Senator Warren warns potential BNY merger with Northern Trust may violate federal banking laws

Senator Elizabeth Warren has warned BNY that its reported interest in a merger with Northern Trust could violate federal banking laws, saying any potential deal between the two large custody banks raises antitrust concerns.

Warren, the top Democrat on the Senate Banking Committee and a longtime big bank critic, told BNY CEO Robin Vince in a letter sent Tuesday that such a deal, which would combine the world’s largest custody bank with a major competitor, would pose major financial stability concerns, and asked for a briefing on the status of potential talks, as well as any ongoing discussions with regulators.

BNY declined to comment on the letter, and Northern Trust did not respond to a request for comment.

“Pursuing a merger that drastically consolidates a key market while supercharging the firm’s risk profile and systemic importance is irresponsible and may also violate federal banking laws,” she wrote in a letter seen by Reuters.

In June, The Wall Street Journal reported that BNY approached Northern Trust to express interest in a merger, although Northern Trust has said it wants to remain independent. BNY declined to comment on the original report.

Interest in potential deals between larger banks has been on the rise as regulators appointed by President Donald Trump have discussed refining the merger review process after the Biden administration was cool to transactions among larger firms.

But Warren said such a deal would result in an institution with a custodial services market share of over 30%, raising competition concerns and breaching antitrust law.

“Further entrenching its already-dominant market position would enable BNY to hike fees and increase prices, undermine its incentives to innovate, erode its customer service, and reduce the already-limited choices available for institutional clients looking for custodial services,” she wrote.

Source : Reuters