Bank investors are looking everywhere for the next mega-deal

Analysts have long speculated that smaller banks needed to join forces to scale up their technology budgets as consumer preferences shift to mobile devices, but deals haven’t been happening. Completed bank mergers totalled $19.7 billion last year, the lowest in more than two decades, according to Refinitiv.

Whether or not Thursday’s deal – the biggest since the 2008 financial crisis – marks the beginning of a wave of consolidation depends on the human element: Can potential CEO partners set aside their egos for the greater good?

In the case of the Thursday’s deal, there is a clear succession path: BB&T CEO Kelly King will lead the combined bank until 2021, when the younger SunTrust CEO William Rogers takes over.

“A merger of equals always works in a spreadsheet,” Foran said. “In real life, sometimes it does and sometimes it doesn’t. Sometimes the two CEOs get along. Sometimes, 10 months in they start hating each other.”

Helping matters is a Federal Reserve proposal late last year that created four tiers of regulation for banks with more than $100 billion in assets. Megabanks still face the highest level of scrutiny, but now firms with less than $700 billion in assets will have lower compliance and liquidity requirements. (The yet-to-be named BB&T-SunTrust bank will have $442 billion in assets.) That clarity could nudge more bank CEOs to start flirting with their competitors.

“We will probably will see more of this,” Foran said. Regulators have created a new category of banks “that can be big, like U.S. Bancorp, but not treated like Bank of America or J.P. Morgan.”

Another question is whether the deal can close on time. BB&T and SunTrust expects it to complete by the fourth quarter of this year. If it drags out, as other recent transactions have, the combined firm risks losing employees and clients to rivals.

“Right now there’s CEOs at a Synovus or Regions blasting their entire team saying, ‘Get me the short list of people to hire from BB&T and SunTrust’,” Foran said.