Wells Fargo and Citigroup Gear Up for Regional Bank Acquisitions

The US banking giants, Wells Fargo and Citigroup, are now in a better position to pursue large regional bank acquisitions due to a more permissive regulatory environment.

This is according to Reuters, which noted that expectations for bank mergers and acquisitions (M&A) have improved as the regulatory backdrop has become more supportive.

The pair remains below the federal limit that generally prevents a bank from completing an acquisition that would push it above 10% of nationwide deposits. This gives them room to pursue deals involving lenders with over $100 billion in assets.

Citigroup's CEO, Jane Fraser, has focused on restructuring and organic growth, while Wells Fargo's CEO, Charlie Scharf, has indicated the bank could consider a transformational transaction if the economics were compelling.

The five regional banks viewed as plausible targets for acquisition are Fifth Third Bancorp, Huntington Bancshares, Citizens Financial, KeyCorp, and Regions Financial. These lenders have large deposit franchises and geographic footprints that could be attractive to Wells Fargo or Citigroup.