PNC Financial Services Group's M&A Strategy

By Saeed Azhar, Pritam Biswas
(Reuters) – PNC Financial Services Group is considering mergers and acquisitions with banks that have core retail deposits in favorable markets, while steering clear of those with significant real estate exposure, according to CEO William Demchak during the Goldman Sachs Financial Services conference in New York.

"What we would look for is somebody with – think about what our strategic need was – right core retail deposits in the right markets," said Demchak. He noted that many institutions have lost their core retail franchise, leading to a deposit base tied closely to real estate, which PNC wishes to avoid.

The potential return of Donald Trump as President might instigate a new wave of bank mergers and acquisitions, with expectations that regulators will be more amenable to approving larger deals. Large regional banks such as US Bancorp, Truist Financial, and PNC Bank are anticipated to participate in these mergers, according to industry experts.

In April, Demchak advocated for a merger policy aimed at establishing more significant competition against the largest Global Systemically Important Banks (G-SIBs). At the conference, he expressed optimism about real growth in earnings for the banking industry, stating, "And management looks at that and says, 'Well, I don't need to do anything because I'm going to grow earnings.'"