The Federal Deposit Insurance Corporation is proposing a broad restructuring of its bank-merger review framework, seeking to replace portions of a process long criticized for uncertain timelines with a more explicitly tiered system tied to the size, complexity and risk profile of individual transactions.

The FDIC Board of Directors approved the notice of proposed rulemaking on September 17. The agency said the changes are intended to modernize its review of transactions governed by the Bank Merger Act and make the process faster and more predictable while continuing to apply the statutory factors Congress requires banking regulators to consider.

The proposal is particularly consequential for state nonmember banks supervised by the FDIC. According to an analysis published by Skadden, those institutions account for roughly 2,700 of approximately 4,500 operating U.S. banks and savings associations. For that segment of the industry, the proposal could alter both the preparation required before announcing a transaction and the amount of regulatory timing risk that must be built into merger agreements.

A central feature of the proposal is a more structured set of processing clocks. The FDIC would generally have 21 days after receiving a merger application to tell the applicant in writing what additional information is necessary for the filing to be considered substantially complete. The applicant generally would then have 30 days to provide the requested information.

If the FDIC does not identify deficiencies within the 21-day period, the application would be treated as substantially complete as of its original receipt date. That distinction matters because the proposed rapid, expedited and standard review periods would begin once the application is substantially complete.

The mechanism is designed to address one of the most persistent uncertainties in regulated dealmaking: an application can formally be filed while the practical regulatory clock remains difficult for the parties to measure because supervisors continue seeking information. Establishing a specific completeness process could give banks and their advisers a clearer starting point for estimating regulatory approval dates and negotiating outside closing deadlines.

At the fastest end of the new framework, the FDIC would create a category of de minimis merger transactions eligible for rapid processing and streamlined filing requirements. Certain qualifying transactions, including some corporate reorganizations, could be submitted through a simplified letter filing and deemed approved in as few as five business days, assuming applicable conditions are met and the U.S. Attorney General does not raise a competition objection.

The rapid-processing category would distinguish very small or structurally limited transactions from combinations that raise broader competitive, supervisory or financial-stability questions. The FDIC’s stated rationale is that regulatory resources and filing burdens should more closely correspond to the risks presented by the transaction rather than imposing essentially the same procedural structure across deals with materially different characteristics.

The proposal also would broaden the FDIC’s existing expedited-processing framework. Under current rules, an eligible acquiring institution can qualify for expedited treatment in certain cases when the assets being acquired do not exceed 10% of the acquirer’s assets. The proposal would increase that threshold to 25%, potentially moving a larger universe of acquisitions into the accelerated track.

For qualifying corporate reorganizations that are eligible for expedited processing but do not meet the de minimis criteria, the FDIC generally would be expected to act within 30 days. Other eligible transactions receiving expedited treatment would generally retain a 45-day processing period.

Standard applications would receive more explicit outer timeframes than under the existing process. The proposal contemplates general processing periods of 90 or 150 days depending on transaction characteristics. A 90-day review would generally apply where the resulting institution has less than $50 billion in assets and completion is not dependent on approval from another federal banking regulator.

The FDIC could extend those processing periods in extenuating circumstances, but the proposal would impose limits. The corresponding maximum periods would generally be 180 days and 270 days. By setting both ordinary processing targets and outside limits, the agency is seeking to reduce the open-ended timing risk that can complicate financing, integration planning and merger agreements.

The proposed overhaul extends beyond timing. It also would revise the way the FDIC conducts its initial analysis of competitive effects. Bank-merger competition analysis has historically placed substantial weight on deposit shares and the Herfindahl-Hirschman Index, or HHI, within defined geographic banking markets.

The FDIC is proposing to broaden that calculation to better reflect changes in how consumers and businesses obtain financial services. Its initial competitive screen would incorporate deposits of banks and thrift institutions while also considering centrally booked deposits and shares held by credit unions. The agency’s position is that those adjustments can provide a more complete picture of competitive conditions than a framework based largely on traditional bank branches and locally booked deposits.

The proposal would establish a competition safe harbor using thresholds associated with longstanding bank-merger analysis. Absent an objection from the Department of Justice, the FDIC would generally not deny a transaction on competitive grounds where the post-merger HHI in each relevant geographic market is 1,800 or less, or where the transaction increases the HHI by less than 200 points. Corporate reorganizations also would fall within the proposed safe-harbor structure.

Transactions outside those parameters would not automatically be rejected. Instead, the FDIC could examine additional evidence, including alternative geographic-market definitions and merger-specific factors that could mitigate apparent competitive concerns. The agency has indicated that this analysis may be especially relevant in rural markets, where a combination of two local institutions could, depending on the facts, create a stronger competitor to larger regional or national institutions serving customers through branches or digital channels.

The proposal therefore could change the initial competitive profile of some transactions without removing antitrust review. Competition remains an explicit statutory element of Bank Merger Act analysis, and the Department of Justice retains a role in evaluating the competitive effects of banking combinations.

The FDIC also is proposing a more defined framework for assessing financial-stability risk. The plan would create circumstances in which a transaction could qualify for a safe harbor indicating that it does not present a financial-stability concern.

