When investigating the role of regulatory capital in bank mergers and acquisitions (m&as) we finds that us targets are better capitalized than their acquirers and non-acquired peers and that us banks maintain higher capital levels than european banks. Thus, us banks strategically raise their capital levels to avoid regulatory scrutiny. Furthermore, more value is created for targets with high excess capital and in m&as involving targets with considerably higher excess-capital ratios than their acquirers. Thus, the excess regulatory capital hypothesis is supported. Finally, market prices reflect the influence that capital has on the probability of the merger's regulatory approval.