RBC lands advisory record with $66bn SunTrust-BB&T merger

Charlotte has been selected for the 2020 Republican National Convention

Charlotte has been selected for the 2020 Republican National Convention

Shares of SunTrust climbed 5.6 percent before the market open, while BB&T's stock rose slightly. Chief Executive Officer Brian Moynihan last month said another round of consolidation in the USA could lead to the emergence of a new competitor.

The combined company will be based in Charlotte, North Carolina, its board and management evenly split between BB&T Corp. and SunTrust Banks Inc.

BB&T reports that, as one company, they will service more than 10 million households across the nation.

The merger joins two banks that have grown along with the bustling Southeast and Mid-Atlantic regions where they began.

The long-anticipated boom in bank mergers and acquisitions may finally be arriving. Wells Fargo merged with Wachovia, JPMorgan acquired Bear Stearns and Washington Mutual and Bank of America purchased Merrill Lynch.

Deal activity in the banking sector languished after the financial crisis a decade ago as stricter rules were imposed on lenders with more than $50 billion in assets and regulators barred banks with compliance issues from expanding.

Since that time, the gap between the size of the big Wall Street banks and the regional banks like BB&T, SunTrust, PNC Bank, Fifth-Third and others has only widened.

BB&T and SunTrust have agreed to merge into a new and as-yet-unnamed bank, in an all-stock deal valued at approximately $66 billion. The new bank, which would have its headquarters in Charlotte, N.C., will be the sixth-largest in the US based on assets and deposits.

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A more permissive regulatory environment culminated Thursday in the biggest bank merger since the 2007-2009 financial crisis, and more deals are likely, analysts and investors said.

But the deal is weighted toward BB&T, whose shareholders will own around 57 percent of the new bank compared to SunTrust shareholders' 43 percent.

Executives for both banks indicated Thursday that jobs could be shed as the new company closes overlapping branches and gets rid of duplicate positions.

The combined company will keep a presence in Winston-Salem, North Carolina, where BB&T is based. It will keep a wholesale banking center in Atlanta, where SunTrust has its headquarters. About one-quarter of the BB&T and SunTrust branches, 740 of them, are within two miles of each other. Until then, Rogers will serve as president and chief operating officer. After that, he will serve as executive chairman for six months.

King will serve as chairman and CEO of the new company until September 2021, but will stay on the board through 2023.

SunTrust's chairman and CEO, William Rogers, will take on the roles of president and chief operating officer at the new company and then become CEO when King transitions to executive chairman, according to the statement.

SunTrust shares were up 8.5% following the news, and BB&T's were higher by 4.8%.

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