Latest news with #consolidation
Globe and Mail
11 hours ago
- Business
- Globe and Mail
2 Large Regional Bank Stocks That Could Get Acquired During the Trump Administration
The banking industry is ripe for consolidation. Although there were more than 4,500 banks in the U.S., as of last year, four, in particular, collectively control trillions in assets: JPMorgan Chase, Bank of America, Wells Fargo, and Citigroup. While smaller banks will keep gobbling each other up and merging to obtain scale, this could also take place in the large regional banking market, among banks with $75 billion to $700 billion in assets. Regulators under President Donald Trump's administration have given the sector the green light for mergers and acquisitions, a stance that wasn't embraced under former President Joe Biden's administration. If the large regional banks truly want to compete against the big four, they're going to have to get bigger. Acquisition candidates typically can command a nice premium for shareholders. Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More » Here are two banks that could get acquired during the next four years. 1. Comerica: Tough size, attractive markets At the end of the first quarter of 2025, Comerica (NYSE: CMA) had about $78 billion in assets and operates in attractive U.S. banking markets like Texas and states in the fast-growing Southeast of the U.S. This is an awkward size for a regional bank these days, because it is too big to be a local bank, but not nearly big enough to compete with the bigger players. Furthermore, $100 billion has previously been a battleground for banking regulators under various administrations when thinking about the size threshold they consider too big to fail -- meaning they're so crucial to the financial system that regulators will bail them out if they are at risk of failing. As such, investors frequently have to reassess regulations and capital requirements for banks around this size. Last year, Comerica announced it will not be extending a banking relationship with the U.S. Treasury Department that provided it with $3 billion in noninterest-bearing deposits, which is essentially a free funding source, although the agreement will continue for the next few years before the transition, which could partly explain its low valuation relative to peers. When looking at acquisitions, it's important to look at a bank's price-to-tangible book value (TBV), which shows its price relative to its tangible equity, or what the bank might be worth if it were liquidated. The higher a bank's price-to-TBV, the more likely it is to be a buyer because its stock currency is more valuable, so it could buy banks with smaller price-to-TBVs and see less dilution in an all-stock or part-stock deal. Here is the price-to-TBV of several major U.S. regional banks. CMA Price to Tangible Book Value data by YCharts Now, just because Comerica sits at the bottom of the group doesn't mean it will automatically be acquired. However, it makes an acquisition more palatable for a buyer. At the end of the day, banks are sold and not bought, meaning Comerica is going to have to raise its hand if it wants to sell. Interestingly, though, Chief Executive Officer Curtis Farmer is 62 and has a change-in-control (CIC) agreement with the bank that would earn him a payout of more than $35 million in the event that the bank changes hands, among other potential benefits that could be lucrative. 2. KeyCorp: Recently sold minority stake KeyCorp (NYSE: KEY) is another bank that could be gone by the time the Trump administration ends. As you can see in the chart, the bank also falls lower in the pack in terms of price-to-TBV. However, KeyCorp could be attractive, due to its strong capital light, fee-based businesses, including investment banking and trust. Any bank that wants to compete with the big four needs to bulk up in investment banking, and acquiring KeyCorp would be a step in that direction. Additionally, KeyCorp last year sold a 14.9% stake to the Canadian-based lender Scotiabank for $2.8 billion in order to obtain more capital flexibility. This helped it restructure its bond portfolio, which fell underwater amid the higher-interest rate environment during the past few years. The agreement with Scotiabank only allows it to increase its stake in KeyCorp to 19.9% for the next five years, although some analysts have speculated on whether a full acquisition could be in Scotiabank's future. Still, I don't believe this prevents another bank from buying KeyCorp if the bank were to be interested in selling. KeyCorp's CEO Chris Gorman is 64 and also stands to make a lot of money if the bank is acquired, with a CIC agreement that would pay out close to $35.7 million. Should you invest $1,000 in Comerica right now? Before you buy stock in Comerica, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Comerica wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $638,985!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $853,108!* Now, it's worth noting Stock Advisor 's total average return is978% — a market-crushing outperformance compared to171%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of May 19, 2025 Bank of America is an advertising partner of Motley Fool Money. JPMorgan Chase is an advertising partner of Motley Fool Money. Wells Fargo is an advertising partner of Motley Fool Money. Citigroup is an advertising partner of Motley Fool Money. Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bank of America, JPMorgan Chase, PNC Financial Services, and U.S. Bancorp. The Motley Fool recommends Bank Of Nova Scotia and Regions Financial. The Motley Fool has a disclosure policy.