Among the proposed criteria are transactions involving institutions outside specified categories of the largest and most systemically significant banking organizations, acquisitions in which the target insured depository institution has less than $20 billion in consolidated assets, certain qualifying corporate reorganizations involving targets below that threshold, and de minimis transactions.

Deals falling outside the safe harbor would remain subject to a broader analysis. Factors would include the resulting institution’s size, the availability of substitute providers for critical products and services, interconnectedness with the U.S. banking system, contribution to financial-system complexity and the extent of cross-border activities. The FDIC also would examine how the transaction changes the institution’s risk profile and whether the combination could support financial stability, including situations involving an institution at risk of failure.

Another proposed change addresses transactions the FDIC considers a “merger in substance.” Instead of relying principally on a qualitative facts-and-circumstances determination, the agency would establish a more concrete asset-based standard. Under the proposal, a transaction or series of transactions occurring over a rolling 12-month period could be treated as a merger in substance where an institution directly or indirectly acquires 80% or more of another institution’s assets.

The move toward an explicit threshold could be important for transactions structured as asset purchases rather than traditional statutory mergers. Banks and advisers would have greater visibility into when a transaction is likely to trigger the FDIC’s merger-review requirements, although the final rule and its application would determine the practical boundaries of the standard.

The FDIC is also proposing reductions in several procedural burdens associated with public notice and comments. De minimis transactions would no longer carry a public-comment period under the proposed framework. For corporate reorganizations that do not qualify as de minimis, the comment period generally would decline to 15 days from 30 days.

The number of required newspaper notices also would fall from three to two, and the proposal would narrow the number of communities in which publication is required. Those changes could reduce administrative costs and eliminate waiting periods for transactions that the agency views as posing relatively limited risks.

At the same time, the proposal would clarify circumstances under which adverse public comments can cause an application to lose expedited treatment. The FDIC would signal that removal from expedited processing should be relatively uncommon and tied to allegations sufficiently serious to affect analysis of the statutory Bank Merger Act factors. Adverse comments or Community Reinvestment Act protests would need support from supervisory records or other available information before they would justify shifting a transaction out of expedited review.

The proposal also contains a separate requirement for significant asset transfers by FDIC-supervised institutions. A bank generally would have to provide prior notice and receive a non-objection from the FDIC before completing a single transaction, or related transactions with the same counterparty or its affiliates, that increase the institution’s size by at least 25% over a rolling 12-month period, unless the transaction is already subject to another FDIC review or approval requirement.

According to Skadden’s analysis, the proposed significant-asset-transfer framework would broadly align the FDIC’s approach with the Office of the Comptroller of the Currency’s treatment of substantial asset changes at national banks and federal savings associations. Non-objection requests generally would be processed within 30 days, with a maximum of 90 days if the review is extended.

The proposal arrives after several years of changes in federal bank-merger policy. The FDIC adopted a new merger policy statement in 2024, then rescinded it in 2025 and restored the earlier framework as an interim measure while undertaking a broader review. The September 2026 proposal is the agency’s attempt to move from that interim position to a more comprehensive regulatory structure.

FDIC Chairman Travis Hill has emphasized processing speed as a central concern. According to remarks reported alongside the proposal, average time from receipt of a merger application to final agency action declined from 107 days in 2023 and 2024 to 80 days in 2025 and 64 days so far in 2026. The proposed rule would seek to turn part of that administrative improvement into explicit regulatory deadlines rather than leaving processing speed dependent primarily on agency practice.

The proposal nevertheless remains subject to public comment and possible revision. Banking organizations, community groups, state regulators, consumer advocates, antitrust specialists and other interested parties can address issues including the appropriate thresholds for rapid processing, treatment of credit unions in competition calculations, rural-market analysis, public-comment procedures and the balance between faster reviews and supervisory scrutiny.

For banks considering strategic combinations, the most immediate implication is not automatic approval of more mergers but potentially greater visibility into the regulatory path. Defined completeness determinations, processing categories, safe harbors and outer deadlines could make regulatory timing easier to incorporate into valuation, due diligence, capital planning and merger agreements.

That predictability can have direct financial consequences. Long regulatory reviews can expose deals to changes in interest rates, funding costs, credit conditions, deposit trends and market valuations. They can also prolong uncertainty for employees and customers and delay planned technology migrations, branch consolidation and expense reductions. Shorter and more measurable review periods could therefore affect both transaction execution risk and the economics used by boards to evaluate proposed combinations.

The Bank Merger Act’s substantive requirements, however, would remain central. The FDIC would continue to evaluate competition, financial and managerial resources and future prospects, convenience and needs of affected communities, effectiveness in combating money laundering and potential risk to the stability of the U.S. banking or financial system. The proposed framework changes how those reviews are processed and, in several areas, how the statutory factors are analyzed; it does not remove the factors themselves.

The FDIC will accept comments for 60 days following publication of the proposed rule in the Federal Register. Until the agency reviews that feedback and adopts any final rule, the September 17 action represents a proposed restructuring rather than a completed change to the merger-approval regime.