SunTrust Banks and BB&T Corporation have agreed to combine in an all-stock merger of equals valued at some $66 billion. The combined company will be the sixth-largest US bank based on assets and deposits.
One of the reasons provided by the companies in a statement was “enhanced scale and financial strength will accelerate investment in transformative technology to embrace disruption and create a more distinctive client experience”.
“The combined company will take advantage of its enhanced scale to focus on selecting best of breed systems and processes and making significant investments in technology to create a sustainable competitive advantage in an increasingly digital-first world,” the statement said.
In a Bloomberg analysis of the merger, it was noted that industry executives have long predicted a wave of bank mergers that have so far played out only in smaller or midsize deals: Ernst & Young expects a flurry of transactions this year, fueled by easing regulations and the US tax overhaul, which helped lenders build a war chest to spend on acquiring new clients and technology.
The companies also said they expected some $1.6 billion in annual net cost synergies by 2022, attributed to facilities, information technology/systems, shared services, retail banking and third-party vendors.
William Rogers, chair and chief exec of SunTrust, said in a statement: “By bringing together these two mission- and purpose-driven institutions, we will accelerate our capacity to invest in transformational technologies for our clients. 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.”
An Innovation and Technology Center to drive digital transformation will also be set up alongside new headquarters.