Risk management pitfalls in bank M&A

EXPECTATIONS FOR modest growth in the U.S. economy, regulatory burdens, customer demands and new technologies will continue to encourage smaller community and regional banks to consolidate in response to this shifting landscape. In spite of due diligence and best intentions, merger and acquisition a...

Full description

Saved in:
Bibliographic Details
Published in:BankBeat 2018-09, Vol.203 (10), p.25-35
Main Author: St Martin, Kris
Format: Article
Language:English
Subjects:
Bank acquisitions & mergers
Banking industry
Directors
Due diligence
Insurance policies
Liability insurance
Litigation
Nominations
Regional banks
Risk management
Settlements & damages
Stockholders
Women in banking
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:EXPECTATIONS FOR modest growth in the U.S. economy, regulatory burdens, customer demands and new technologies will continue to encourage smaller community and regional banks to consolidate in response to this shifting landscape. In spite of due diligence and best intentions, merger and acquisition activity invariably heightens the risk of liability and the threat of shareholder lawsuits that claim some degree of economic harm due to a merger. The acquiring bank typically takes responsibility for actions from the closing date going forward. [...]the acquired bank will often purchase a "tail" or "run-off" policy to protect its directors and officers for their actions occurring prior to the closing date.