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UPDATE 1-Zions Bancorp files petition to lose 'systemically important' tag

(Adds background on "SIFI" status, CEO quote, details about restructuring)

Nov 20 (Reuters) - Zions Bancorp on Monday said it would file a petition with the Financial Stability Oversight Council to challenge its "systemically important" status, a label that triggers heightened oversight, and forces banks to hold more capital.

Salt Lake City, Utah-based Zions also said it would simplify its corporate structure by merging the parent company into its banking business.

The systemically important financial institution (SIFI) designation, or "too big to fail," is given by the Financial Stability Oversight Council (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," Zion Chief Executive Harris Simmons said. (http://reut.rs/2zWQzsE)

Wall Street bankers have been lobbying for regulatory relief under the business-friendly administration of Republican President Donald Trump.

Last week, a bipartisan group of U.S. senators reached a tentative deal to cut the number of banks labeled systemically risky, in a major step forward for efforts to roll back regulations enacted following the 2008 financial crisis. (http://reut.rs/2zXxEhw)

The deal would exempt banks with less than $250 billion in assets - including BB&T, SunTrust Banks and American Express - from heightened regulatory scrutiny, and could redraw the domestic U.S. banking landscape by cutting costs and unleashing a wave of mergers and acquisitions.

The current threshold starts at $50 billion.

Zions is the first bank to openly petition the FSOC to remove its SIFI designation.

The financial services provider expects to initiate the filings before the end of the year. Sullivan & Cromwell LLP will represent the company in this matter.

(Reporting By Aparajita Saxena in Bengaluru; Editing by Martina D'Couto)