Is a Massive M&A Wave on the Way?

Pre-COVID, the bank sector was ripe for consolidation

I remember thinking heading into this year that it was likely to be an active one for M&A, for a variety of reasons. 

• First, there were notable fundamental challenges. Interest rates were heading lower, pressuring margins; loan growth was likely to remain muted given late cycle credit concerns; and increased technology spend – on infrastructure and talent — was a certainty, amidst encroachment from fintech and market share gains by the big banks. Thus, cost takeouts via M&A were among the few fundamental levers available to be pulled to help drive earnings growth in the coming years.
• Second, there were the typical and ongoing succession issues in the C-suite and in boardrooms at many banks across the country, which has long been a catalyst for bank sector consolidation.
• Third, following the longest economic expansion on record, the perception was that at some point, a downturn was inevitable, which would likely lead many to conclude that an exit now was preferable to waiting out a recession of unknown length and severity.