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updated 5/7/2004 2:50:53 PM ET 2004-05-07T18:50:53

Two large regional banks were on Thursday night vying to pay more than $6 billion for control of Tennessee-based National Commerce Financial in the latest sign that consolidation among the U.S.'s myriad commercial banks is gathering pace.

SunTrust Banks, based in Georgia, and Fifth Third Bancorp, which has headquarters in Ohio, were both bidding for National Commerce, according to people familiar with the situation. National Commerce has a market capitalization of $5.8 billion and about $22 billion in assets.

A deal was likely to be announced "within days rather than weeks", according to one person involved in discussions. Another said a transaction could be agreed over the weekend.

The emergence of a duel between two of the largest U.S. regional lenders for control of a relatively small bank in Tennessee is further evidence that the highly fragmented U.S. retail banking market is experiencing one of its periodic bouts of mergers and acquisitions activity.

This week, Royal Bank of Scotland announced the largest acquisition of a U.S. commercial bank by a foreign buyer when it agreed to purchase Charter One Financial of Ohio for $10.5 billion in cash. Combining Charter One with RBS's New England-based Citizens subsidiary will create the seventh-biggest bank in the U.S.

In the last seven months, there have also been two blockbuster deals in retail banking: JP Morgan Chase's $58 billion agreed purchase of Bank One and Bank of America's $47 billion takeover of FleetBoston Financial.

Early this year, Union Planters, also based in Tennessee, agreed to be taken over by Regions Financial of Alabama in a $6 billion all-stock deal. That transaction came with no premium to Union Planters' shareholders. The Southeast, like many western states, is considered an attractive region for expansion because of its fast-growing population.

As well as its home state, National Commerce has operations in North and South Carolina, Mississippi, Arkansas, Georgia, Virginia and West Virginia.

The two regional banks hoping to gain control of National Commerce are well-known to many Wall Street bankers. Only last week, Fifth Third, which has market capitalisation of $29.8 billion, is believed to have pulled out of merger discussions with Charter One, paving the way for RBS to clinch a deal.

In 2001, SunTrust mounted an ultimately unsuccessful attempt to break up a merger between First Union and Wachovia. That deal ended up transforming the banking landscape in the mid- Atlantic region. SunTrust, which has a market capitalisation of $19.5 billion, has about $180 billion of assets including about $20 billion in its retail brokerage unit.

© The Financial Times Ltd 2013. "FT" and "Financial Times" are trademarks of the Financial Times.

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