Pinnacle shares tumble as $8.6 billion deal for Synovus raises fears of stricter oversight
The combined entity, with more than $115 billion in assets, would cross the threshold to be classified as a "large financial institution," subject to much stricter regulations.
Analysts said that surpassing the $100 billion threshold often negatively affects bank profitability.
"The broader balance sheet impact may not be fully captured in the company's current projections and that it could represent an incremental headwind to profitability," Jefferies analysts wrote in a note.
"It necessitates growth in high-quality liquid asset securities, which typically yield less than loans."
Shares of Synovus, which has more assets than Pinnacle, tumbled 12.7% in morning trading, while Pinnacle, which has a larger market capitalization, also declined, according to LSEG data.
Expectations of lower interest rates and positive economic data have improved executive sentiment, a marked reversal from early April when U.S. tariff policy put dealmaking on hold.
Analysts remain cautious about the timing of Pinnacle's decision. 'Pinnacle's organic growth model was strong enough not to require a deal that could disrupt the existing strategy,' J.P. Morgan analysts said.
Some analysts said that crossing the asset mark could provide a buffer for a stronger balance sheet and enhance operational efficiency.
"The combination includes two growth-oriented companies with a long history in large, growing Southeast markets giving a solid start out of the gate," analysts at Raymond James said in a note.
U.S. bank M&A activity is expected to accelerate in the second half of the year, supported by a more accommodating regulatory environment and a new merger review process.
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Breakingviews - EU's lopsided Trump trade deal will be short-lived
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The Independent
an hour ago
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The Guardian
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Sign up to Business Today Get set for the working day – we'll point you to all the business news and analysis you need every morning after newsletter promotion The deal also creates a division on the island of Ireland as traders in Northern Ireland can sell into the US on a 10% tariff rate, setting the scene for difficult diplomatic conversations over guarantees to maintain stability on the entire island in the Good Friday agreement. Ireland's deputy prime minister, Simon Harris, said he 'regretted' the 15% tariff rate but said 'certainty' was important. 'There is still a lot of detail on the agreement which will need to be brought forward including in relation to pharma, aviation and other sectors. Over the coming days, we will be examining what has been agreed and the full implications for Irish business and the economy, including any implications for the All-Island economy,' he said. There was also confusion over the tariff rate applying to steel. While Trump indicated his punitive 50% rate would continue to apply as part of 'a worldwide thing that stays the way it is, von der Leyen told reporters there would be a quota system in place. The UK steel industry is still faced with 50% tariffs despite Trump's initial promise they would be brought to zero, with hopes that there could be further concessions when Trump meets Keir Starmer, the British prime minister, in Scotland on Monday. The agreement struck in Scotland is likely to be greeted with relief by financial markets when they open on Monday, after a turbulent few months with jittery investors spooked by the prospect that Trump's tariff wars could pummel the world economy. Trump also signalled progress could be made in trade talks with China, with the US president saying 'we're very close'. Reports by the South China Morning Post on Sunday suggested Washington and Beijing were preparing to announce a 90-day extension to a pause in tariffs to allow for continuing negotiations, before a 12 August deadline. Markets rallied sharply last week after Trump reached a trade deal with Japan, the world's fourth-largest economy, amid investor hopes that the measures announced by Washington in the president's 2 April 'liberation day' plan could be avoided. Facing von der Leyen in the eponymously named DJT ballroom at his Turnberry golf resort, Trump said he was 'very honoured' to have done the deal, telling the European Commission president her staff had been 'fantastic'. The two sides shook hands and congratulated each other in front of a bilateral delegation that included the US commerce secretary, Howard Lutnick, and the trade representative, Jamieson Greer. Looking relieved and flanking von der Leyen were Šefčovič; Björn Seibert, her head of cabinet; Sabine Weyand, a key player in the Brexit negotiations and now the director general of the EU's trade commission; and Tomas Baert, a member of von der Leyen's cabinet who has taken a lead role in talks.
