THURSDAY FEBRUARY 18, 2021 VOL. 186 No. 32 AMERICANBANKER.COM Follow us on Twitter @AmerBanker Eugene Ludwig to step 5 down as Promontory CEO Most wanted The former comptroller of the currency, who founded the consulting firm known SVB Financial increased its offer for Boston Private for its roster of ex-regulators, will hand over multiple times before agreeing to buy the company for leadership of day-to-day activities to an operating committee as he pursues other $900 million projects. Page 6 Offer amount See story on page 2 Biden extends mortgage 6 forbearance and $1B foreclosure protections While the Mortgage Bankers Association hailed the move, some experts say it could $800M $900M negatively impact housing inventory. Page 7 $827M $760M Citi loses bid to $600M $662M recoup massive mistake $625M 7 in surprise ruling $400M Citigroup unexpectedly lost a legal battle to recover half a billion dollars it sent Revlon lenders, after the embarrassing blunder $200M forced it to answer to regulators and tighten Aug. 11 Aug. 18 Sept. 7 Nov. 23 Jan. 4 its internal controls. Page 7 Source: The companies (dates are approximate) Bank of America, Citi 8 trim CEO compensation for 2020 in year of restraint Bank of America and Citigroup trimmed dailybriefing A renewed call to compensation for their chief executives 3 break up big banks in 2020, a year in which banks exercised In a book that was decades in the making, restraint in compensating employees as the Fed governor backs revamp retired law professor Art Wilmarth tells the pandemic ravaged the economy. Page 8 1 of bank merger review process story of the Glass-Steagall Act — its origins, Gov. Michelle Bowman said the agency’s demise and aftermath. He also makes a case Goldman Sachs pledges analysis of certain deals should weigh the for restoring the separation between banks 9 $25 million to historically competitive threats posed by technology and securities firms, arguing that erecting Black colleges companies and nonbanks. Page 2 such a barrier would reduce systemic risk Goldman’s move follows similar initiatives in and weaken the big banks’ recent months by the biggest U.S. financial How joint venture political power. Page 3 firms. Page 8 2 negotiations led to a $900 million bank merger Morgan Stanley creates Western Alliance to buy The leadership at Boston Private Financial 4 bot that does junior 10 large mortgage lender Holdings wanted to establish a wealth analysts’ work — faster The Arizona company will pay $1 billion for management partnership with SVB Financial The AskResearch virtual assistant helps the the parent of AmeriHome Mortgage, which Group — but ended up striking a deal to sell company’s employees quickly find specific manages a $99 billion mortgage servicing the company to SVB instead. information buried in proprietary research portfolio. Page 9 (See chart above.) Page 2 to facilitate their work with clients. It’s a creative solution to data-retrieval problems many banking companies face. Page 4 THURSDAY FEBRUARY 18, 2021 AMERICANBANKER.COM PAGE 2 company too much control over a specific The $116 billion-asset SVB, the Santa Clara, M&A market. The Justice Department has also Calif., parent of Silicon Valley Bank, agreed asked stakeholders for input on whether it on Jan. 4 to buy the $10 billion-asset Boston would be “helpful to have joint guidance Private for $900 million in cash and stock. By Fed governor from the Antitrust Division and the banking sale price, the deal ranks among the 10 biggest agencies.” bank acquisitions announced since late 2019. backs revamp Bank regulators, including the Fed, Talks between the companies began nearly review merger applications for management a year ago and initially centered on plans to expertise, capital and safety measures, and establish a wealth-management joint venture. of bank other elements. They also examine the It took SVB nearly five months to present its impact on market competitiveness and can first proposal to buy Boston Private, according merger review refer concerns to the Justice Department. to a regulatory filing tied to the proposed merger. Boston Private also fielded inquiries from process M&A two other potential acquirers: a similar-sized bank with a “significant” wealth management By Hannah Lang business and an unnamed wealth February 16, 2021 How joint management and investment banking firm. WASHINGTON — The Federal Reserve Each company floated offers that were below should revamp its process for reviewing bank venture what SVB was willing to pay. mergers to address the competitive threat The filing also disclosed that while Boston posed by tech companies, Fed Gov. Michelle Private kept pushing SVB to increase its offer it Bowman said Tuesday. negotiations did not seek competing offers. “The board’s framework for banking The lack of an auction process is notable antitrust analysis hasn’t changed substantially led to a $900 because a big