BB&T-SunTrust merger could spark bank industry tie-ups, analysts say

Feb. 07, 2019 11:57 PM ETSunTrust Banks, Inc. (STI), RF, KEY, CMA, PNC, USB, KRE, KBE, IAT, KBWB, QABA, KBWR, DPST, WDRW, FTXOTFC, STI, RF, KEY, CMA, PNC, USB, KRE, KBE, IAT, KBWB, QABA, KBWR, DPST, WDRW, FTXOBy: Carl Surran, SA News Editor12 Comments
  • Analysts say today's merger deal between BB&T (NYSE:BBT) and SunTrust (NYSE:STI) could serve as a "catalyst for consolidation" as other large regional banks feel the pressure to take on the industry's largest players.
  • The deal is the largest U.S. bank merger since the financial crisis resulted in new regulations that kept banks out of recent deal-making booms, but rules have loosened considerably in the Trump administration, leading some to predict more consolidations in the industry.
  • The two banks struck the deal from a position of strength, as each reported strong Q4 earnings last month with no signs of pressure near to mid-term, said Terry McEvoy, managing director at Stephens, who also mentioned Regions (NYSE:RF), KeyCorp (NYSE:KEY) and Comerica (NYSE:CMA) as potential candidates for M&A activity.
  • Banks already subject to Fed oversight such as PNC Financial (NYSE:PNC) and U.S. Bancorp (NYSE:USB) might be attracted to regional banks if the price and geographic fit are reasonable, Heard On The Street's Justin Lahart speculated.
  • "A positive share reaction to the transaction could help induce managements to more actively consider tying up with other depository institutions," UBS analysts said; BB&T bounced 4% and STI surged 10% in today's trade.
  • Meanwhile, Rep. Maxine Waters, Chair of the House Financial Services Committee, said the proposed deal "raises many questions and deserves serious scrutiny" from banking regulators and Congress.
  • ETFs: KRE, KBE, IAT, KBWB, QABA, KBWR, DPST, WDRW, FTXO

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