The Era of Big Bank mergers has passed

Will we ever see another big bank merger?


Yet banks and other financial companies – usually among the most avid shoppers for deals – have been conspicuously subdued amid the corporate coupling. In prior merger-and-acquisition cycles, bank mergers have produced increasingly gargantuan institutions and progressively more byzantine financial conglomerates. ... A firm regulatory commitment to keep the largest banks from getting any bigger or more complex is keeping this activity in check. The authorities intend for banking to stay boring – and this is how the sector will remain for consumers and investors.
Comment: Image Source. List of bank mergers in the United States.

Kathee and I were talking yesterday at dinner how our entire careers at Wells Fargo have been characterized by M&A activity. Kathee started at the old United Bank of Colorado (acquired by Norwest). Of course the Wells Fargo - Norwest merger and Wells Fargo - Wachovia merger were the largest. We've also been through Y2K (that involved quite a bit of preparation). I see the banking industry in the US as follows:

  • You have the nationals (C, BAK, JPM, and WFC). I really think WFC is the strongest. We have stock in WFC and JPM. I've passed on buying stock in the other two.
  • You have the regionals: Sun Trust, Regions Bank, US Bank, BBVA and others. 
  • You have the credit unions - eg Spire in Minnesota
  • You have mini-regionals - eg TCF
  • You have large state centric banks: Frost Bank in Texas and First Bank in Colorado are examples.
  • And then the pure locals (small but personal). Privately owned by millionaires they may have one or two offices. An example is Bank West in Rockford MN with 3 locations
Some decry the large banks and see that there is little competition. But the industry has a lot of competition. What I like about a national bank:
  • Stores or branches available across the country (although none have the entire US footprint). I think about going into a Wells Fargo store in Marquette MN or in North Carolina. 
  • A credit card. TCF for example does not offer one
  • A brokerage service. For example I can instantly transfer money from my checking or savings account to my brokerage account
  • A mortgage service (don't have one now but potentially could  in the future)
  • A robust platform. Think about the old Hiberia bank that was completely taken out by Hurricane Katrina when both their production and their BCP site flooded.
  • A 24-hour phone bank. I called another bank on behalf a relative. It was a holiday and I received the message "call back during business hours"


  1. You also have brokerage firms with a banking arm like Schwab and Internet only banks.

  2. A dated list (Sept 2013) of the top US banks here

  3. James Gorman on the Future of Finance: Big Banks Will Get Bigger -
    But the Morgan Stanley CEO Also Expects Most Bank Branches to Disappear—and Cash to Become a Museum Piece

    On branches:

    Universal adoption of mobile devices puts a bank branch in everyone's pocket and renders bricks and mortar obsolete. Of the 97,000 bank branches that exist across the U.S. today, all but about 10,000 will disappear. Those remaining will become social gathering places where people go to be educated about finance, engage in discussion groups about savings and investment and, at the high end, get exclusive exposure to luxury goods and services.


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