Published: Thu, February 07, 2019
Money | By Ralph Mccoy

BB&T, SunTrust announce merger as Charlotte gains another bank headquarters

BB&T, SunTrust announce merger as Charlotte gains another bank headquarters

While it may be tempting to explain the deal by pointing to the partial rollback of the postcrisis Dodd-Frank financial reform law that signed was into law last spring by President Donald Trump, the bulk of that law's measures were targeted at banks far smaller than the one that will be created by this deal, if it is approved by regulators.

USA regional lender BB&T Corp said it will buy rival SunTrust Banks Inc for about $28 billion in stock.

A merger of two United States banks has handed RBC Capital Markets, the Canadian investment bank, its largest sole advisory role on a global mergers and acquisitions deal.

The combined company will operate under a new name and have around $442 billion in assets, $301 billion in loans and $324 billion in deposits, and will rival Citigroup and Bank of America. They did not cite any numbers, however. A new name will be chosen before the deal closes in the fourth quarter.

A Wachtell Lipton memo said the speed of the approvals was evidence of an "increasingly favorable regulatory environment for bank M&A". "It's an extraordinarily attractive financial proposition that provides the scale needed to compete and win in the rapidly evolving world of financial services". To that end, an innovation and technology center will be based in Charlotte.

It will keep a community banking center in Winston-Salem, North Carolina, where BB&T is based. JPMorgan Chase, Bank of America, Wells Fargo, Citigroup, Goldman Sachs and Morgan Stanley brought in more than $120 billion combined in profit a year ago, the result of President Donald Trump's corporate tax cuts and a booming economy.

BB&T chairman and CEO Kelly will keep those titles with the merged bank.

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That has been a reflection of two factors: Charlotte's loss of banking headquarters, and restrictions the Federal Reserve placed previous year on Wells Fargo's growth following a 2016 scandal over unauthorized accounts and newer instances of customer harm.

The merger will pressure other regional banks to consider their own deals, analysts said.

Watch SunTrust and BB&T trade live.

The combined company will be based in Charlotte, North Carolina, its board and management evenly split between BB&T Corp. and SunTrust Banks Inc. The transaction would deliver at least $1.6 billion in annual cost savings by 2022, the companies said.

Since that time, the gap between the size of the big Wall Street banks and the regional banks like BB&T, SunTrust, PNC Bank, Fifth-Third and others has only widened.

BB&T agreed to pay a roughly 7% premium for SunTrust, according to Bloomberg data.

William H. Rogers, Jr., Chairman and Chief Executive Officer of SunTrust, said, "By bringing together these two mission- and purpose-driven institutions, we will accelerate our capacity to invest in transformational technologies for our clients".

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