Report: Bank M&A slows due to uncertainty

Bank M&A slowed in the first half of this year due to inflation, monetary policy and geopolitical conflicts, according to a June 17 report from PricewaterhouseCoopers. .Fifty-nine bank deals so far this year as of late May, which trails the pace of 2025 when 182 deals were announced, said Craig Mueller, co-founder and managing partner at Lake Elmo, Minn.-based TruStar Advisors. He sees bond depreciation as the biggest limiting factor in M&A. Banks with strong credit and have a lot of deposits that are not lent out are attractive as they can be converted into cash and fund either their current merged balance sheet or convert into new loans. “Deposit-rich banks are in high demand,” and garnering fairly high premiums, Mueller added. Despite the slowed activity, median deal closing times have fallen to 132 days from 187 in 2025 amid a friendlier regulatory environment. Federal reviews have become faster, with greater perceived predictability in dealmaking. Looser M&A regulations are important for banks with more than $1 billion as they often have the professional corporate development groups to take on multiple deals in a year, Mueller said. Smaller banks often do not have the internal staff to buy a bank every year. Megabank deals have driven overall value over the past year to a similar mark from the previous 12 months, PwC noted. Two such deals this year include large Spanish financial institution Banco Santander acquiring Connecticut-based Webster Financial for $12.3 billion. Also, Capital One announced its pending, $5.15 billion acquisition of corporate card and expense management fintech Brex. According to PwC, market participants still expect to benefit from consolidation by spreading operational and compliance costs over a larger revenue base. M&A interest continues even as boards are more cautious in decision-making amid inflation, changing expectations surrounding interest rates and broader market volatility. Stablecoins are increasingly competing for transaction balances and payment flows, according to PwC. The accounting firm expects banks to respond by partnering with or acquiring other financial institutions or investing in payments infrastructure, digital asset custody, tokenization or stablecoin-enablement opportunities.