investor has been pressuring over the past couple of decades,” Bowman Boston Private for more details about said in remarks given for an American the decision to sell to SVB. HoldCo Asset Bankers Association event. “I believe we million bank Management in New York, which owns about should consider revisions to that framework 4.9% of Boston Private’s stock and is trying to that would better reflect the competition that merger get five nominees elected to the company’s smaller banks face in an industry quickly board, has expressed disappointment with the being transformed by technology and By Paul Davis deal’s value. nonbank financial companies.” February 16, 2021 The filing makes it clear that Boston Private The central bank is currently assessing The leadership at Boston Private Financial did not consider itself a seller prior to its the framework, Bowman said, months after Holdings wanted to negotiate a joint venture discussions with SVB. In fact, the company the Department of Justice said in September with SVB Financial Group — but ended up had spent the years before the pandemic that it would look to overhaul its bank merger striking a deal to sell the company to SVB considering potential acquisitions that would review process to account for new trends in instead. help build its wealth management business. the financial sector. “We have engaged in conversations and received feedback from community banks Established 1836 One State Street Plaza, 27th floor, New York, NY 10004 about the Board’s competitive analysis Phone 212-803-8200 AmericanBanker.com framework and its impact on their business strategies and long-term growth plans,” she Editor in Chief Alan Kline 571.403.3846 Copy Editor Neil Cassidy 212.803.8440 said. “We are in the process of reviewing our Managing Editor Dean Anason 770.621.9935 approach, and we are specifically considering Reporters/Producers the unique market dynamics faced by small Executive Editor Bonnie McGeer 212.803.8430 Laura Alix 860.836.5431, Kate Berry 562.434.5432 community banks in rural and underserved Washington Bureau Chief Joe Adler 571.403.3832 areas.” Executive Editor, Technology Miriam Cross 571.403.3834 After the Justice Department announced Penny Crosman 212.803.8673 Jim Dobbs 605.310.7780 its review, industry participants and M&A BankThink Editor Rachel Witkowski 571.403.3857 experts speculated that possible antitrust- John Heltman 571.403.3847, Allissa Kline 716.243.2679 Community Banking Editor Paul Davis 336.852.9496 related policy changes could favor smaller Hannah Lang 571.403.3855 banks, and could even slow consolidation. Contributing Editor Daniel Wolfe 212.803.8397 John Reosti 571.403.3864, Gary Siegel 212.803.1560 The Justice Department sought feedback Digital Managing Editor on its process to determine whether a Christopher Wood 212.803.8437 Kevin Wack 626.486.2341 proposed merger would give the combined For up to date and complete coverage go to AmericanBanker.com THURSDAY FEBRUARY 18, 2021 AMERICANBANKER.COM PAGE 3 CEO Anthony DeChellis had preliminary SVB amended its offer on Nov. 13, proposing SVB’s offer eventually increased to $900 talks with the CEO of a similar-sized California a range of $740 million to $761 million, based million, and each board unanimously bank holding company in August 2019. But on Boston Private’s outstanding shares on Oct. approved the merger on Jan. 4. It was Boston Private’s board decided the other 31, with up to one-fifth of the purchase price announced later that day. bank, which was looking to fetch a market consisting of cash. The deal, which is expected to close in premium, wasn’t “a strong cultural or strategic The filing details the deliberations Boston mid-2021, priced Boston Private at 115% of its fit,” the filing said. Private’s board had in the final months of tangible book value. Boston Private’s discussions with SVB 2020 as it weighed the proposals from SVB, DeChellis, who will become CEO of began in March 2020, with talks between overtures from other financial institutions and private banking and wealth management at DeChellis and Greg Becker, SVB’s president the prospects of remaining independent. Silicon Valley Bank when the deal closes, is and CEO, initially focused on a wealth Boston Private’s board determined during a set to receive a $700,000 annual salary and a management partnership and other strategic Nov. 18 meeting that SVB had complementary chance to earn an annual cash bonus of up to alliances. While the companies entered into businesses, strong financial performance $805,000, the filing said. He could also earn an a confidentiality agreement to exchange more and a stock price that had “significant further annual equity incentive valued at $1.5 million. information, each had a different agenda. upside potential,” the filing said. Still, directors He will also be eligible to receive service- and “At this time, SVB was focused on wanted a higher price.