Wells Fargo Chief Executive Officer Charles Scharf and Citigroup Chief Executive Officer Jane Fraser.
Caroline Breman | Shen Qilai | Shen Qilai Bloomberg | Getty Images
Walk down the halls of major banking conferences or listen to quarterly earnings calls, and you’ll hear one topic after another. The question is, with the room for mergers wide open under the Trump administration, who will take the plunge?
Big banks, which have remained silent for years due to regulatory constraints, may once again consider acquiring other financial institutions, or even local banks with more than $100 billion in assets.
meanwhile JP Morgan Chase and bank of america There are two megabanks that could pursue major acquisitions, although such deals are prohibited because they already hold more than 10% of national deposits. citygroup and wells fargo. Investment bankers, consultants and investors say the nation’s third- and fourth-largest banks have plenty of room to pursue larger regional banks under national deposit caps.
“Two years ago, it would have been impossible for a bank of that size to get approval to buy just about anything,” said Brian Graham, co-founder of advisory firm Claros. “There’s a chance they could get a deal done now. I’d be shocked if they weren’t considering it.”
After spending much of the past decade in the penalty box, both financial institutions, Citigroup under consent orders and Wells Fargo under growth restrictions, have cleared important regulatory hurdles and are in growth mode.
A major acquisition like the one rival JPMorgan pulled off in 2023 and during the 2008 financial crisis would give Wells Fargo and Citigroup thousands of branches and billions of dollars in deposits.
It would be a much-needed source of cheaper capital for Citigroup, which has only about 650 branches in the United States. For Wells Fargo, which already has a large branch network, these transactions provide opportunities for further expansion and cost reduction.
KBW analyst Chris McGratty said of the broader need for industry consolidation: “There’s a massive scale competition and the shot clock is running.” “If you want to do something, now is the time to do it.”
There are more than 4,200 banks in the United States, but only a handful make sense as acquisition targets for Wells Fargo and Citigroup. A viable target needs to be large enough to move the needle, but small enough that the acquirer can stay comfortably below the 10% domestic deposit limit. Add to that the imperative of a complementary branch network, good cultural fit, and quality deposits, making most deals difficult to justify.
After screening based on these criteria, five local banks emerged as strong candidates for any bank.
fifth third provides a commercial and retail engine throughout the Midwest and rapidly growing Southeast. huntington will expand its branch presence in high-growth markets in Texas and the Carolinas while providing a low-cost deposit base.
people provides dense retail and commercial services throughout the affluent cities of the Mid-Atlantic Coast and New England. key corp brings mid-market commercial business, with branches from the Great Lakes to the Pacific Northwest.
Finally, region We offer a retail deposit footprint in the fast-growing Southern region, including Texas and Florida.
Beyond that group, banks that work specifically for Wells Fargo are: Zionsprovides connections throughout the high-growth western states and fits well into that footprint.
Here are some goals that might make sense for Citigroup: first horizonhas a presence throughout the rapidly growing U.S. Sunbelt.
Wells Fargo and Citigroup declined to comment for this article. Most of the local banks mentioned above also declined to comment, with the exception of Huntington Zions and First Horizon, which did not respond.
“I’ll think about it.”
Asked in April about Citigroup’s potential acquisition of a major bank, Chief Executive Officer Jane Fraser said the bank was focused on organic growth, not deals.
Still, Citigroup executives have discussed the idea of acquiring large financial institutions in the region to shore up its deposit base, Bloomberg News reported in March. Citigroup said at the time that the report was “unsubstantiated speculation.” The company’s stock fell more than 4% on the day.
Citigroup is still trying to prove to many analysts covering the bank that self-help can yield higher returns. While acquiring a large regional bank would add branches, employees, technology systems and integration risks, Citigroup is aiming to simplify.
KBW’s McGratty said “deposit trading will be very disruptive” to Citigroup.
Wells Fargo CEO Charlie Scharf, meanwhile, signaled that the company is open to transformative deals, from acquiring banks to acquiring credit card companies, while also emphasizing organic growth.
“We should always consider ways to increase the value of our franchise, including through M&A,” Schaaf said in a letter to shareholders in March, acknowledging regulators’ flexibility in making deals.
Schaaf said he “doesn’t feel any pressure to pursue a deal,” but added, “If a great opportunity arises, we will consider it.”
But there’s one problem. The wave of integration that many expected when Trump returns to office in 2025 has so far failed to materialize. In fact, North American bank merger value fell by more than half to $30.1 billion in the first half of 2026 compared to the same period last year, according to EY data.
Yes, the regulatory barrier may be coming down. But few banks are willing to sell when profits and stock prices are rising.
“Most companies have high margins and very good stock prices. It just raises the bar for a sale,” said Frank Sorrentino, a mergers banker at Stevens. “Everyone thinks of themselves as buyers, not sellers.”
Activist investors who have pushed banks to improve shareholder returns say there is more discipline around deals, with executives now routinely comparing the economics of acquisitions with simple share buybacks.
Regional champion?
Mr. Sorrentino said the current situation remains favorable for mergers and is “probably the best environment since the financial crisis.”
Last year, Congress overturned Biden-era rules on mergers by the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corp. reinstated longstanding merger guidelines, effectively reinstating expedited reviews and lowering standards for regulatory approval.
When it comes to big acquisitions, Wells has something that City doesn’t have. It’s a stronger stock currency. This can make it easier to justify the deal, especially if the target fills a geographic or product gap.
But another way to win the race is for local residents to team up with each other.
For years, bankers have believed that two of the three largest superregional financial institutions PNC, US Bancorp and Trustee — could eventually merge to create a new banking champion to take on the giants.
Bain predicts regional mergers will create one to three new megabanks with at least $1 trillion in assets by 2030, according to new research shared with CNBC. The consulting firm’s predictive model, based on 20 years of data, also found that the ranking of local banks will shrink from 49 to just 30.
“We expect more banks, especially regional banks, to use M&A to add capabilities,” particularly around technology such as artificial intelligence, Bain said.
That idea still hasn’t gone away. If Wells Fargo and City decide not to swing, local teams will have to decide whether they can afford to sit on the bench or merge with each other to keep pace.
