Top 5 large bank mergers

In the light of BB&T and Suntrust merging (which happened like some time ago and The Compounding Dollar has now just started to give comments on it… good job Jimmy… excellent journalism) this has been the biggest merger since the 2008 recession, if the deal is approved they will be the sixth largest bank in the U.S. and I figured I’d give you a whole big list of banks becoming bigger banks. Or as I like to call it, an asshole coming together with another asshole and becoming a bigger asshole.

Chart of bank mergers

Now, I know it says there will be a chart… but there isn’t, mainly because, the chart would not fit entirely onto this page.

bank mergers chart.PNG

Like THAT ABOVE is just this tiny part of the chart, but the overall jist of it is that a bank bought another bank, that bought another bank, that ended up merging into one large bank.

Bank names like JPMorgan Chase, Bank of America, Wells Fargo, PNC, Citigroup, Deutsche bank, HSBC, etc. usually end up purchasing the smaller bank and ultimately become this larger entity or the larger successor.

You can also categorize these mergers in terms of their market capitalization, purchase value, by time frame, etc. so before I list them, I’ll briefly summarize how they will be presented.

Fun fact: Bank of America used to be 35 separate entities

In terms of transaction value

What bank paid top dollar for what bank.

#1: Up first, we have Citicorp purchasing Travelers group for a pretty $140 billion back in 1998. Ultimately changing their name to Citigroup.

#2: Bank of America purchased Merrill Lynch for $50 billion on September 2008, in the midst of the financial crisis.

#3: Bank of America is back again, this time purchasing FleetBoston financial in 2004 for $47 billion.

#4: Bank of America (again) is back purchasing MBNA corporation in 2005 for $35 billion

#5: Banc One corp (finally, a different name) purchased First Chicago for $30 billion in 1998 and changed their name to Bank One Corp.

During the financial crisis  

We tend to see many of these mergers happen during recessions, especially during the financial crisis when banks faced liquidity issues, credit freezing, and credit defaults. All of these purchases happened in 2008.

#1: Bank of America purchasing Merrill Lynch for $50 billion. Why? Merrill Lynch experienced rapid liquidity “evaporation” and was seeking a merger, and found Bank of America. Merrill also had large chunks of toxic debt, while yes, it was being written off and being sold off, Merrill was still facing hardships in regards to their balance sheet.

#2: Wells Fargo purchased Wachovia for $15.1 billion. Why? Like Merrill Lynch, Wachovia also had a very large amount of toxic debt and a massive loan portfolio.

#3: TD Banknorth purchased Commerce bankcorp for $8.5 billion

#4: PNC purchased National city corp for $5.08 billion

#5: JPMorgan Chase purchased Washington mutual for $1.9 billion

#honorable mention: JPMorgan chase purchasing Bear Stearns for a mere $236 million or quite literally, $10 per share, a 97% discounted price from their 52 week high of $133.20 per share. It desperately sought for someone to buy their bad debt.

The next big bank acquisition

With BB&T and Suntrust in the works, it leaves room for banks to merge with other banks and leave them at outstanding high valuations. I’m only talking about mid-size banks, however. Wells Fargo, JPMorgan, Bank of America, and Citi will have to sit this one out, as these banks will get a HUGE “no” from the U.S government if they even think about purchasing another bank. I’m looking closely at Synchrony, M&T, Deutsche bank (ESPECIALLY DEUTSCHE), Ally, Discover, and Fifth third bank. Either they’re getting bought out OR they’re doing the buying in the years that follow.