BB&T-SunTrust deal prompts questions of overlap, culture
BB&T in Winston-Salem, North Carolina, has agreed to buy SunTrust Banks in Atlanta to create the sixth-biggest U.S. bank.
BB&T will pay $28.2 billion in an all-stock deal stock, giving it 57% of the combined company, which will be based in Charlotte, North Carolina. The biggest bank merger in 10 years, it will result in a juggernaut in the Southeast with $442 billion in assets and 10 million customer households.
Two advisors who work for SunTrust said uncertainty was the overriding feeling hours after the announcement. One worked in an area where there were nearby competing BB&T branches and questioned which bank would really be in charge of the wealth management unit. Both requested anonymity because they weren’t authorized to speak about the deal.
The deal puts the combined bank in the upper echelons of banking and allows it to compete the big national banks. But the overlap is a cause for concern.
One outside observer had some advice for them: Don’t believe what you’re hearing in these early days. Recruiter Rick Rummage said the real answers will take time to come out.
Among the biggest concerns: Will BB&T allow the SunTrust advisors to keep the same autonomy they now enjoy? Probably not, says Rummage. It would be a nice surprise if the acquirer decided to adopt the culture of the acquired, he said, but he’s not expecting it.
To be sure, Rummage says that BB&T has some positive attributes: the bank has a strong culture, spends money on training and tries not to fire employees after acquisitions.
That strong culture, however, will bring some frustrations to the SunTrust advisor force, he says. In general, BB&T is a very conservative bank and its salespeople don’t step outside the lines. More specifically, it doesn’t prize wealth management the same way SunTrust does.
Indeed, GenSpring Family Offices, which caters to UHNW clients, has been a crown jewel of SunTrust for nearly 20 years.
By contrast, BB&T, which owns regional brokerage Scott & Stringfellow in addition to its branch-based advisors, seems to view wealth management as an afterthought, Rummage says. Also, SunTrust tends to pay better, he notes.
Among the biggest concerns: Will BB&T allow the SunTrust advisors to keep the same autonomy they now enjoy?
Rob Blevins, a recruiter who has worked with SunTrust, says the two firms should blend well together, noting similarities in size and culture. “They’re both Southern banks, and they’re kind of super regionals,” he says.
But he agrees they've used different approaches in developing their wealth management units. SunTrust has also been more aggressive recruiting wirehouse talent, hiring a Wells Fargo team last year managing $500 million, while BB&T has been less aggressive in courting talent from the big firms.
Neither bank responded to requests for information, but in a press release, BB&T Chairman and CEO Kelly King said the transaction was “a true merger of equals and … an extraordinarily attractive financial proposition that provides the scale needed to compete and win in the rapidly evolving world of financial services.”
The companies expect to cut $1.6 billion in annual expenses by 2022, or roughly 12% of their current costs, according to the press release.
King will serve as CEO until September 2021 and as chairman through March 2022. He will remain on the board until the end of 2023. William Rogers Jr., SunTrust’s chairman and CEO, will serve as the company’s president and chief operating officer until he succeeds King as CEO. Rogers, who will join the board, will eventually succeed King as chairman.
The 14-member board and the executive management team will be evenly split between BB&T and SunTrust.
The appeal of the merger, Rummage notes, is scale. This puts the combined bank in the upper echelons of banking and allows it to compete the big national banks. But the overlap is a cause for concern. The combined bank will have 750 branches within 2 miles of another, he says. And it can cost $1.5 million a year to run a typical bank branch.
So even if advisors working at a branch targeted for closure are retrained and offered a new job, it may well not be a job they want, he says.
But overall the merger makes a lot of sense, according to Rummage. “For years, both BB&T and SunTrust have been takeover targets,” he notes.