BB and T and SunTrust Plan $66 Billion Merger

BB and T and SunTrust Plan $66 Billion Merger

Ten years ago, many saw the suburbs of Atlanta and North Carolina real estate projects as Florida’s epicenter of the collapse of the housing and commercial market. Ten years later, however, these sunny coastal areas are much more than growing or declining regions. They are among the most dynamic and dynamic economies in the United States. Atlanta continues to pull heavyweights from Mercedes-Benz to Norfolk Southern NSC, as does Charlotte, who recently hosted Honeywell.

Large universities anchor cities along the Atlantic coast, producing a stream of skilled workers and promising start-ups. President Trump’s tax laws have made Florida a promised land for wealthy transplants. The $ 66 billion merger of the Southeast banking giants, BB & T, and Sun Trust is a sign of this economic reality. The Atlantic Coast and the Southeast now have a new national banking champion to cope with rising circumstances.

High Hopes for the Future of American Banking

Once merged, BB & T and Sun Trust, which merged, will hold assets of $ 442 billion and deposits of $ 324 billion, making it the sixth largest bank holding group in the US, surpassed only by JP Morgan, Bank of America, Wells Fargo, Citigroup, and US Bank. This financial strength is a bit timid compared to Charlotte-based Wachovia’s position as the country’s fourth-largest lender before its failure during the financial crisis and its absorption by Wells but creates a new lender on which the big four will pay special attention. Kelly King, CEO of BB & T, based in Winston-Salem, North Carolina, will lead the merged company, which will move its head office to neighboring Charlotte and propose a new name.

According to King, this agreement will create the first financial institution of the future with the scale to compete and win in the rapidly changing world of financial services. In other words, it aims to use increased financial power to offer a range of services and technological prowess on par with major competitors. In fact, they may be catching up. The combined mega-bank as a result of this deal will have the largest deposit market share of all banks in Georgia and Virginia, the second most in North Carolina and Maryland and the third most in states like Florida, Tennessee, and Caroline from the south.

Strategic Reasons for the Merger

By merging, BB & T and Sun Trust are developing primarily in markets where they are already largely present, instead of expanding into new geographic areas (such as Wells with Wachovia). Rightly, this footprint is home to some of the best demographic data in the country. The population growth is expected to increase by 5.3% between 2019 and 2024, while the nominal gross domestic product will increase by 4% per year, exceeding all other major banks.

This results in not only creating a fairly attractive footprint when you look at demographics, but it also helps facilitate the creation of a more competitive franchise to compete with much larger banks. The shares of BB&T and Sun Trust rose sharply, the former having risen by almost 3% and the last by 8% at the beginning of the afternoon. The two companies anticipate that the merger will be 20% of earnings per share by 2021 and will generate net cost savings of $ 1.6 billion the following year.

Technically, through a merger of equals, Sun Trust shareholders will receive 1,295 BB&T shares for every share they own. As a result, BB&T shareholders will own 57% of the new company and Sun Trust shareholders will hold the remaining 43%. In addition to potential integration issues and the challenges of creating a new head office, the merged company will also have to propose a new name to present to customers. Its board of directors will begin to divide equally with BB&T and Sun Trust appointees, but the story is littered with numerous examples of power cuts and disruptions in similar situations.

 

 

About Anand Sai 84 Articles
Anand Sai has worked in the field of market research as an analyst and a consultant and has also operated at several leadership positions. He has an enormous experience with respect to the compilation of high-quality market research reports and boasts over six years of experience in end-to-end project management. Anand is a dependable voice in the market research field and has been named in some of the top industry publications. He is also a travel junkie and loves to explore new places with his friends.