Bank M&A Buzz Grows as Trump-Era Regulators Ease Rules

The Trump administration's new regulatory framework has revived discussions about major U.S. bank mergers which Wall Street and regional lenders now consider for consolidation.

The reported merger proposal from BNY to Northern Trust caused a surge in interest according to sources. The news about Northern Trust's rejection of the proposal has started industry-wide discussions about the matter. The M&A prospects have shifted as Capital One completed its $35.3 billion acquisition of Discover.

The Federal Reserve introduced new guidelines which enable large banks to maintain their “well managed” rating for deal approvals by requiring multiple category deficiencies before downgrading firms.

The new regulatory approach indicates regulators will become more lenient in their oversight according to James Stevens who leads financial institution advisory services at Troutman Pepper Locke. The new regulatory framework enables major financial institutions to pursue aggressive acquisition opportunities.

Strategic acquisitions of entire institutions or business lines have become more appealing to executives because of the relaxed oversight from the Biden administration.

Analysts will focus on M&A strategies during the earnings conference calls of BNY, JPMorgan, Citigroup and Wells Fargo on Tuesday. The market shows increasing signs of deal activity although companies maintain their silence about potential acquisitions.