The prospect of a new wave of bank mergers is gaining momentum as regulatory conditions become more favourable under the Trump administration. After years of limited dealmaking, major U.S. lenders are once again considering acquisitions that could significantly expand their scale.
While JPMorgan Chase and Bank of America face restrictions because their national deposit shares already exceed 10%, Wells Fargo and Citigroup have sufficient capacity to pursue sizeable regional banks, according to investment bankers, consultants and investors.
Regulatory Barriers Ease
Both Wells Fargo and Citigroup have spent much of the past decade operating under significant regulatory constraints. Citigroup faced multiple consent orders, while Wells Fargo operated under an asset cap that restricted its growth.
Those barriers have begun to ease, creating greater room for strategic expansion. Brian Graham, co-founder of advisory firm Klaros, said deals that would have been difficult to approve only two years ago could now become viable.
A large acquisition could provide either bank with thousands of additional branches and billions of dollars in deposits, strengthening their competitive position as the industry increasingly prioritises scale.
Different Benefits for Citigroup and Wells Fargo
For Citigroup, an acquisition could help address one of its biggest challenges in the U.S.: a relatively small domestic branch footprint. The bank operates roughly 650 U.S. branches, leaving it with fewer opportunities to gather low-cost deposits compared with larger domestic rivals.
Buying a regional lender could provide Citi with an established branch network and a substantial deposit base, potentially improving its funding profile while accelerating its U.S. expansion.
Wells Fargo, meanwhile, already operates one of the country’s largest branch networks. A major regional acquisition could therefore focus more heavily on scale, operational efficiencies and cost reductions.
KBW analyst Chris McGratty said the banking industry is facing a growing “race for scale,” increasing pressure on lenders to act while regulatory conditions remain supportive.
Five Regional Banks Stand Out
Although the U.S. has more than 4,200 banks, only a limited number would meet the requirements for a transaction involving Wells Fargo or Citigroup.
Potential targets must be large enough to materially strengthen the buyer while remaining below the 10% national deposit threshold. They also need complementary branch networks, strong deposit franchises and compatible corporate cultures.
Applying those criteria leaves five regional banks as particularly compelling candidates for either Wells Fargo or Citigroup.
A successful deal could give the buyer greater scale, stronger deposits and additional cost-saving opportunities, while potentially accelerating consolidation across the U.S. banking sector.
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