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By: Maddy Ozer | meo14@psu.edu | February 10, 2019
Announced Wednesday, February 7, 2019, BB&T Corp. (BBT) will be acquiring SunTrust Banks. Inc. (STI) to create the sixth-largest retail bank in the United States. At a deal valued at $66 billion, this all stock deal is the largest U.S. bank merger since the 2008 financial crisis. Upon completion of the merger, SunTrust shareholders will receive 1.295 BB&T shares for each SunTrust share owned. STI shares rose 10% Thursday, while BB&T shares were up about 4%. The banks expect the merger to close in the fourth quarter and project it will produce $1.6 billion in annual cost cuts by 2022. The combined bank plans to focus on the expansion of technology to stay relevant among endless mobile and start-up banking options.
Since the announcement, Atlanta residents have been on edge about the future of their city. “For those of us who grew up here and have a history in Georgia, you think of SunTrust as one of those iconic brands in Atlanta… it’s right up there with Coca Cola,” said Atlanta resident Jonathan Hightower, 39, a banking lawyer at Bryan Cave Leighton Paisner LLP. The SunTrust logo can be seen throughout metro Atlanta, most notably on the Atlanta Braves’ SunTrust Park. With the new headquarters located in Charlotte, N.C., Atlanta residents feel concerned about the future of their nonprofit community as well as the overall growth and prosperity of the city without the large presence of SunTrust.
For the sake of the banks, I feel this merger is a great deal. The Federal Reserve announced late last year a large rollback of bank rules for regional banks, which allows local banks to expand their businesses to compete with market leaders such as JPMorgan Chase & Co. (JPM) and Bank of America Corp (BAC). Combining their resources will allow the companies to develop better digital offerings together than they could on their own, making the combined bank more attractive to potential customers. However, there exists a concerning aspect of this merger: the deal is likely to lead to branch closures throughout the Southeast. The combined company will hold about 3,100 branches, with about 740 within 2 miles of each other. This fact will inevitably lead to many closures, leaving many current employees without jobs. It will be interesting to witness how the new company addresses these issues, as well as the effects this merger has on the market for regional banks.
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