BB&T + SunTrust = ??

John Pierpont's picture
Rank: King Kong | banana points 1,191

WSJ Article (Paywall)

BB&T is buying SunTrust in a $66 billion all stock deal. Combined, they'll create a bank with $442 billion in assets.

You west-coasters probably don't care. They combined company will be HQ'd in Charlotte. They said they'll have a new name but I haven't found it yet. My guess is on SunBB.

Thoughts?

Comments (36)

Feb 7, 2019

southeastern US here. this will be very interesting, as in the carolinas + georgia there's a ton of overlap already in territory, managing that will be interesting. not like when wells fargo bought wachovia or BofA and Merrill joined forces.

I'm unsure of their presence on the league tables, but this deal makes a lot of sense culturally, I just wonder how much sense it makes strategically? maybe BB&T is weak in GA/AL/FL and they wanted that market, maybe SunTrust felt they were weak in the carolinas/VA, I'm not sure. unless I'm missing something, there isn't a line of business one is tremendously bigger in than the other.

curious to see other's thoughts. a great win for the City of Charlotte, if nothing else.

    • 2
Feb 7, 2019

Bank deals are mainly structured on cost saves which mainly stem from branch closures. Higher branch overlap in a 1 or 2 mile radius = higher cost saves.
A good amount of layoffs are coming.

Also, expect bank activity to pick up a lot. Last MOE (Chemical/TCF) was literally announced last week. Nowhere near this size, but it got banks talking.

Feb 7, 2019

So I'm from the northeast and have a ton of family in central/eastern PA so I spend a lot of time there and BB&T seems to be a big competitor with Wells and PNC in that market. I wonder of the merger will give them the size they need to spread more throughout the northeast/midwest and compete with places like Keybank/BofA/TD etc. Idk how retail banking really works or what that market is like, but BB&T probably could start to spread through lesser served/sparsely populated places like upstate ny and western mass

Dayman?

Feb 7, 2019

I left NY ~10 years ago and M&T was growing leaps and bounds then, not sure what their presence is like now. I imagine they'll hit stiff competition up there though.

Feb 7, 2019

I'm southeastern as well. The mid-atlantic region just got a little more crowded at the top. Both BB&T and SunTrust have a presence in the club/lower end syndicated deals and I imagine other banks will try and swoop in over the next few months to try and capitalize on any transition bumps their clients might experience.

But yea, The Queen City will definitely see an uptick from this.

Learn More

Side-by-side comparison of top modeling training courses + exclusive discount through WSO here.

Most Helpful
Feb 7, 2019
thebrofessor:

southeastern US here. this will be very interesting, as in the carolinas + georgia there's a ton of overlap already in territory, managing that will be interesting. not like when wells fargo bought wachovia or BofA and Merrill joined forces.

I'm unsure of their presence on the league tables, but this deal makes a lot of sense culturally, I just wonder how much sense it makes strategically? maybe BB&T is weak in GA/AL/FL and they wanted that market, maybe SunTrust felt they were weak in the carolinas/VA, I'm not sure. unless I'm missing something, there isn't a line of business one is tremendously bigger in than the other.

curious to see other's thoughts. a great win for the City of Charlotte, if nothing else.

$1.6 B in potential annual cost savings. I don't think this deal is supposed to mean anything with respect to their current clients. Sounds like the companies, independently, want to transform their cost side and leverage the combination synergies to get there. I think that it makes sense in terms of it being a cheap financing solution to invest in tech or other services.

I will add that, it seems obvious that you can combine overhead and maybe even reduce expensive professionals to some degree, which would be helpful. But I don't know how realistic it is to eliminate "overlapping" branches. I'd assume that might've been inevitable as standalone companies. But overall, I'm wondering how realistic it is to get to the cost savings they're estimating.

    • 2
Feb 7, 2019

Good point about tech - I'm not familiar with either banks treasury management platforms but I imagine they'll be able to combine the "best of both worlds" and create a better platform. It's an often overlooked aspect of banks but if the C-suite hears 100x a day from their treasurer how awful Bank x's UI is, it could be the deciding vote between bank x and y when going for their next deal.

Feb 7, 2019

Good point on the "realistic" branch savings. I'm in a tier.. gosh idk 3/4 city with a downtown that has both BB&T and STRH with huge offices and plenty of locations with their names plastered on the top of the tallest buildings around. Not sure how they're gonna combine the two without tons of layoffs or inefficiency.

