A SunTrust-BB&T merger would create a $22.8 billion auto finance operation, propelling the business into the top 20 among auto financiers, according to Big Wheels Auto Finance Data. The combined entity would leapfrog lenders like Citizens One Auto Finance, PNC Dealer Finance, and Huntington Auto Finance.
However, integrating the banks’ auto finance businesses will take time, Jim Houston, senior director of automotive finance at J.D. Power, told AFN. “Experience tells me it will take months to redefine territories and reduce redundancies,” he said.
It makes the most sense for the banks’ auto lending divisions to operate together, Jeremy Acevedo, Edmund’s manager of industry analysis, told AFN. “I think [the banks] will combine auto operations and operate collaboratively, not only from an efficiency standpoint but because of the technology burden that now can be shared.”
The merger — which is expected to close in the fourth quarter — shows parallels in the auto industry. For example, the Volkswagen AG and Ford Motor Co. alliance announced last month is serving as an opportunity for the companies to “go head to head” with technology giants like Google and Apple, Acevedo said. Similarly, BB&T and SunTrust — two banks with similar portfolios and operations — are establishing partnerships with the same end goal of sharing the weight of technology while becoming more cost-efficient, Acevedo said.
The costs of going mobile, establishing a digital presence, all while managing cybersecurity threats are “massive,” he added. Further, the industry is moving into blockchain and artificial intelligence, Acevedo said. Another benefit of the merger is that it “pinches out other regional southern banks,” Acevedo said. “That’s a major play here, too.”
The combined company will operate under a new name and brand, which will be determined before the closing, the banks noted in a press release. The combined company’s board of directors and executive management team will be evenly split between the two institutions.
Additionally, the new corporate headquarters will be in Charlotte, N.C., and will include an “Innovation and Technology Center” to drive digital transformation, the companies noted. The deal is an all-stock merger valued at approximately $66 billion with a targeted Sept. 12 closing date.
BB&T Bank and SunTrust Bank did not respond to requests for comment.