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- As pandemic uncertainty eases, banks are consolidating at the fastest pace since the financial crisis, the Wall Street Journal reported.
- The total value of announced bank deals through late September is $54 billion, up from $17 billion a year ago.
- Banks are "no longer looking at a deal like trying to catch a falling knife," S&P analyst Nathan Stovall told the Journal.
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As pandemic uncertainty subsides, banks are rushing to consolidate at a pace not seen since the financial crisis, according to a new Wall Street Journal report.
The total value of announced bank deals through late September has reached $54 billion, according to Dealogic data cited by the Journal. That's up from $17 billion during the same period in 2020 and higher than any year since 2008, when year-to-date deal value hit $55.4 billion.
Last year, as the pandemic shook the financial system, bankers began to worry about a tidal wave of loan defaults as the economy collapsed and a new federal law made it hard to tell which borrowers were risky.
Even though pandemic fears are not over, banks are "no longer looking at a deal like trying to catch a falling knife," S&P analyst Nathan Stovall told the Journal.
Meanwhile, the pressure to bulk up is growing. Rock-bottom interest rates have also pinched the amount banks can make from lending, pushing them to compete on other dimensions like digital services and wealth management.
Indeed, in the last few months alone, JPMorgan Chase has agreed to acquire college financial site Frank, Zagat owner the Infatuation, ESG investing platform OpenInvest, and wealth management firm Nutmeg.
Scott Wylie, CEO of Denver-based First Western Financial, said that running a small, sustainable regional bank was becoming untenable.
"For a $300- or $500- or $700-million bank, it used to be you could have a nice little business that could go for a long time," he told the Journal. "These days, that's really hard."