Feb 10, 2019

BB&T and SunTrust's mega merger

Felix Salmon, author of Edge

The big M&A deal of the week was the announced merger of BB&T with SunTrust, two large regional banks who between them cover most of the southern and eastern USA. The deal even arrived with its own bespoke website, thepremierfinancialinstitution.com. (The actual name of the combined bank is still TBD.)

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Data: FactSet Universal Screening; Chart: Harry Stevens/Axios

The big picture: The merger is ambitious. The word "mega-bank" has been thrown around, and a new headquarters is going to be built in Charlotte, North Carolina, a storied banking town that's currently home to only one major bank, Bank of America. (The other huge Charlotte bank, Wachovia, was swallowed up by Wells Fargo during the financial crisis.)

The deal doesn't really change the American banking landscape, however, which remains dominated by the Big Four universal banks.

  • America still has thousands of banks, with new ones still arriving. The tiny BankFlorida, for instance, with just one branch, is set to IPO this week.
  • On a global level, regional American banks remain small. BB&T and SunTrust, together, will have about $441 billion in assets. That's enough to make them the 65th biggest bank in the world, per a 2018 S&P ranking.
  • The combined bank will be smaller than Spain's CaixaBank; less than half the size of China Minsheng Bank; less than a third of the size of France's Group BPCE; and less than a ninth of the size of China's ICBC.

Context: Size isn't always a good thing. Germany's Deutsche Bank, for instance, has assets of $1.78 trillion. That makes it more than four times the size of BB&T and SunTrust combined. Its market capitalization, however, is just $17.3 billion, which is significantly lower than either of those U.S. banks on their own.

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