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The banking industry’s long dormant merger machine is stirring under a friendlier Trump administration, and two giants stand apart. Wells Fargo and Citigroup have enough room beneath the federal 10% national deposit ceiling to purchase a major regional lender, while JPMorgan Chase and Bank of America do not.

After years constrained by consent orders and growth restrictions, both banks have cleared crucial regulatory barriers. Klaros cofounder Brian Graham said, “Two years ago, it was impossible for a bank of that size to get approval to acquire almost anything.”

The political and regulatory climate has changed dramatically. Graham added, “Now, it’s possible they can get a deal done. I’d be shocked if they aren’t exploring it.”

A major acquisition could deliver thousands of branches and billions of dollars in deposits. Citigroup would gain cheaper funding and a broader domestic network, while Wells Fargo could extract cost savings and build even greater scale.

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“There’s a massive race for scale, and the shot clock is running,” KBW analyst Chris McGratty said. “If you want to do something, this is the time to do it.”

Only a narrow collection of regional banks appears large enough to matter without pushing either buyer too close to the deposit ceiling. Attractive targets also require sound deposits, compatible operations, useful branch networks and a culture capable of surviving a difficult integration.

Fifth Third stands out for its retail and commercial businesses across the Midwest and its growing Southeastern presence. Huntington offers relatively inexpensive deposits and expansion opportunities in Texas and the Carolinas.

Citizens brings dense coverage across prosperous cities in New England and the Mid Atlantic. KeyCorp would contribute a middle market commercial franchise stretching from the Great Lakes to the Pacific Northwest, while Regions offers valuable exposure to Southern markets including Florida and Texas.

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Zions could be an especially logical match for Wells Fargo because of its relationships across growing Western states. First Horizon could fit Citigroup because of its reach across the expanding Sunbelt.

Citigroup and Wells Fargo declined to comment, as did most of the regional institutions identified as potential targets. Huntington, Zions and First Horizon did not respond to requests for comment.

Citigroup Chief Executive Jane Fraser has said her bank remains focused on organic growth rather than acquisitions. After Bloomberg reported that executives had discussed purchasing a large regional lender, Citigroup dismissed the report as “baseless speculation.”

Investors also question whether Citigroup should attempt a sprawling integration while it is still simplifying its own operations and trying to improve returns. McGratty warned, “A depository deal would be a major distraction” for the company.

Wells Fargo Chief Executive Charlie Scharf has sounded more receptive to a potentially transformative transaction. “We should always consider ways to increase franchise value, including M&A,” Scharf wrote in a shareholder letter, while acknowledging that regulators had become more welcoming toward combinations.

Scharf stressed that “we feel no pressure to pursue” a transaction. Even so, he left the door wide open by stating, “if a great opportunity exists, we will look at it.”

The expected merger surge has yet to arrive despite the improved regulatory environment. North American bank merger value fell by more than half to $30.1 billion during the first six months of 2026 compared with the same period one year earlier, according to EY.

Healthy earnings and strong stock prices have made potential sellers harder to persuade. Stephens banker Frank Sorrentino explained, “Most companies have good profit margins, stock prices are really good, and it just raises the bar if they are going to sell.”

“Everybody thinks they’re a buyer, not a seller,” Sorrentino added. Still, he described the current climate as “probably the best environment that we’ve seen since the financial crisis.”

Congress helped open the door by overturning Biden era merger restrictions at the Office of the Comptroller of the Currency. The Federal Deposit Insurance Corporation also restored its long standing guidelines, making expedited reviews available again and reducing some regulatory uncertainty.

Wells Fargo holds another advantage because its stronger shares provide more valuable currency for financing an acquisition. Citigroup faces a tougher valuation challenge, particularly while shareholders continue weighing whether internal reforms can produce acceptable returns without the hazards of a major deal.

Regional banks could also merge among themselves rather than wait for Wells Fargo or Citigroup to strike. Industry speculation has long centered on whether two institutions among PNC, U.S. Bancorp and Truist might combine into a new national heavyweight.

Bain expects regional combinations to produce between one and three new banks with at least $1 trillion in assets by 2030. Its model also projects that the number of regional banks could fall from 49 to as few as 30.

“We expect more banks, particularly regional players, to use M&A to add capabilities,” Bain said, pointing particularly to technology and artificial intelligence. If Wells Fargo and Citigroup remain cautious, regional executives may soon need to choose between consolidation and losing ground to larger rivals.

DISCLAIMER: GoldInvestors.news is not a registered investment, legal or tax advisor or broker/dealer. All investment/financial opinions expressed by GoldInvestors.news are from the personal research and experience of the owner of the site and are intended as educational material. Although best efforts are made to ensure that all information is accurate and up to date, occasionally unintended errors and misprints may occur.