Merger to create one of U.S.’ largest lenders
Two large banks in the southeastern United States announced Thursday that they plan to combine, in what would be the first big bank merger since the 2008 crisis and would create the country’s sixth-largest lender.
BB&T said it planned to buy SunTrust Banks for about $28 billion in stock. If the transaction is consummated, the merged banks, with $442 billion in assets, would be based in Charlotte, N.C., and operate under a new, as-yetundisclosed name.
The deal is intended to create a bank that is large enough to compete against the country’s largest lenders: Wells Fargo, Bank of America and JPMorgan Chase, which cemented their dominance with large acquisitions amid the financial crisis.
The combination of BB&T, with headquarters in Winston-Salem, N.C., and SunTrust, based in Atlanta, would create a Southeast juggernaut and allow the new institution to save money by shutting side-by-side bank branches and cutting overhead costs. Indeed, the banks are likely to shed deposits and branches in some cities to pass muster with federal regulators.
In general, bank mergers tend to benefit shareholders and executives, but they translate into lost jobs and reduced competition, which hurts customers through higher prices and worse terms for banking products and services.
BB&T and SunTrust executives insist that will not happen in this case because, while they plan to eliminate lots of jobs, they will plow the savings into technological innovations that will foster greater competition with the nation’s largest banks.
Analysts and investors have long said the U.S. banking industry is ripe for consolidation. But the anticipated wave of mergers never took place, in part because many executives feared that getting much bigger would subject them to tougher financial regulations and extra government scrutiny.
Now, though, the Trump administration and its appointees at the Federal Reserve have eased regulations and signaled a relaxed approach with the country’s biggest banks.
The industry will closey watch how regulators react to the BB&TSunTrust deal, analysts said.
The deal would bring the combined bank’s assets to well over the $250 billion threshold that, under the 2010 Dodd-Frank Act, mandates that lenders adhere to stricter capital requirements and closer regulatory scrutiny.