The largest merger of banks in the US since the 2007-08 financial crisis took place this week and more such industry consolidation is likely in the near future according to analysts and investors.
The deal is the merger of BB&T Corp and rival SunTrust Banks Inc and would be worth about $28 billion in stock.
According to the banks, the deal should come to a close by the end of the year. This deal would not have been possible, according to analysts, before the easing of the crisis-era regulations by the administration of President Donald Trump. The earlier regulations were aimed to increase the security of banks and thereby limited options for expansion.
According to analysts, this merger would put under pressure a number of other regional banks which could result in further restructuring of the industry.
"The BB&T/SunTrust merger will open more eyes on the potential for more sizable bank M&A to occur," wrote Jefferies analyst Ken Usdin in a client note.
At the World Economic Forum in Davos, Switzerland, the possibility of a new wave of bog consolidation in the banking industry was predicted by Bank of America Corp Chief Executive Brian Moynihan earlier this year.
The deal has however not been welcomed by everyone.
"This proposed merger between SunTrust and BB&T is a direct consequence of the deregulatory agenda that Trump and Congressional Republicans have advanced," said Maxine Waters, chairwoman of the House Financial Services Committee. "The proposed merger raises many questions and deserves serious scrutiny from banking regulators, Congress and the public to determine its impact and whether it would create a public benefit for consumers."
Yearly savings in expenditure to the tune of $1.6 billion by 2022 would result from the merger of the two banks and the emergence of eth resultant entity, said BB&T and SunTrust. The deal would also increase the ability of the new merged entity to make more investments in new technology to serve the demands of customers.
"The business has been changing and will be changing," SunTrust Chief Executive William Rogers said in an interview to a television channel. "This gives us the opportunity to be absolutely the most competitive bank."
A new name would be given to the new entity after the merger and it would have combined assets of $442 billion, loans extended of $301 billion and accumulated deposits of $324 billion. The size and reach of the new entity would give tough competition to U.S. Bancorp, which has assets worth about $467 billion.
The reach of the new merged entity would encompass the US East Coast and would have its headquarters in Charlotte, North Carolina. The new entity would also continue the operations of the two banks in their former home regions of Winston-Salem, North Carolina, and Atlanta, Georgia.
Analysts have for long believed that the two banks were natural partners in the industry.
According to Terry McEvoy, managing director at Stephens, both the also reported strong fourth quarter results last month and both the banks apparently does not have any pressure at least in the mid-term. "The end result of the transaction is a very powerful company in some of the best markets in the United States," he said.
(Source:www.news.abs-cbn.com)
The deal is the merger of BB&T Corp and rival SunTrust Banks Inc and would be worth about $28 billion in stock.
According to the banks, the deal should come to a close by the end of the year. This deal would not have been possible, according to analysts, before the easing of the crisis-era regulations by the administration of President Donald Trump. The earlier regulations were aimed to increase the security of banks and thereby limited options for expansion.
According to analysts, this merger would put under pressure a number of other regional banks which could result in further restructuring of the industry.
"The BB&T/SunTrust merger will open more eyes on the potential for more sizable bank M&A to occur," wrote Jefferies analyst Ken Usdin in a client note.
At the World Economic Forum in Davos, Switzerland, the possibility of a new wave of bog consolidation in the banking industry was predicted by Bank of America Corp Chief Executive Brian Moynihan earlier this year.
The deal has however not been welcomed by everyone.
"This proposed merger between SunTrust and BB&T is a direct consequence of the deregulatory agenda that Trump and Congressional Republicans have advanced," said Maxine Waters, chairwoman of the House Financial Services Committee. "The proposed merger raises many questions and deserves serious scrutiny from banking regulators, Congress and the public to determine its impact and whether it would create a public benefit for consumers."
Yearly savings in expenditure to the tune of $1.6 billion by 2022 would result from the merger of the two banks and the emergence of eth resultant entity, said BB&T and SunTrust. The deal would also increase the ability of the new merged entity to make more investments in new technology to serve the demands of customers.
"The business has been changing and will be changing," SunTrust Chief Executive William Rogers said in an interview to a television channel. "This gives us the opportunity to be absolutely the most competitive bank."
A new name would be given to the new entity after the merger and it would have combined assets of $442 billion, loans extended of $301 billion and accumulated deposits of $324 billion. The size and reach of the new entity would give tough competition to U.S. Bancorp, which has assets worth about $467 billion.
The reach of the new merged entity would encompass the US East Coast and would have its headquarters in Charlotte, North Carolina. The new entity would also continue the operations of the two banks in their former home regions of Winston-Salem, North Carolina, and Atlanta, Georgia.
Analysts have for long believed that the two banks were natural partners in the industry.
According to Terry McEvoy, managing director at Stephens, both the also reported strong fourth quarter results last month and both the banks apparently does not have any pressure at least in the mid-term. "The end result of the transaction is a very powerful company in some of the best markets in the United States," he said.
(Source:www.news.abs-cbn.com)
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