Bank CEOs Say Don’t Hold Your Breath for Predicted Wave of Deals

(Bloomberg) -- The biggest bank merger since the financial crisis -- February’s $28 billion tie-up between BB&T Corp. and SunTrust Banks Inc. -- was supposed to spark a wave of copycats. Industry CEOs must have missed the memo.

“M&A is not on our minds at this point,” KeyCorp Chief Executive Officer Beth Mooney said last week in a phone interview. Steve Steinour, head of Columbus, Ohio-based Huntington Bancshares Inc., said Thursday that his team is “not inclined to be proactive on bank transactions.” And U.S. Bancorp threw cold water on the idea last week.

Bank CEOs Say Don’t Hold Your Breath for Predicted Wave of Deals

It made sense on paper. KeyCorp and Huntington, both based in Ohio, were among the candidates analysts said could benefit from a deal that would cut overlapping branches and free up funds for the technology arms race that bigger companies can finance more easily.

Bank CEOs Say Don’t Hold Your Breath for Predicted Wave of Deals

And the big banks have been attracting customer deposits more efficiently. The top lenders have a 45 percent share of deposits with just 19 percent of branches, while regionals have 14 percent of deposits and 16 percent of storefronts, McKinsey & Co. said in a report this week.

But instead of the predicted bank combinations, lenders have pursued smaller non-bank acquisitions, from fintech firms to trading operations. And if executive commentary on recent earnings calls is any indication, finding a bank to buy or merge with isn’t a priority.

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

The apparent disinterest doesn’t preclude deals from getting done, according to Mike Mayo, an analyst at Wells Fargo & Co. Regional banks are behind their bigger competitors when it comes to efficiency, deposit growth and digital banking, Mayo said in an interview.

“It’s really just a matter of time,” he said. “You downplay it until you do it.”

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