Partnerships / Acquisitions

Mergers Not A Priority For Big Bank CEOs

Mergers Not A Priority For Big Bank CEOs

Ever since BB&T and SunTrust merged for $28 billion in February, many industry analysts predicted it would start a trend of similar moves from other large banks. That hasn’t been the case, according to a report by Bloomberg.

“M&A is not on our minds at this point,” said KeyCorp Chief Executive Officer Beth Mooney. Another CEO, Steve Steinour, the head of Huntington Bancshares, said his organization is “not inclined to be proactive on bank transactions.” U.S. Bancorp also expressed that it is not interested.

Bank mergers make sense in theory – save costs by getting rid of overlaps and make more money available for other pursuits, like digital offerings.

Bigger banks also attract more customer deposits. Top lenders own a 45 percent share of deposits with only 19 percent of branches. Regionals have 14 percent and 16 percent of storefronts.

Banks have been pursuing other avenues instead of combining, Bloomberg reported. For example, they have gone after non-bank acquisitions and leaned toward financial technology companies or trading outfits. Merging just isn’t at top priority.

“I think most of us just want to continue to improve at our own shops,” said Regions Financial Corp. Chief Financial Officer David Turner. “Mergers are very difficult to do.”

In international banking news, Commerzbank and Deutsche Bank announced Thursday (April 25) that they have ended talks about a combination. In a statement on its website, Commerzbank said the two sides discontinued talks after careful analysis determined it would not be in the interest of either bank’s shareholders to combine.

“It made sense to evaluate this option for domestic consolidation in Germany. However, we were always clear: We needed to be convinced that any potential combination would generate higher and more sustainable returns for shareholders and allow us to enhance our value proposition to clients,” said Martin Zielke, CEO of Commerzbank. “After thorough analysis, we have concluded that this transaction would not have created sufficient benefits to offset the additional execution risks, restructuring costs and capital requirements associated with such a large-scale integration.”



The pressure on banks to modernize their payments capabilities to support initiatives such as ISO 20022 and instant/real time payments has been exacerbated by the emergence of COVID-19 and the compelling need to quickly scale operations due to the rapid growth of contactless payments, and subsequent increase in digitization. Given this new normal, the need for agility and optimization across the payments processing value chain is imperative.