WASHINGTON–While the banking industry’s trade groups have consistently criticized mergers within credit unions and the asset size of the resulting institutions, a new analysis by the Wall Street Journal found that bank mergers “are on track to hit their highest level since the financial crisis.”
According to data provided by Dealogic and reported by the Journal, deals totaling more than $54 billion have been announced this year, up from about $17 billion at this time last year.
“Banks typically spend weeks or months turning a potential target’s loan book upside down, searching for risky loans or other red flags, before agreeing to acquire it. But the COVID-19 pandemic muddied that process,” the Journal reported.
The report noted that for months lenders have struggled to assess the creditworthiness of their own customers, much less those of their competitors.”
‘No Longer Fearful’
“[Banks] are no longer fearful of the bottom falling out,” Nathan Stovall, an analyst at S&P Global Market Intelligence, told the Journal. “They are no longer looking at a deal like trying to catch a falling knife.”
The report also reminded that 2019 was also a big year for bank mergers, but added, “more of the major regionals are in play this year.”
“So, while there are fewer deals this year than at this point in 2019, the overall value is higher than it was two years ago,” the Journal stated.
Similar to credit unions, the Journal analysis added that smaller banks have also “struggled to compete with the high-end digital offerings and technology of the megabanks.”