When $500 Billion Isn’t Enough to Take on the Giants

William Demchak is stuck in the middle. The boss of America’s sixth-biggest bank, he enjoys neither the heft of the largest lenders nor the political patronage of the smallest.

It’s not for want of trying. His bank, PNC Financial Services Group Inc., operates a network of nearly 2,300 branches and sits on over half a trillion dollars of assets. And as fast as he wins new business, he’s unable to keep pace with his two largest competitors. Over the past 10 years, JPMorgan Chase & Co and Bank of America Corp. have increased their combined retail deposit share by a quarter to 20.3%. Meanwhile, Demchak’s has barely budged at 3%.

Yet because of his bank’s size, policymakers are sour on him doing deals. Last month, the Federal Deposit Insurance Corporation issued a proposed statement of policy that puts mergers involving banks with assets over $100 billion under greater scrutiny. “By codifying this, boards of directors and management at large firms can understand that the likelihood of approval of megamergers will be low,” commented Rohit Chopra, director of the Consumer Financial Protection Bureau. Another regulator, the Office of the Comptroller of the Currency, proposes an even lower threshold of $50 billion, above which merger applications may not get ready approval.

PNC got to where it is through acquisition, so, if enacted, these rules would be especially punitive. Over three decades, it has completed at least 65 acquisitions, most recently its 2021 purchase of BBVA USA, the Birmingham, Alabama-based subsidiary of Spain’s Banco Bilbao Vizcaya Argentaria SA. It rescued two banks from collapse – Riggs National Corp. in 2005 and National City Corp. in 2008 – and lost out on picking up significant parts of both Silicon Valley Bank and First Republic Bank after they failed in early 2023.