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

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12/11/2024 20:01

(Adds BofA CEO quote on deals in paragraph 4, comments on
consolidation paragraph 10; adds PIX from banking conference)
    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. 
    Bank of America  BAC.N  CEO Brian Moynihan told a separate
conference that regulators should allow deals to go through. 
        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.
        Large regional banks such as US Bancorp  USB.N , Truist
Financial  TFC.N  and PNC Bank  PNC.N  are likely to be involved
in mergers or acquisitions, said Randal Quarles, founder of
Cynosure Group and former vice chair for supervision at the
Federal Reserve.
  
        The three banks did not immediately respond to requests
for comment.
  
        In April, PNC CEO William Demchak sent a letter to
regulators advocating for a merger policy that "is capable of
building challengers to the largest Global Systemically
Important Banks in the United States," a group known as G-SIBs. 
   
  

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