Big bank deals could be spurred by Trump administration, executives say

Discover Financial Services

12/11/2024 16:31

By Tatiana Bautzer
       NEW YORK, Nov 12 (Reuters) - President-elect Donald
Trump's return to the White House could usher in a wave of bank
mergers and acquisitions as the administration appoints
regulators who are more open to approving larger deals,
financial executives and analysts said on Tuesday.
    The banking industry is expected to win big if Republican
regulators ease capital rules and merger approvals when they
replace the aggressive financial regulators of the Biden era.
    "I have to believe we are entering a moment where bigger
deals can be done," Mitchell Eitel, managing partner at law firm
Sullivan & Cromwell, told a banking conference in New York. 
    The regulators could become more receptive to larger
acquisitions, overturning recent perceptions that smaller deals
were more likely to be endorsed by officials. One key test case
will be Capital One Financial Group  COF.N 's $35.3 billion
agreement to take over Discover Financial  DFS.N .
    Larger regional banks should also be allowed to buy rivals
and get significantly bigger, creating more competition for
banking giants whose deposits have swelled in recent years. 
    "I think we’re going to see more activity, there’s a lot of
pent-up demand” for bank deals, said Tom Michaud, CEO of
investment bank Keefe, Bruyette & Woods. 
    Mid-sized banks typically improve their returns on capital
after deals increase their scale, he said. 
    "If we do nothing, we’re going to have four really big banks
that are going to be even bigger," Michaud said.

 (Reporting by Tatiana Bautzer, editing by Lananh Nguyen and
Nick Zieminski)
 ((tatiana.bautzer@tr.com; Mob: +1-646-2397968; Reuters
Messaging: tatiana.bautzer.thomsonreuters.com@reuters.net))