This year could be a “banner year” for bank mergers and acquisitions, and while there remain numerous variables that could hinder activity, improving economic conditions, enhanced net interest margins and the possibility of tax cuts “should improve fundamentals,” according to a recent analysis by the law firm Hunton Andrews Kurth.
Among the positive factors that should increase M&A activity are increasing CEO confidence and the solid performance of the overall stock market. President-elect Trump’s administration is also likely to be less hostile to proposed mergers than the Biden administration, although the law firm cautioned that “populist views in the Trump administration and Congress that may scrutinize major consolidations or mergers, particularly if they will impact U.S. jobs.” Lower interest rates combined with Trump’s pledges to lower taxes and cut regulation may also fuel bank M&A.
Still, the law firm warned there are some factors that could hold back M&A. One would be the economic effects of Trump’s proposed tariffs and deep cuts in government spending. Political dysfunction in Washington, D.C., could also affect M&A activity, with Republicans having only a slim majority in the House. It also noted that “a more business-friendly antitrust posture from the federal government could be offset by state attorneys general or state-level bank regulators.”
