BB&T And SunTrust to Merge, But Why?
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BB&T And SunTrust to Merge, But Why?

BB&T and SunTrust Bank announced their merger this morning. The banks are the 12th and 13th largest US banks based on assets and the combined entity will become the sixth largest US bank. (A complete list of the largest banks based on asset size is here).

I spent my morning reading all of the articles across financial media that have been trying to explain the rationale for this merger, which is the largest proposed bank merger in over a decade. I then waited until 10 AM to watch the CEOs of the two institutions appear on CNBC.

I am not seeing any reason for consumers to be excited about this merger.

Bank of America and Wells Fargo have proven over the last decade that bigger is not better. Their large asset size has not enabled a better lending portfolio, nor has it enabled them to extend more meaningfully into new or more creative financing initiatives in the public interest.

In terms of consumer banking, their large size does not necessarily enable them to offer more creative mortgages products, home equity loans or auto loans. Neither these two - nor JP Morgan Chase or Citibank – have used their size to offer competitive savings rates or CD rates.

We are living in a world where small and creative institutions can offer more unique solutions. We have seen an influx of smaller banks and tremendously talented so-called Neobanks that offer technology solutions that outflank anything that the larger banks can produce. It is a sheer fact that in relation to technology, being smaller and more nimble is an advantage.

Therefore, when Kelly King, BB&T Chairman and CEO, and Bill Rogers, SunTrust Chairman and CEO, began speaking on CNBC this morning about the primary driver for their merger was technology investment, it struck me as being about as compelling as a Trump State of the Union address. The truth is that both banks, in their current position and without a merger, should be able to find the technology talent and resources in Atlanta or Charlotte to compete technologically across all consumer and the institutional spectrums.

Towards the end of the interview, Sara Eisen asked point blank whether this merger is in fact a defensive move designed to address the issue of contracting net interest margins. Kelly King, who has always been a straight shooter on CNBC, turned very candid and indicated that his view of some sort of inflection point in net interest margins is a motivating factor.

In other words, this merger is like an old-line industrial merger. It is being done to drive costs out of the system. Excessive branches in Florida, Georgia and the Carolinas will be shuttered, and people will lose their jobs. Investors in the companies may or may not make money, but few if any benefits are going to inure over the short or medium term to customers of either bank.

As someone who watches innovation in the banking space, I see nothing to celebrate here and I hope that this is the last, and not the first, of a new wave of bank mergers.

Full Disclosure: The author has been an investor in and a consumer of services of both BB&T and SunTrust in the past, and would have no interest in going near either one right now.

Ari Socolow
Ari Socolow: Ari Socolow is the Chief Economist and Editor-in-Chief at BestCashCow. He is particularly interested in issues relating to bank transparency and the climate crisis. Since co-founding BestCashCow in 2005, Ari has been frequently cited in the media as an expert on local and national savings accounts, CD products, mortgage and loan products and credit card rewards products.

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  • bif

    February 14, 2019

    Ari Socolow,
    Why the Trump bashing? You should focus on this site, not anti-Trump comments in many of your articles.
    We need a wall, elimination of unfettered immigration, no anchor babies.

    All these ignorant people should visit or move to Venezuela to see what Democratic Socialism has done there, and the immigration to Sweden, Norway other countries that have seen rape, other crimes skyrocket.

    "Therefore, when Kelly King, BB&T Chairman and CEO, and Bill Rogers, SunTrust Chairman and CEO, began speaking on CNBC this morning about the primary driver for their merger was technology investment, it struck me as being about as compelling as a Trump State of the Union address. "

  • Mike G.

    December 28, 2019

    It’s moronic people like you that we have the world we have today!

  • Sharon Taylor

    October 18, 2020

    Why don't every bank have pictures of the customer's? It would be safer for the customer's if they had their pictures on their cards. I don't think other people would steal the cards then.

  • Frederick H. Cooper Jr.

    July 14, 2021

    I have been using the Suntrust bank for 16 years. It was not a complex bank to do business with. I use my account to pay bills and transfer money to our household account. At the end of the month I was able to pay my personal bills, and switch over to the house account from my computer. Since this merge I have been blocked out of my account and need to get a passcode sent to my cell phone. At which time I was able to do my business, but not the household payments. Each time I wanted to log on to my account I had to go through the same routine. I have been promised if I were to change my password it would not happen. Currently I have had to go through this routine over a dozen times. I then contacted my manager explained the whole situation to her. She said she had gone through the same thing, but by changing my ID, I would not have any more problems. I reluctantly did that and I still have the same problem. I fear with all the changes made to my account the bank will not recognize who I am. This needs to be corrected before the end of this month as that is when I set up bills to be paid. I cannot believe two major banks could have employed users that have no clue how to fix this. I gave my bank manager till the end of this month to rectify this problem or I will take my business to another bank.

    Frederick H. Cooper Jr.

  • jjohnson

    March 30, 2023

    It is important to know as much as we can, about a bank, in which we are considering to do business.
    Whether it is to know about their mergers, their acquisitions, their customer service, they are handling our money and the more we know the better for us. We get a better sense of this establishment from the folks who do business on a daily basis, or from those who plan to make a large investment in their CD.
    Check them out and check again from their customers as well as RELIABLE SOURCES.

    Good CD rates, maybe. Checking on this bank further, absolutely!

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