Monday, November 3, 2014

Finding Synergies in the Strangest Places



I previously discussed the CIT-One West transaction. This post further explores the unintended subsidy benefits for a limited group of regional banks flowing from banking regulations. There are perhaps a group of 30+ regional banks who could obtain the net benefits from achieving Too Big To Fail (TBTF) status. Basically, they obtain funding cost advantages that could outweigh any regulatory burdens associated with becoming TBTF. This synergy-subsidy allows them to out bid other bidders and still have a value adding transaction. See the Attached .

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