CIT Group's purchase of OneWest Bank should spur more lenders with less than $100 billion in assets to consider acquisitions, Chief Executive Officer John Thain said.
"There should be more consolidation creating banking institutions under $100 billion," CIT's Thain, 60, said in a phone interview Monday after the deal was completed. "Hopefully it will encourage more people to be willing to entertain the process."
CIT's $3.4 billion takeover of OneWest, one of the biggest deals in the banking industry since the financial crisis, was agreed to last year and approved by regulators in July. While the transaction faced opposition from advocacy groups expressing reservations about creating another too-big-to-fail lender, investors have viewed it as a sign that larger banks deals could accelerate.
"The process still took us a year and regulators have very stringent requirements in who they will allow to make acquisitions," Thain said. "They are very conscious of not creating any institution that may be in fact too big to fail. But I think it's pretty clear that institutions under $100 billion do not present that kind of a problem."
CIT's acquisition of OneWest, a Pasadena, California-based lender backed by billionaires John Paulson and George Soros, creates a bank with more than $65 billion in assets. It becomes the first systemically important financial institution, or SIFI, created since the financial crisis, he said. Banks that are deemed systemically important face some of the toughest regulatory requirements, including undergoing annual stress tests.
Bank deals have slowed since the financial crisis amid concerns about drawing additional scrutiny from regulators. M&T Bank Corp.'s takeover of Hudson City Bancorp, the largest pending bank merger, has been delayed four times since it was announced in 2012 as regulators continue to examine M&T's anti- money-laundering controls.
Anti-Wall Street rhetoric and calls to break up big banks remain popular among politicians today because the economic situation of many middle-class Americans hasn't gotten better, Thain said.
"Improving the economic conditions for the middle class is going to be one of the most important things in this campaign," said Thain, who donated $200,000 to the super-PAC supporting Republican presidential candidate Jeb Bush. "Candidates need to focus on how do we improve the state of the middle class, how do we get some wage growth."