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SunTrust Banks, much speculated as a takeover target, and Citigroup, under pressure to grow US retail banking, could be an acquisition match, four sector bankers suggested.
One of the bankers, who has worked with SunTrust in the past, said that Georgia-based SunTrust had been in talks with a larger bank earlier this year, but those talks did not continue. He would not however identify which bank was involved.
Spokespersons for both NYSE-listed financial services companies declined comment.
A second banker, familiar with the Florida banking market, said New York-based Citigroup could in fact enhance its Florida presence by acquiring SunTrust.
A third banker, who said he knew both companies from a financial analysis standpoint, added the acquisition would allow Citigroup to increase profitability through cost savings, “given how the two operate.”
The second sector banker said that SunTrust was an attractive target because it was one of the best franchises with which to enter the Florida market and was a “quality organization”.
The second banker and a fourth sector banker, who has worked directly with SunTrust in the past, said they had also heard rumors that SunTrust had been in discussions with Citigroup. The fourth banker noted though that it would be surprising if SunTrust was not also in talks with two or three other banks.
While Georgia-based SunTrust has been a much-speculated takeover target, in a time frame ranging from now to within 24 months, New York-based Citigroup has rarely been mentioned among its most-likely potential acquirers.
Wells Fargo, JPMorgan and PNC have been mentioned in previous reports by this news service, and rumored by others, to be among potential SunTrust acquirers.
Citigroup’s US banking operations, large in assets but relatively small in branch size and profitability, compared to some competitors such as JPMorgan Chase and Bank of America, is seeing increased profitability and growth pressure, sources familiar with Citigroup have previously told this news service.
Citigroup’s main domestic growth strategy has been organic, but those sources familiar with Citigroup recently said US acquisition efforts to add to its approximately 3,500 North America branch network could intensify following the recent resignation of that network’s top executive.
SunTrust CEO Jim Wells was quoted in a recent media report as saying that SunTrust is looking at all options in order to turn the company around, but in other reports Wells has discounted sales rumors.
Analysts and media reports at various times have set a potential SunTrust buyout price at between USD 105 and USD 115 per share.
SunTrust has a market capitalization of around USD 27.5bn.
Its shares have traded as high as USD 94.18 during the past 52 weeks, and shares are currently trading much closer to the 52-week low price of USD 75.11.
SunTrust, with assets of more than USD 180bn, operates 1,685 retail branches and 2,533 ATMs in Alabama, Arkansas, Florida, Georgia, Maryland, Mississippi, North Carolina, South Carolina, Tennessee, Virginia, West Virginia, and the District of Columbia.
SunTrust recently sold-off non-core assets, including a minority stake in Lighthouse Partners, a private Florida-based investment firm, and 9% of its stake in Coca-Cola. It still holds 43.7m Coca-Cola shares. Citigroup has a market capitalization of more than USD 233bn.
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