BBT BB and T Corporation

   By Colin Kellaher 
 

BB&T Corp.'s (BBT) deal to buy SunTrust Banks Inc. (STI), which will combine two regional banking powerhouses to create the sixth-largest U.S. retail bank, could signal that merger activity among some of the larger U.S. banks could remain strong over the next year or two, according to a report from Fitch Ratings.

The ratings agency said the $28 billion all-stock deal, which marks the largest U.S. bank merger since the financial crisis, could serve as a template for more consolidation among regional lenders looking to compete with the biggest national banks.

Fitch said that while the majority of bank consolidation has been in the community and midsize spaces over the past decade, recent deals indicate that bigger regional banks may now be in play.

"The financial and strategic benefits of the BB&T and SunTrust deal are compelling, and other regional banks may look to replicate the model in order to increase spending power and scale to drive innovation," Fitch said.

The financial crisis resulted in a stricter regulations that kept big banks on the sidelines of the deal-making boom, but Fitch said recent regulatory relief proposals and a more streamlined approval process have eased the way for more M&A activity.

Sen. Elizabeth Warren on Tuesday said the Federal Reserve's process for approving bank mergers "appears to be a rubber stamp," as the Fed is set to review the BB&T/SunTrust deal.

But Chairman Jerome Powell, testifying before the Senate Banking Committee, said the Fed review would be "a very fair and open, transparent process."

Write to Colin Kellaher at colin.kellaher@wsj.com

(END) Dow Jones Newswires

February 27, 2019 13:57 ET (18:57 GMT)

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