BB&T: Post Dodd-Frank, Regional Banks Can Continue To Grow Only If They Build Up Scale

With Dodd-Frank regulations coming into play, banking is seeing a massive change. BB&T Corporation (NYSE: BBT) CEO Kelly King was on CNBC Tuesday to discuss how new banking regulations impact regional banks and the company’s plans for expansion.

New Regulatory Compliances: A Barrier For Growth

“We are in a new world of banking,” King said. “Post Dodd-Frank, it really is dramatically different in terms of the infrastructure costs that are involved in complying with the new regulatory requirements. Remember, Dodd-Frank requires 393 new rules; they have only rolled out 300, and it’s already massive.

“So, it requires huge amount of investments in backroom infrastructure – products, processes, systems – and therefore, scale becomes much more important today than it ever has in our business.”

Related Link: Regions Financial Corp. Releases Dodd-Frank Act Stress Test Results

He continued, “So, you can grow organically, but this is a relatively slow economy. And so what we are trying to do is put together a combination strategy of good, solid organic growth and then really good acquisition growth to build the scale we need and continue to expand our franchise on a good strategic basis.”

Building Up Scale

King was asked for his outlook on regional banks at this point of time. He replied, “It’s very good if you build the scale – and everybody has their own size number as to what’s okay. With our recent acquisition announced, we will be about $210 billion. So, we are the tenth largest U.S. bank; we think that will be pretty large.

“But we are up against banks that are $400 billion and $1 trillion, $2 trillion, and so we need more scale, but only if it makes us better,” King concluded.

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