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US bank Fifth Third has struck a $10.9bn all-stock deal to buy Comerica, the latest example of regional banks combining in an effort to compete with larger rivals.
If approved by regulators, the deal would propel Fifth Third to become the ninth-largest US bank by assets, controlling approximately $288bn. Shares in Fifth Third rose 1.4 per cent in early trading, giving the company an implied market capitalisation of more than $29bn.
The takeover of Dallas-based Comerica will help to grow Fifth Third’s client base among small businesses across the “Sunbelt” states including Florida, Arizona and California. It would also solidify Fifth Third’s dominance in the Midwest, the Cincinnati-based company said.
The deal, announced on Monday, will be a test of the receptivity under the Trump administration, which bank executives and dealmakers view as friendlier to industry consolidation than the Biden White House.
It is the latest US regional bank tie-up after PNC agreed a $4.1bn cash-and-stock agreement to buy FirstBank, while Columbia Banking System struck a $2bn all-stock deal to acquire Pacific Premier.
Fifth Third chief executive Tim Spence said the Trump administration’s banking regulators had helped get deals done with speedier review and approval.
“I don’t think that the current administration is approving things that the prior administration wouldn’t have, but they are getting the approvals out faster,” Spence told the Financial Times. “And that is a very positive factor when it comes to de-risking integration.”
There is scope for further consolidation in the highly fragmented US banking industry, with more than 4,000 banks across the country. The vast majority are local minnows with under $10bn in assets.
The argument from proponents is that deals to form larger banks will make it easier to compete with industry giants — such as JPMorgan Chase and Bank of America — that have more than $1tn in assets.
But some sceptics have cautioned that more big banks could concentrate risk in the system. In 2023, a trio of mid-sized regional banks failed amid rising interest rates.
Comerica has been squaring up to an activist investor that was preparing to launch a proxy fight and push for a sale.
Under the terms of the deal, Comerica investors will receive a roughly 20 per cent premium to Comerica’s average share price over the past 10 days. Comerica shareholders will receive just under 1.9 Fifth Third shares in exchange for one Comerica share, amounting to about $82.88 a share, or $10.9bn in equity value.
Fifth Third said it expected by 2030 that about half of its branches would be located across south-eastern US. Fifth Third added that the deal would give it a particularly strong position in commercial payments and wealth management, with both divisions generating more than $1bn in fees each year.
Fifth Third expects the deal to close by the first quarter of next year.
