Trump Admin Could Spur Big Bank Deals: Execs

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 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.

Bank of America CEO Brian Moynihan told a separate conference that regulators should allow deals to go through.

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 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.

Large regional banks such as US Bancorp, Truist Financial and PNC Bank are likely to be involved in mergers or acquisitions, said Randal Quarles, founder of Cynosure Group and former vice chair for supervision at the Federal Reserve.

The three banks did not immediately respond to requests for comment.

In April, PNC CEO William Demchak sent a letter to regulators advocating for a merger policy that "is capable of building challengers to the largest Global Systemically Important Banks in the United States," a group known as G-SIBs.