BB&T buys SunTrust Bank in $66 billion deal
The merger will create the sixth-largest lender in the US.
BB&T has acquired SunTrust Bank in a blockbuster deal worth $66 billion. The two institutions will combine in the largest US bank merger in a decade. Shares of both financial institutions rose after news of the agreement was released.
Why did BB&T buy SunTrust?
BB&T and SunTrust are banks based in the southern states of the US. Both banks likely want to combine their disparate strengths. Local newspapers have noted that BB&T’s community banking will pair well with SunTrust’s focus on larger corporate clients. BB&T bought SunTrust for $28 billion all in stocks, and the banks say that the merger is worth $66 billion. The financial institutions will operate under a new name and have $442 billion in assets. SunTrust shareholders will own 43% of the new corporation, while BB&T stock owners will have 57%. BB&T’s chief executive officer, (CEO), Kelly S. King, released a statement about the acquisition.
‘This is a true merger of equals, combining the best of both companies to create the premier financial institution of the future. It's an extraordinarily attractive financial proposition that provides the scale needed to compete and win in the rapidly evolving world of financial services,’ said King.
SunTrust CEO, William H. Rogers, Jr., also touted the merger as progress for fintech(financial technology) in a statement.
‘Our shared culture embraces the disruption of technology and we will take this innovative mindset to expand our leadership in the next chapter of these historic brands. With our geographic position, enhanced scale and leading financial profile, these two companies will achieve substantially more for clients, teammates, associates, communities, and shareholders than we could alone,’ said Rogers, Jr.
What will the BB&T/SunTrust merger mean for US banking?
While corporate combinations usually mean higher fees for customers and laying off workers, both banks promise that the deal will lead to more growth for their combined 60,000 employees and better service for clients. BB&T and SunTrust’s joint venture will expand their reach across the East Coast of the US. The current US corporate tax cuts also enabled banking institutions to have more capital to make blockbuster deals. Jefferies Financial Group bank analyst, Ken Usdin, noted that the acquisition could lead to more US bank mergers.
‘Scale is the game here.The BB&T/SunTrust merger will open more eyes on the potential for more sizable bank M&A(mergers and acquisitions) to occur,’ said Usdin.
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