Most regional banks, including Comerica, are exploring opportunities to diversify their revenue streams, maintain a more robust balance sheet and expand operations in growing markets to compete against bigger money lenders.
Fifth Third Bank has struck the biggest US bank deal of the year as it has agreed to buy Comerica for $10.9 billion. This merger will create the ninth-largest bank in the country. Such deals and partnerships are gaining traction under President Trump, as the government has unveiled rules to make the merger approval process more seamless.
According to Curtis Farmer, CEO, Comerica, this deal was timed bearing in mind the administration’s business-friendly approach. Business leaders are welcoming this move, as it makes M&As much easier, and industry analysts are hopeful that more such announcements will soon be underway.
These newly changed rules mean that money lenders could witness a shrink in capital requirements. These financial institutions welcomed this move as the banking sector’s capital requirement had surged considerably under the Biden administration. Trump aims to do away with most of the capital rules that have been in place since the 2008 global financial crisis.
This merger is yet to receive approval from some regulators, but both parties are confident that this deal will get the green light at the earliest. Farmer also reiterated that neither bank would be moving forward with this partnership if there was any uncertainty regarding the regulatory approval.
Most regional banks, including Comerica, are exploring opportunities to diversify their revenue streams, maintain a more robust balance sheet and expand operations in growing markets to compete against bigger money lenders. Farmer disclosed that Comerica agreed to such a deal because this offer was made at a time when most of its rivals had already expanded, having been acquired by bigger banks.
He explained that the 2023 regional bank crisis was particularly challenging for the company, as, despite being a $78 billion regional money lender, it did not have a large retail presence. According to reports, the regional bank index climbed over 1%. This partnership will be finalised by the end of the first quarter of 2026.
This merger comes as no surprise, as Comerica has long been the target of a buyout. This is the second regional bank M&A in two months, after FirstBank Holding, yet another large regional money lender in the US, was bought by PNC Financial in a $4.1 billion cash-and-stock deal. This deal will be finalised around early 2026 and will value the PNC’s assets at close to $600 billion, and reduce the group’s gap among rivals like US Bancorp.
Industry analysts have predicted that Zions Bancorp, Flagstar, and First Horizon, among others, are also potential M&A candidates. Such speculations have pushed First Horizon shares up by 3.6% and Flagstar shares rose 2%.
With this deal, Comerica’s shareholders will receive 1.8663 Fifth Third shares for each of the former’s shares, valuing the deal at $82.88 per share. This announcement caused Comerica’s shares to jump 14% while Fifth Third’s shares dropped 1.4%. The latter’s shareholders will own nearly 73% of this combined bank.
Fifth Third already has a large presence in the Midwest, and this acquisition creates a bank with $224 billion in deposits and $174 billion in loans. This merger will birth a bank with combined assets worth $288 billion. This also means that Fifth Third will expand its operations to some of the rapidly growing markets within the US.
To wean their reliance on interests, financial lending institutions are seeking to build various businesses which bring in steadier revenue, like wealth management, payments or treasury services. Moreover, the US has over 4,400 banks and therefore, regional banks are compelled to pursue more M&As in order to become more competitive in the domestic banking sector.
