By Saeed Azhar, Pritam Biswas
(Reuters) -PNC Financial Services Group would look at banks with core retail deposits in the right markets for mergers and acquisitions but would avoid lenders with heavy real estate exposure, its CEO said on Tuesday.
“What we would look for is somebody with – think about what our strategic need was – right core retail deposits in the right markets,” William Demchak, chief executive of the Pittsburgh-based company, said at the Goldman Sachs Financial Services conference in New York.
“Many of these institutions have lost a lot of their core retail franchise and their deposit base is heavily related to real estate and assets we don’t want to own. It’s just the math doesn’t work,” Demchak said.
President-elect Donald Trump’s return to the White House could usher in a wave of bank mergers and acquisitions as his administration appoints regulators who are more open to approving larger deals, according to financial executives and analysts.
Large regional banks such as US Bancorp (NYSE:USB), Truist Financial (NYSE:TFC) and PNC Bank are likely to be involved in mergers or acquisitions, industry experts have said.
In April, Demchak sent a letter to regulators advocating for a merger policy that “is capable of building challengers to the largest Global Systemically Important Banks in the United States,” a group known as G-SIBs.
At the conference on Tuesday, Demchak said there is going to be real growth in earnings for the banking industry,
“And management looks at that and says, ‘Well, I don’t need to do anything because I’m going to grow earnings,’” Demchak said.
