Charles Scharf, chief executive officer of Wells Fargo & Co., and Jane Fraser, chief executive officer of Citigroup Inc.
Caroline Brehman | Qilai Shen | Bloomberg | Getty Images
Walk the halls of any major banking conference or listen in on a quarterly earnings call, and one topic keeps coming up: With the window for mergers wide open under the Trump administration, who will take a swing?
After years on the sidelines because of regulatory restrictions, large banks can once again contemplate buying other lenders, even a $100 billion-plus-asset regional bank.
While JPMorgan Chase and Bank of America are barred from such a deal because they already have more than 10% of national deposits, there are two megabanks that could pursue a large acquisition: Citigroup and Wells Fargo. The nation’s third- and fourth-largest banks have enough room under the national deposits cap to pursue a hefty regional bank, according to investment bankers, consultants and investors.
“Two years ago, it was impossible for a bank of that size to get approval to acquire almost anything,” said Brian Graham, co-founder of advisory firm Klaros. “Now, it’s possible they can get a deal done. I’d be shocked if they aren’t exploring it.”
After spending much of the last decade in a penalty box — Citigroup via consent orders and Wells Fargo capped by growth restrictions — both institutions have cleared key regulatory hurdles and are in growth mode.
A large acquisition — like the ones that rival JPMorgan pulled off during the crises of 2023 and 2008 — would give Wells Fargo or Citigroup thousands of branches and billions of dollars in deposits.
For Citigroup, which has only about 650 U.S. branches, it would offer a much-needed source of cheaper funding. For Wells Fargo, which already has a large branch network, such a transaction would add more scale and cost-cutting opportunities.
“There’s a massive race for scale, and the shot clock is running,” KBW analyst Chris McGratty said about the broad need for industry consolidation. “If you want to do something, this is the time to do it.”
While there are over 4,200 banks in the U.S., only a handful would make sense as acquisition targets for Wells Fargo or Citigroup. A viable target needs to be large enough to move the needle, but small enough to keep the acquirer comfortably beneath the 10% national deposit cap. On top of that, a complementary branch network, good cultural fit and quality deposits are must-haves, making most deals hard to justify.
Run screens on those criteria, and five regional banks emerge as strong contenders for either bank.
Fifth Third delivers a commercial and retail engine across the Midwest and a fast-growing Southeastern footprint. Huntington provides a low-cost deposit base alongside a growing branch presence in high-growth markets in Texas and the Carolinas.
Citizens offers dense retail and commercial coverage across affluent Mid-Atlantic and New England cities. KeyCorp brings a middle-market commercial business and branches stretching from the Great Lakes to the Pacific Northwest.
Finally, Regions delivers a retail deposit footprint in the fast-growing Southern corridor, including Texas and Florida.
Beyond that group, a bank that would work specifically for Wells Fargo is Zions, which provides relationships across high-growth Western states, fitting well with its footprint.
For Citigroup, a possible target that makes sense is First Horizon, with its presence across the fast-growing U.S. Sunbelt.
Wells Fargo and Citigroup declined to comment for this article. Most of the regional banks mentioned above also declined to comment, with the exception of Zions and First Horizon, which did not respond.
‘We will look at it’
When asked about the potential for Citigroup to purchase a large bank in April, CEO Jane Fraser said the bank’s focus is on organic growth, not deals.
Still, Citigroup executives reportedly discussed the idea of buying a major regional lender to bolster its deposit base, Bloomberg News said in March. Citigroup said at the time that the report was “baseless speculation.” The firm’s shares dropped more than 4% that day.
To many of the analysts covering the bank, Citigroup is still trying to prove that its self-help story can deliver higher returns. Taking on a large regional bank would add branches, employees, technology systems and integration risk while Citigroup is trying to simplify itself.
“A depository deal would be a major distraction” for Citigroup, said KBW’s McGratty.
Wells Fargo CEO Charlie Scharf, on the other hand, has telegraphed an openness to a transformative deal, from acquiring a bank to a credit-card player, even as he also emphasized the organic growth emphasis.
“We should always consider ways to increase franchise value, including M&A,” Scharf wrote in a March shareholder letter, acknowledging that regulators were more amenable to deals.
While “we feel no pressure to pursue” a deal, Scharf said, “if a great opportunity exists, we will look at it.”
But there’s one problem: So far, the wave of consolidation that many expected when Trump returned to office in 2025 hasn’t materialized. In fact, the value of North America bank mergers actually fell by more than half to $30.1 billion in the first six months of 2026 compared to the year-earlier period, according to EY data.
Yes, regulatory barriers may be falling. But few banks are eager to sell when profits and share prices are rising.
“Most companies have good profit margins, stock prices are really good, and it just raises the bar if they are going to sell,” said Frank Sorrentino, a mergers banker at Stephens. “Everybody thinks they’re a buyer, not a seller.”
Activist investors who have pushed banks to improve shareholder returns say executives are now routinely comparing the economics of an acquisition with simply repurchasing their own stock, creating more discipline around deals.
Regional champion?
The moment is still favorable for mergers, according to Sorrentino, who called it “probably the best environment that we’ve seen since the financial crisis.”
Last year, Congress overturned Biden-era restrictions around mergers at the Office of Comptroller of the Currency, and the Federal Deposit Insurance Corporation reinstated its long-standing merger guidelines, effectively restoring expedited reviews and lowering the bar for regulatory clearance.
When it comes to big acquisitions, Wells has something Citi doesn’t: a stronger stock currency. That could make a deal easier to justify, particularly if the target fills a geographic or product gap.
But another way to win the race is for regionals to team up with each other.
For years, bankers have speculated that two of the three biggest super-regionals — PNC, U.S. Bancorp and Truist — could eventually combine to create a new banking champion capable of taking on the giants.
Bain projects that mergers among regionals will create one to three new megabanks with at least $1 trillion in assets by 2030, according to new research shared with CNBC. The consulting firm’s predictive model, which was based on two decades of data, also found that the ranks of regional banks will shrink from 49 to as few as 30.
“We expect more banks, particularly regional players, to use M&A to add capabilities,” especially around technology including artificial intelligence, Bain said.
That idea hasn’t gone away. If Wells Fargo and Citi decide not to swing, the regionals have to decide whether they can afford to sit on the bench — or merge with each other to keep pace.