Fed approves Citizens' acquisition of New Jersey-based Investors

The Federal Reserve has approved Citizens Financial Group’s $3.5 billion acquisition of Investors Bancorp in Short Hills, New Jersey.

The Fed’s board of governors approved the deal by a 4-0 vote, but said that Citizens will have to take part in 2023 stress tests in order to recalculate its stress capital buffer.

The Fed imposed a similar condition in early March when it approved M&T Bank's acquisition of People's United Financial.

Citizens had $188.4 billion of assets on Dec. 31, and the Investors deal would push the Providence, Rhode Island, company to $214.9 billion of assets.

Bloomberg News

Since it has between $100 billion and $250 billion of assets, Citizens is on a two-year stress testing cycle. Because the company is taking part in this year’s round, it would have had the choice to opt out of next year’s round if not for the Fed’s ruling.

This year’s round of stress testing will not include the effects of the Investors Bancorp acquisition, according to the Fed.

Federal banking regulators are reviewing their merger approval processes after the White House issued an executive order last summer encouraging more scrutiny of consolidation deals.

House Financial Services Committee Chair Maxine Waters, D-Calif., asked the agencies in December to establish a moratorium on the approval of mergers that would result in a bank holding companies above $100 billion of assets until the policy review was completed.

For Citizens, securing regulatory approval for the deal is a major step toward gaining more ground in Northeast markets.

After it closes the deal for Investors, which was announced in July 2021, Citizens will have a top-10 deposit share in the New York metro area, according to the company.