BB&T and SunTrust are joining to create new $66 billion bank

Reuters  Jim Young

Reuters Jim Young

SunTrust is headquartered in Atlanta and has 1,268 branches throughout the Southeastern U.S., but none in Robeson County.

The combined bank, which will be named at a later date, will have nearly 60,000 employees and about $440 billion in assets.

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

The deal is the industry's biggest since Bank of America's $40.5 billion takeover of Merrill Lynch & January 2009. Most bank mergers stopped after the crisis because the banks had to clean up their balance sheets, and the regulatory environment under the Obama administration made mergers more hard.

Also, changes in the US tax laws that lowered corporate tax also freed up capital and Wall Street has always been expecting a wave of dealmaking in the banking sector.

The Trump administration is taking a much softer stance on bank regulations, and has appointed dozens of new business-friendly policymakers into critical positions at the nation's bank regulators. This includes the Dodd-Frank Act.

"The regulatory environment is much easier for something of this size to happen", said Brian Klock, an analyst with KBW. But the deal is weighted toward BB&T, whose shareholders will own around 57 percent of the new bank compared to SunTrust shareholders' 43 percent.

The combined company will be rebranded and establish a new headquarters in Charlotte, North Carolina.

The combined company will be based in Charlotte and operate under a new name but continue to have operations in Winston-Salem and Atlanta.

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BB&T has agreed to pay US$28.1 billion for SunTrust's equity as of Wednesday's closing price, according to data compiled by Bloomberg.

BB&T, founded in the aftermath of the Civil War, and SunTrust, chartered in Georgia in 1891, had been direct competitors in many cities.

Bank of America is the market leader with $21.3 billion in deposits and a almost 30 percent market share. About one-quarter of the BB&T and SunTrust branches, 740 of them, are within two miles of each other.

William H. Rogers Jr., chairman and CEO of SunTrust will serve as president and chief operating officer of the combined company, and Kelly S. King, chairman and CEO of BB&T, will serve as chairman and CEO. The transaction will deliver at least $1.6 billion in annual cost savings by 2022, the companies said.

"This is a true merger of equals, combining the best of both companies to create the premier financial institution of the future", BB&T's chairman and CEO, Kelly King, said.

Shares of SunTrust jumped 11.1 percent in early morning trading, while BB&T's stock rose 5 percent.

Executives said they did not expect regulators to demand significant divestitures and that the deal would close in the fourth quarter of 2019.

The Baltimore Sun staff contributed to this report.

The two banks have a combined 92 offices in Central Florida and control $12.8 billion of deposits in Central Florida, according to the Federal Deposit Insurance Corp.

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