Bank Mergers Will Continue Ramping Up. Here’s Why.
The era of bank consolidation shows little sign of petering out.
There have been 149 bank mergers announced so far this year, easily eclipsing the 119 deals announced in the whole of 2020, according to data compiled by Truist. And there are plenty more banks—particularly in the Southeast and Texas—that appear to be willing targets.
Bank mergers took a brief pause at the onset of the pandemic last year but have strongly rebounded. Regional and community-size banks alike realized they needed to boost their digital capabilities and are expanding their geographic footprint to compete with larger banks.
This year, U.S. Bancorp (ticker: USB) announced plans to buy MUFG Union Bank, M&T Bank (MTB) and People’s United Financial (PBCT) are merging, and Citizens Financial Group (CFG) has been on an acquisitive streak, snatching up both Investors Bancorp and the East Coast branches of HSBC Holdings (HSBC) in recent months. Goldman Sachs Group (GS), meanwhile, agreed to buy GreenSky (GSKY).
The pace of deal making—at least among the smaller banks—should continue even amid a tougher climate for mergers under the Biden administration. Much of the increased scrutiny surrounds so-called megadeals, or those in excess of $5 billion, according to a recent report from Deloitte. But when it comes to bank deals, there are several potential sellers in the sub-$1 billion range, according to Jennifer H. Demba, an analyst at Truist.
Expect to see more marriages—and you can take that to the bank.