Big bank deals could be spurred by Trump administration, executives say

By Tatiana Bautzer

NEW YORK (Reuters) – President-elect Donald Trump’s return to the White House could usher in a wave of bank mergers and acquisitions as the administration appoints regulators who are more open to approving larger deals, financial executives and analysts said on Tuesday.

The banking industry is expected to win big if Republican regulators ease capital rules and merger approvals when they replace the aggressive financial regulators of the Biden era.

“I have to believe we are entering a moment where bigger deals can be done,” Mitchell Eitel, managing partner at law firm Sullivan & Cromwell, told a banking conference in New York.

The regulators could become more receptive to larger acquisitions, overturning recent perceptions that smaller deals were more likely to be endorsed by officials. One key test case will be Capital One Financial (NYSE:) Group’s $35.3 billion agreement to take over Discover Financial.

Larger regional banks should also be allowed to buy rivals and get significantly bigger, creating more competition for banking giants whose deposits have swelled in recent years.

“I think we’re going to see more activity, there’s a lot of pent-up demand” for bank deals, said Tom Michaud, CEO of investment bank Keefe, Bruyette & Woods.

Mid-sized banks typically improve their returns on capital after deals increase their scale, he said.

“If we do nothing, we’re going to have four really big banks that are going to be even bigger,” Michaud said.