Yahoo
11 hours ago
- Business
- Yahoo
2 Large Regional Bank Stocks That Could Get Acquired During the Trump Administration
Mergers and acquisitions (M&A) could pick up in the banking sector under the Trump administration, which plans to deregulate the sector. Large regional banks could experience consolidation. The large regional players need to scale if they want to compete with the likes of JPMorgan Chase and Bank of America. 10 stocks we like better than Comerica › The banking industry is ripe for consolidation. Although there were more than 4,500 banks in the U.S., as of last year, four, in particular, collectively control trillions in assets: JPMorgan Chase, Bank of America, Wells Fargo, and Citigroup. While smaller banks will keep gobbling each other up and merging to obtain scale, this could also take place in the large regional banking market, among banks with $75 billion to $700 billion in assets. Regulators under President Donald Trump's administration have given the sector the green light for mergers and acquisitions, a stance that wasn't embraced under former President Joe Biden's administration. If the large regional banks truly want to compete against the big four, they're going to have to get bigger. Acquisition candidates typically can command a nice premium for shareholders. Here are two banks that could get acquired during the next four years. At the end of the first quarter of 2025, Comerica (NYSE: CMA) had about $78 billion in assets and operates in attractive U.S. banking markets like Texas and states in the fast-growing Southeast of the U.S. This is an awkward size for a regional bank these days, because it is too big to be a local bank, but not nearly big enough to compete with the bigger players. Furthermore, $100 billion has previously been a battleground for banking regulators under various administrations when thinking about the size threshold they consider too big to fail -- meaning they're so crucial to the financial system that regulators will bail them out if they are at risk of failing. As such, investors frequently have to reassess regulations and capital requirements for banks around this size. Last year, Comerica announced it will not be extending a banking relationship with the U.S. Treasury Department that provided it with $3 billion in noninterest-bearing deposits, which is essentially a free funding source, although the agreement will continue for the next few years before the transition, which could partly explain its low valuation relative to peers. When looking at acquisitions, it's important to look at a bank's price-to-tangible book value (TBV), which shows its price relative to its tangible equity, or what the bank might be worth if it were liquidated. The higher a bank's price-to-TBV, the more likely it is to be a buyer because its stock currency is more valuable, so it could buy banks with smaller price-to-TBVs and see less dilution in an all-stock or part-stock deal. Here is the price-to-TBV of several major U.S. regional banks. Now, just because Comerica sits at the bottom of the group doesn't mean it will automatically be acquired. However, it makes an acquisition more palatable for a buyer. At the end of the day, banks are sold and not bought, meaning Comerica is going to have to raise its hand if it wants to sell. Interestingly, though, Chief Executive Officer Curtis Farmer is 62 and has a change-in-control (CIC) agreement with the bank that would earn him a payout of more than $35 million in the event that the bank changes hands, among other potential benefits that could be lucrative. KeyCorp (NYSE: KEY) is another bank that could be gone by the time the Trump administration ends. As you can see in the chart, the bank also falls lower in the pack in terms of price-to-TBV. However, KeyCorp could be attractive, due to its strong capital light, fee-based businesses, including investment banking and trust. Any bank that wants to compete with the big four needs to bulk up in investment banking, and acquiring KeyCorp would be a step in that direction. Additionally, KeyCorp last year sold a 14.9% stake to the Canadian-based lender Scotiabank for $2.8 billion in order to obtain more capital flexibility. This helped it restructure its bond portfolio, which fell underwater amid the higher-interest rate environment during the past few years. The agreement with Scotiabank only allows it to increase its stake in KeyCorp to 19.9% for the next five years, although some analysts have speculated on whether a full acquisition could be in Scotiabank's future. Still, I don't believe this prevents another bank from buying KeyCorp if the bank were to be interested in selling. KeyCorp's CEO Chris Gorman is 64 and also stands to make a lot of money if the bank is acquired, with a CIC agreement that would pay out close to $35.7 million. Before you buy stock in Comerica, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Comerica wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $638,985!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $853,108!* Now, it's worth noting Stock Advisor's total average return is 978% — a market-crushing outperformance compared to 171% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of May 19, 2025 Bank of America is an advertising partner of Motley Fool Money. JPMorgan Chase is an advertising partner of Motley Fool Money. Wells Fargo is an advertising partner of Motley Fool Money. Citigroup is an advertising partner of Motley Fool Money. Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bank of America, JPMorgan Chase, PNC Financial Services, and U.S. Bancorp. The Motley Fool recommends Bank Of Nova Scotia and Regions Financial. The Motley Fool has a disclosure policy. 2 Large Regional Bank Stocks That Could Get Acquired During the Trump Administration was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Bloomberg
3 days ago
- Business
- Bloomberg
Bridgepoint in Talks to Sell French Broker Kereis to Advent
Bridgepoint Group Plc is in talks to sell French broker Kereis to buyout firm Advent, adding to a wave of insurance deals in Europe as the industry consolidates. Advent is in exclusive negotiations for the acquisition, the companies said Wednesday in a statement confirming an earlier report by Bloomberg News. Terms of the potential deal weren't disclosed. The price is more than €2 billion ($2.3 billion) including debt, according to people familiar with the matter.