Feb 9, 2019
thebrofessor:

curious to see other's thoughts. a great win for the City of Charlotte, if nothing else

Charlotte over Atlanta is an interesting choice. The queen city certainly has more of a banking presence, but it pales in comparison to the capital of the south in most other aspects.

    • 1
Feb 14, 2019

Like what, traffic?

I kid, I kid. Think that since it was a merger of equals they had to relo to a new city but not 100% sure.

Learn More

Side-by-side comparison of top modeling training courses + exclusive discount through WSO here.

Feb 7, 2019

As someone in the Charlotte market I love it. More competition and opportunities in the area and the chance to bounce around banks for higher salaries for the competitive salary positions. Win for bank employees around here

Feb 7, 2019

Anyone else surprised that RBC got their hands on such a deal as sole financial advisor?

Congrats to them!

    • 1
Feb 7, 2019

Banks will continue to consolidate as scale helps with both the revenue side (network effects, trust, brand name, product offerings) and cost side (operating leverage, bargaining power, technology, G&A).

Feb 7, 2019

What do you think the effect on Sun's IB will be?

Feb 7, 2019

I imagine they'll fold BB&T's capital markets, which is almost nonexistent as they really only have a presence in the logistics/transportation sector, into SunTrust's Robinson Humphrey name. Anecdotally, BB&T has a larger retail banking footprint which should give more capital for their combined IB team to play with. The transition will take time so I wouldn't expect any of the summer analyst's to be coming back to school in the fall with crazy stories of deals where BB&T/SunTrust really threw their weight around.

Feb 7, 2019

I'll be an SA at STRH in IB this summer in Atlanta. What effect do you think this will have on my summer gig and the future for full-time offers? I'm thinking BB&T will take a harder hit on the IB side due to the wholesale banking HQ being in ATL headed by Beau Cummins (former STRH CEO and current head of wholesale for SunTrust. BB&T also just hasn't been growing IB revenue like STRH has, 0.5% (BB&T) 2016 over 2017 growth vs. 20% (STRH),

Would love to hear what you all think.

Feb 7, 2019

Really impressive that RBC won as the sole financial advisor on BB&T on this megadeal. Looks like the high-profile senior bankers they poached from DB and UBS recently will really help them win bigger M&A deals. The bankers that ran this deal were all former DB FIG bankers who jumped to RBC in 2017. As someone who works in FIG, must point out how impressive it is to be a sole advisor in a deal this big.

On the other side, not surprising at all that GS FIG advised SunTrust

Feb 7, 2019

What impacts will this merger have on other regional banks? Should more MM mergers be expected? Does this cause problems for Regions Bank since they are the other largest SE bank?

Feb 7, 2019

On another note... what banks do you think are next?

M&T
Zions
Comerica
KeyCorp
Huntington
PNC
Citizens
5/3rd
Regions

Etc....

Key / Huntington / would mean major branch closures, same thing with 5/3rd

    • 1
Feb 7, 2019

It would be tough to speculate on this. We won't see another one of this size as the $66B price point is too rich for a lot of regionals. I don't know how aggressive M&T is feeling, but I would peg them to acquire a bank or two. They have loan growth in their core commercial segment that is promising.

Feb 7, 2019

M&T just got out from under their order so they can grow again. Zero chance Huntington and Key merge. Regions needs to make a move now or they will be in the dust.

Smaller banks are merging. Chemical and TCF is a good example. Busy time in the bank market.

Feb 14, 2019

I wouldn't count on another merger like this between mid-cap regional banks. They've largely stayed on the sidelines for large acquisitions for the past 10 years or so. While they still have to undergo stress tests, the more serious capital requirements and compliance standards kick in at a certain amount of assets, and it simply doesn't make sense for these banks to just barely break the threshold and suddenly take on those costs. They are a huge burden, but have done their job at ensuring the BB / TBTF banks are sufficiently capitalized and liquid to weather another sudden shock

    • 1
Funniest
Feb 9, 2019

I think they should call it BunTrust. Any other ideas?

Fuckin my way thru nyc one chick at a time

    • 5
Feb 11, 2019

litquidity did a poll and "Banky McBank face" was actually the winning name idk why

thots and prayers

Feb 14, 2019

Ever hear of Boaty McBoat Face?

Feb 9, 2019

BB&T + SunTrust = BunTrust

    • 1
Feb 9, 2019
John Pierpont:

They said they'll have a new name but I haven't found it yet.

Whatever it is, it'll most likely be the name of the Braves' stadium

Feb 12, 2019

.

Feb 13, 2019

Why not SunB&B?

Feb 17, 2019

BB&T + SunTrust = BBunTrust (BB by default)