Ask anyone at a major banking summit or sitting through a public lender's quarterly earnings call these days, and one question inevitably surfaces: with the merger window now wide open under the Trump administration, which institution will be first to pull the trigger on an acquisition? For years, regulatory constraints kept the largest banks on the sidelines. Today, they can once again weigh the prospect of buying other banking organisations — even regional lenders with assets exceeding $100 billion.
While JPMorgan Chase & Co (NYSE: JPM) and Bank of America Corp (NYSE: BAC) are barred from such deals because their nationwide deposit share already tops 10%, two mega-banks remain well-positioned to launch transformative takeovers: Citigroup Inc (NYSE: C) and Wells Fargo & Co (NYSE: WFC). As the third- and fourth-largest US banks, both still have ample room under national deposit cap rules to absorb a sizeable regional lender, according to investment bankers, consultants and investors.
Two years ago, a bank of that scale would almost certainly have been denied approval to buy anything at all, said Brian Graham, co-founder of consultancy Klaros. Now, they have a genuine shot at completing deals, and he would be surprised if they were not actively exploring opportunities. Over the past decade, both institutions endured their own "penalty periods" — Citigroup constrained by a consent order and Wells Fargo shackled by growth restrictions. Both have now cleared key regulatory hurdles and formally entered an expansion phase.
A blockbuster acquisition — similar to the kind JPMorgan executed in 2023 and during the 2008 crisis — would hand Wells Fargo or Citigroup thousands of new branches and tens of billions in deposits. For Citigroup, which operates only about 650 domestic branches, that would provide a much-needed source of low-cost funding. For Wells Fargo, which already boasts an extensive branch network, such a deal could amplify scale efficiencies and unlock deeper cost-cutting opportunities.
This is an intense race for scale with a limited window, noted Chris McGratty, an analyst at KBW, speaking to the broader need for industry consolidation. If banks are going to act, now is the time. Although more than 4,200 banks operate across the country, only a handful could realistically serve as acquisition targets for Wells Fargo or Citigroup. An ideal candidate must be large enough to make a meaningful impact, yet not so big that it pushes the buyer past the 10% national deposit ceiling. Complementary branch networks, solid cultural fit and a high-quality deposit base are also essential, which leaves most potential deals lacking a compelling rationale.
Screening against those criteria, five regional banks stand out as strong contenders for the two giants. Fifth Third Bancorp (NASDAQ: FITB) runs a combined commercial and retail engine across the Midwest while expanding rapidly into high-growth Southeastern markets. Huntington Bancshares Inc (NASDAQ: HBAN) offers a low-cost deposit base and continues to extend its branch footprint into growth markets like Texas and the Carolinas. Citizens Financial Group Inc (NYSE: CFG) maintains dense retail and commercial coverage in affluent mid-Atlantic and New England cities. KeyCorp (NYSE: KEY) brings middle-market commercial banking operations with branches stretching from the Great Lakes to the Pacific Northwest. Finally, Regions Financial Corp (NYSE: RF) has built a retail deposit network across the fast-growing Southern corridor, including Texas and Florida.
Beyond that list, Zions Bancorporation NA (NASDAQ: ZION) is a notable potential target for Wells Fargo, given its extensive relationships across high-growth Western states that align closely with the bank's existing footprint. For Citigroup, First Horizon National Corp (NYSE: FHN) represents a plausible acquisition candidate thanks to its rapidly expanding business presence across the US Sun Belt. Wells Fargo and Citigroup both declined to comment. Among the regional banks, Huntington, Zions and First Horizon did not respond, while the others also declined to comment.
"We would seriously consider it" — When asked in April whether Citigroup was interested in buying a large bank, Chief Executive Jane Fraser said the firm is currently focused on organic growth rather than M&A. Even so, reports from March indicated that Citigroup's senior management had discussed the possibility of acquiring a major regional lender to strengthen its deposit base. The bank dismissed that report as "baseless speculation," and its shares fell more than 4% that day.
In the eyes of the analysts covering the bank, Citigroup still needs to prove it can generate higher returns through internal reforms. At a time when the lender is trying to simplify its own structure, absorbing a large regional bank would bring the added burdens of branches, employees, technology systems and integration risk. A deposit-driven deal would be a major distraction for Citigroup, said KBW's McGratty.
By contrast, Wells Fargo Chief Executive Charlie Scharf has signalled openness to transformative deals — whether acquiring a bank or a credit card issuer — while also stressing that organic growth remains the priority. "We should always be thinking about ways to enhance the franchise value, including M&A," Scharf wrote in his March shareholder letter, acknowledging that regulators have become more receptive to transactions. He added that while "we don't feel pressure to pursue" a deal, "if the right opportunity presents itself, we will seriously consider it."
The catch, however, is that the wave of consolidation many anticipated since Trump returned to the White House in 2025 has yet to materialise. In fact, according to EY data, North American bank M&A deal value in the first six months of 2026 fell more than half year-over-year to $30.1 billion. Regulatory barriers may indeed be lowering, but with profits and share prices both on the rise, few banks are eager to sell.
Most companies are enjoying solid margins and fairly strong stock performance, which significantly raises the bar for selling, said Frank Sorrentino, head of bank M&A at Stephens. Everyone sees themselves as a buyer, not a seller. Activist investors pushing banks to enhance shareholder returns note that executives have grown accustomed to weighing acquisition economics against share buybacks, adding a layer of caution to deal-making decisions.
"The rise of regional banking giants?" — Sorrentino believes the current environment is still favourable for M&A, calling it "the best environment we have seen since the financial crisis." Last year, Congress overturned Biden-era restrictions on the Office of the Comptroller of the Currency's merger reviews, and the Federal Deposit Insurance Corporation restored its long-standing merger guidance, effectively reinstating a fast-track review process and lowering the bar for regulatory approval.
On large acquisitions, Wells Fargo holds one advantage Citigroup lacks: stronger stock valuation. That could make deals easier to approve both internally and externally, particularly when a target fills a geographic or product gap. But another path for regional banks to break out is through combining with each other. For years, the industry has speculated that two of the three super-regional banks — PNC Financial Services Group Inc (NYSE: PNC), US Bancorp (NYSE: USB) and Truist Financial Corp (NYSE: TFC) — could eventually merge to create a new banking powerhouse capable of challenging the giants.
Bain & Company predicts in a recent research report that by 2030, consolidation among regional banks will give rise to one to three emerging large banks with at least $1 trillion in assets each. The consultancy's forecasting model, based on two decades of data, also finds that the number of regional banks will shrink from 49 to as few as 30. "We expect more banks, particularly regional players, to build capabilities through M&A," especially in technology areas like artificial intelligence (AI), Bain said.
That vision has never faded. If Wells Fargo and Citigroup choose to stay on the sidelines, regional banks will have to ask themselves whether they can afford to remain on the bench — or whether they must merge with one another to keep pace with the times.