The pressures of the pandemic and the warm welcome from investors to recent acquisitions has increased the appetite of midsize U.S. banks to more deals such as the sale of People’s United Financial last week of $ 7.6 billion to M&T Bank, according to traders and industry analysts.
Likely buyers include regional US lenders such as US Bank and Citizens Financial, as well as TD Bank of Canada and Bank of Montreal, they say. Small American banks and foreign lenders with low yields and less reason to stay in the United States, such as Santander in Spain, are considered more likely to sell.
“Everyone wants to make a deal,” said a seasoned negotiator who advises banks and other financial groups. “It’s the difference now with the past.”
Bankers warn that not all potential trades will be easy to execute. HSBC, which confirmed this month that it plans to sell its 150-branch U.S. retail bank, may simply end the transaction, a company insider said.
But the pandemic has highlighted the advantages of size in the banking industry. With branches closed or customers reluctant to visit them, digital banking has become more important, putting pressure on banks to invest.
At the same time, low interest rates and low demand for loans have made it more difficult for lenders to profit from their inflated deposit bases. Greater economies of scale are one way to increase returns.
“Any bank that is below the top four or five, especially in retail banking, must ask itself the question …
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