Midsized Banks Are Making Billions in Merge Boom
In the wake of BB&T’s $1.8B cash and stock acquisition of National Penn Bancshares, analysts are confirming a merger boom for midsized US banks. In 2015 alone, smaller, less regulated banks have made more than $24.4B in 219 mergers, a 63% jump from last year. Bankers attribute the boom to the market’s low interest rates, claiming that scaling is the only way to boost revenue without adding to costs. Bankers expect these mergers to increase in the future, since few deals get stalled by regulations. BB&T CEO Kelly King says the National Penn sale happened because the bank—worth $9.6B in assets—had reached a tipping point where they could either sell or be overwhelmed by regulations and compliance costs of the 2010 Dodd-Frank law. The law—which enforces increasingly complex restrictions on banks as their value increases—has been the catalyst for many of these midsized deals. [WSJ]
