(Bloomberg) -- Bob Diamond sees the number of US lenders dwindling by 3,000 in the next two to three years as regulators embrace consolidation of the industry — a trend that he hopes to help accelerate.
Diamond's Atlas Merchant Capital, which raised a fund to invest in US regional banks earlier this year, is already working on a number of tie-ups among the 4,500 banks across the country, he said in an interview with Bloomberg Television. He declined to name the lenders his fund is working with.
"With the support of the Treasury and the SEC in terms of approvals of these — and the OCC — we think that there's going to be consolidation that takes that number of 4,500 to something closer to 1,000 or 1,500 literally over the next two to three years," said Diamond, who ran Barclays Plc until 2012 before founding his investment firm.
A slew of US banking deals has sparked a wave of speculation about further consolidation among lenders, with an increasingly friendly regulatory climate under President Donald Trump seen as setting the stage for more tie-ups. It's a pivot from the Biden administration's more rigid attitude, and paves the way for a revival in M&A activity that cooled in the wake of the 2023 failures of Silicon Valley Bank and others in the sector.
Just in recent weeks, Fifth Third Bancorp agreed to buy Comerica Inc. for about $11 billion in stock to create the ninth-largest bank in the US. Huntington Bancshares Inc. then said it would buy Cadence Bank for $7.4 billion and extend its footprint to 21 states, stretching from the Midwest to the South to Texas.
In September, PNC Financial Services Group Inc. said it will acquire FirstBank Holding Co. for $4.1 billion to expand in Colorado.
Diamond said he sees more activity taking place among banks with assets between $10 billion and $50 billion. Lenders face more regulatory scrutiny as they amass more assets, making scale more important to executives as time goes on.
"You think about the cost of technology, that comes right out because almost all these banks are on the same technology platform; the cost of regulatory relations, you've got duplicate departments, that comes right out," he said. There's an opportunity "to get really, really good returns just from the cost synergies, to say nothing about the revenue synergies."
It's not just banking — top dealmakers across Wall Street have been enjoying a broad-based recovery in mergers and acquisitions so far this year. That momentum should continue after Federal Reserve officials cut their benchmark rate last week by a quarter percentage point for a second month in a row, according to Anna Skoglund, Goldman Sachs Group Inc.'s co-head of investment banking across Europe, the Middle East and Africa.
"Throughout 2025, we've seen an increasingly supportive environment anyway — we've seen M&A volumes up 40%, we've seen sponsor activity coming back in earnest and we're seeing people being quite forward leaning anyways," Skoglund said in a separate interview with Bloomberg TV. "So, of course, a rate cut will be supportive — further supportive of that — but I don't necessarily think it's going to fundamentally change the momentum we're seeing. If anything, it's going to continue in 2026 and 2027."
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