Zions announces restructuring, will petition to lose 'too big to fail' status

Zions Bancorporation of Salt Lake City announced last week that it will streamline its corporate structure by merging the parent company into its banking subsidiary, ZB NA, or one of its subsidiaries. The resulting entity will bear the name Zions Bancorporation, NA and will continue to operate with its existing local brand names and management teams in markets throughout the western United States.

Concurrently with the simplification of its corporate structure, Zions said it would file a petition with the Financial Stability Oversight Council (FSOC) to challenge its “systemically important” status, a label that triggers heightened oversight and forces banks to hold more capital.

The systemically important financial institution (SIFI) designation — known as “too big to fail” — is given by the FSOC to companies whose failure can pose a threat to the global financial system.

“There is much evidence that a consensus exists among Washington policymakers that a straightforward regional bank of Zions’ size and lack of complexity does not warrant the ‘systemically important’ appellation,” said Harris Simmons, Zions' CEO.

Wall Street bankers have been lobbying for regulatory relief under the business-friendly administration of Republican President Donald Trump. Zions is the first bank to openly petition the FSOC to remove its SIFI designation.

“Historically, Zions Bancorporation operated as a multi-bank holding company with separately chartered banks in each of several western states,” Simmons continued. “In late 2015, we consolidated our seven banks under a single national bank charter as part of a larger effort to simplify our business operations. We now conduct essentially all our business under that single national bank charter. We believe the logical next step in rationalizing and simplifying our business is to eliminate our holding company, an entity which is no longer necessary in serving customers and providing for the needs of investors.” 

Zions said it expects to initiate the filings and other actions required in connection with this project, including filing a proxy statement and other proxy materials with the Securities and Exchange Commission and scheduling a shareholder vote to approve the combination, before the end of the year. “Assuming a favorable result from the FSOC, receipt of required regulatory approvals and an affirmative vote by shareholders, Zions expects to consummate the transaction within six months from the date the appeal request is filed with the FSOC, provided that Congressional hearings are not held under Section 117(c)(2)(b)(ii) of the Dodd-Frank Act. Zions is represented in this matter by the law firm of Sullivan & Cromwell LLP,” the bank said in a release last week.

Zions Bancorporation has total assets exceeding $65 billion and operates under local management teams and distinct brands in 11 western states including Arizona, California, Colorado, Idaho, Nevada, New Mexico, Oregon, Texas, Utah, Washington and Wyoming.