Reuters
3 days ago
- Business
- Reuters
EU warns Spain's government not to hinder BBVA's bid for Sabadell
LONDON/MADRID, May 28 (Reuters) - The European Union has warned the Spanish government against trying to prevent banking consolidation it says is needed to create strong lenders, after Madrid announced a ministerial review of BBVA's ( opens new tab bid for rival Sabadell ( opens new tab. Spain's government has opposed BBVA's hostile move since it was made more than a year ago, citing potential risks to jobs. The economy minister Carlos Cuerpo announced the rare move on Tuesday of examining BBVA's offer, which has been approved by the European Central Bank and Spain's competition regulator. The government cannot stop BBVA from buying shares in Sabadell but it can block a full merger. Now it has until the end of June to decide whether to approve the bid and whether to set conditions relating to the implications for jobs and branches. Olof Gill, the European Commission's spokesperson for financial services, said that there was no basis to stop a deal if it met standards on risks and competition, particularly as consolidation was vital to build stronger European lenders and in turn make the EU's Savings and Investment Union a success. "It is important that banking sector consolidation can take place without undue or inappropriate obstacles being imposed," he said. Cuerpo said he was not concerned about the EU's warning. "We are fully respectful of the procedure, the deadlines, and the involvement of the various institutions that are part of this process," he told reporters. The past year has seen a jump in European banking M&A activity, as lenders flush with cash look to make deals that industry supervisors and executives hope can create banks better able to compete with rivals in the United States and Asia. However a number of deals have run into problems with politicians. UniCredit's ( opens new tab move on Commerzbank ( opens new tab is opposed by Berlin and Italy recently imposed conditions on UniCredit's offer for its peer Banco BPM. BBVA says it wants to buy Sabadell to build the second largest lender in Spain, and agreed with the competition watchdog it would limit branch closures and maintain capital lines to small and medium-sized clients. Sabadell says the deal will damage competitiveness, particularly in the area of lending to small and medium-sized enterprises, where the bank is strong.
Zawya
3 days ago
- Business
- Zawya
GCC bank consolidation may accelerate due to lower oil prices
Fitch Ratings-London: Consolidation among GCC banks may gain momentum if lower oil prices add to competitive pressure in the region, Fitch Ratings says. Sustained lower oil prices and weaker global demand may put pressure on GCC bank operating environments, leading to weaker profitability and acting as a catalyst for M&A as banks seek to diversify their revenues and increase scale. Smaller banks may become targets due to their weaker franchises, and often higher funding costs and thinner capital buffers. Most GCC banking sectors are 'overbanked': characterised by a large number of banks relative to population size, with over 150 banks operating across the region, including 75 domestic commercial banks. Many GCC banks have shareholders in common, which could help to bring about M&A in some cases. However, many of the common shareholders are not sufficiently large to wield significant influence. Bahrain appears the most likely market for consolidation as it is highly overbanked, with generally weaker banking sector profitability and growth prospects. The Bahraini authorities seem supportive of consolidation, but relatively few banks have common shareholders, which could hinder deals. Oman and Kuwait are also overbanked with modest banking sector profitability. However, consolidation pressures in Kuwait may ease if economic reforms lead to stronger growth and better profitability prospects, and Oman's banking sector could expand given its relatively low banking sector assets/GDP ratio. In the UAE, some smaller banks with weaker franchises and revenue generation may need strategic mergers to sustain their operations, especially if profitability comes under pressure for a sustained period. Again, strong growth prospects may limit this need in the short term. Consolidation is likely to be less widespread in Qatar and Saudi Arabia. Qatar has many banks for its small population, but profitability is strong, so there is less pressure for M&A to diversify revenues. Saudi Arabia stands out as the one GCC market that does not appear overbanked given its much larger population, lower banking system assets/GDP ratio and strong growth prospects. Bank sector M&A in the GCC has been focused on enhancing shareholder value through strengthened market positions and economies of scale. This has led to the creation of dominant entities, such as First Abu Dhabi Bank and Saudi National Bank. The recent merger between Kuwait Finance House and Bahrain's Ahli United Bank, creating a regional Islamic banking powerhouse, exemplifies the trend. Nevertheless, smaller banks with weaker franchises, pricing power and capital buffers are increasingly likely to feature in M&A. We expect digital banking and new digital entrants to be an increasingly significant driver of consolidation in the region, with banks seeking technological partnerships to improve competitiveness. The expansion of open banking is also likely to influence M&A strategies, fostering joint ventures between tech companies, telecom firms and banks. Islamic banks have increasingly been involved in M&A to consolidate their franchises, as with Dubai Islamic Bank's acquisition of Noor. The UAE's ambitious domestic Islamic finance strategy may lead to further M&A involving Islamic banks. Emirates NBD and Abu Dhabi Commercial Bank have acquired domestic Islamic subsidiaries, which should support financing and deposit growth. In Oman, banks such as Oman Arab Bank and Sohar International Bank have completed or are pursuing Islamic bank acquisitions to cement their positions in the market. Most GCC bank M&A has been domestic, but we expect a gradual shift towards regional transactions, such as Kuwait Finance House's takeover of Ahli United Bank. A few GCC banks have also shown a strong appetite to expand beyond the region, although this brings additional risks, especially for acquisitions in more macroeconomically volatile markets, such as Turkiye and Egypt. Matt Pearson Associate Director, Corporate Communications Fitch Group, 30 North Colonnade, London, E14 5GN E:
