Would Citigroup Ever Consider Buying Another U.S. Bank?
Banks have accelerated their mergers and acquisitions (M&A) activity over the past six months, with the announcement of several big regional banking deals. Many believe M&A in the sector could pick up later this year, and are wondering how big a deal we could potentially see in the space. The large U.S. banks are flush with capital, and could have more excess capital when they likely release the reserves they've been holding for potential loan losses later this year. Could one of the largest banks in the U.S., like, say, Citigroup (NYSE: C), buy another big commercial bank? Let's take a look.
Citigroup is in a unique position. While the four largest banks in the U.S. are flush with capital, JPMorgan Chase and Bank of America are not allowed to buy another depository institution. U.S. banking laws prohibit one bank from acquiring another if the acquisition would push that bank over 10% U.S. deposit market share. And Wells Fargo, which really would be at or above the limit if not for regulatory issues, is still close to the 10% threshold.
Data source: Bank financial reports, Federal Reserve. * = as of Dec. 31, 2020
Source Fool.com
