U.S. regulatory bodies during the Trump era are greenlighting bank mergers at the quickest rate seen in over three decades, breaking a long-standing gridlock in a fragmented banking sector.
This year, the time frame between the announcement and the finalization of deals has shrunk to four months—the shortest since at least 1990, as reported by S&P Global. In contrast, during the Biden administration, the average approval duration peaked at nearly seven months.
These quicker authorizations are lifting what dealmakers considered a significant barrier to merging among the country’s more than 4,000 regional banks. This trend is evident in four recent transactions totaling upwards of $24 billion.
“The uncertainty around regulatory approvals and their timelines has significantly decreased, with even large transactions now completed in the range of three to six months,” said Seth Lloyd, a financial services expert at Centerview Partners. “This has been a strong catalyst for bank mergers and acquisitions.”
Approximately 150 bank mergers worth around $45 billion have already closed this year, suggesting that 2025 could turn out to be the busiest year for the industry since 2021.
John Esposito, co-head of Morgan Stanley’s financial institutions division, remarked that, “All the transactions announced would have received approval under the previous administration, but the difference lies in how quickly they’re being approved.”
The larger the transaction is, the more scrutiny it attracts. For instance, Capital One’s $35.5 billion acquisition of Discover Financial this year was among the industry’s largest deals since 2008 and took over a year to complete before receiving approval back in April.
Other notable transactions include PNC’s $4.1 billion acquisition of Colorado’s First Bank and Fifth Third’s $10.9 billion all-stock purchase of Comerica. Just recently, Huntington Bancshares announced plans to acquire $53 billion-asset Cadence Bank for $7.4 billion, only days after finalizing its $1.9 billion acquisition of Texas-based Veritex.
“A lengthy approval process can generate anxiety, which isn’t beneficial for shareholders or anyone involved in the business in the long haul,” Huntington’s CEO Stephen Stayner noted.
The number of banks in the U.S. has been on a steady decline for decades, dropping from around 9,000 two decades ago to about 4,400 today. Yet, the market remains considerably more crowded compared to countries like the UK and Canada, where a few lenders dominate the landscape.
PNC CEO Bill Demchak commented, “We’re not currently in an unusual situation. I think we’re just returning to normal following a challenging few years.”
Bank executives and traders have often contended that smaller banks need to merge to effectively compete against the towering presence of America’s megabanks, including JPMorgan Chase, Bank of America, Citigroup, and Wells Fargo, which together control more than $1 trillion in deposits.
Mergers typically allow banks to achieve economies of scale, spreading the high fixed costs associated with marketing, technology, and compliance across a larger customer base.
Mid-sized banks are further pressured by activist investors. For instance, HoldCo, a small hedge fund in Florida, urged Comerica to consider a sale prior to agreeing to the deal with Fifth Third.
HoldCo has publicly shown interest in three other regional banks (Eastern Bank, First Interstate Bank, and Columbia Bank), though they haven’t consistently called for sales. The argument posited is that some banks exhibit lower profits and are overcapitalized.
“With the new interest rate environment, your deposits will be more valuable now and in the foreseeable future than they have been for quite a while,” stated HoldCo co-founder Vik Ghei.
One hurdle to these deals lies in banks having unrealized losses on assets such as loans and U.S. Treasuries bought when interest rates were lower. These losses must be recognized in any sale.
However, over time, these assets will eventually leave banks’ balance sheets, allowing for reinvestment in higher-yield alternatives.
Eric Neveu, a senior managing director at Evercore, expressed that this has been the busiest time in his 25-year career. “We’re in an exciting period right now, with increasing levels of bank mergers and acquisitions across all sizes,” Neveu shared. “There’s a wave of consolidation happening and buyers don’t want to be left behind.”
