved BB&T's $28 billion acquisition of SunTrust on Tuesday, allowing the two banks to move forward with their plans to form the sixth-largest U.S. bank, a combined entity called Truist.
The regulatory agencies approved the merger on the condition that the banks divest 30 branches and more than $2.4 billion in deposits to mitigate the competitive effects of the deal. The Fed also issued a consent order against SunTrust for unfair and deceptive practices, regarding "misleading or inaccurate statements" the bank made to business customers from 2013 to 2017 regarding the operation and billing of add-on products.
BB&T and SunTrust expect the deal to be completed by Dec. 6, the banks said in a joint statement.
With green lights from the Fed and the FDIC, BB&T and SunTrust have cleared the final hurdles on their path to pursue what their CEOs have referred to as "a merger of equals."
Once merged, Truist is expected to have assets totaling approximately $451 billion.
The banks are well on their way to satisfying the merger's conditions. The banks announced this month that SunTrust would sell 30 branches to First Horizon Bank to satisfy the Department of Justice's antitrust concerns.
First Horizon will assume approximately $2.4 billion in deposits for a deposit premium of 3.4%, and will purchase about $410 million in loans. That deal is expected to close early next year.
Additionally, SunTrust has ended the practices raised in the consent order and has repaid about $8.8 million in fees to customers over the past three years. BB&T agreed, as a condition of the merger, to comply with the enforcement action and implement procedures to verify and provide additional refunds if required, the Fed said in its release Tuesday.
"We are pleased to have received regulatory approval to merge two strong companies with complementary business models and a high level of cultural alignment," BB&T Chairman and CEO Kelly King said in a statement. "We'll be even better together for our clients, teammates, communities and shareholders." King will serve as chairman and CEO of Truist.
The potential impact of the proposed deal spawned a House Financial Services Committee hearing in July. King and SunTrust Chairman and CEO Bill Rogers faced questions from panel members who expressed concerns that the combined bank would result in branch closures and consolidations.
The CEOs of both banks said the deal would allow the new Truist entity to invest in more technology to help it remain competitive.
The deal, which the two banks first announced in February, will be the largest bank merger since the 2007-08 financial crisis.