Fifth Third to buy Comerica for $10.9 billion: 11th biggest US bank after deal; merger expands reach

Fifth Third Bancorp will buy Comerica Inc. in a $10.9 billion stock deal. After the merger, the combined bank will have $287 billion in total assets. It will become the 11th largest bank in the US. The deal will help both banks grow and compete with large players like JPMorgan Chase and Bank of America. It also shows a growing trend of regional banks joining hands to survive in a fast-changing banking market.

Fifth Third Bancorp, a bank based in Cincinnati, said on Monday that it will buy Comerica Inc., which is based in Dallas. The deal is worth $10.9 billion and will be paid fully in stock. As part of the deal, Comerica shareholders will get 1.8663 shares of Fifth Third for each share they hold. This puts Comerica’s value at $82.88 per share. That is 17.5% more than its closing price last Friday. After the deal is complete, the new bank will have $287 billion in assets. Fifth Third will move up from the 20th to the 11th spot among the largest banks in the US.

This deal comes at a time when many regional banks are merging to grow quickly and deal with rising competition. Fintech companies and cryptocurrencies have started offering services that were earlier only provided by banks. Because of this, traditional banks are trying to become bigger and more flexible.

Less than a month ago, PNC Financial Services said it would buy Colorado-based FirstBank for $4.1 billion. That deal, and now the Fifth Third-Comerica deal, show that more such mergers are likely to happen. Experts say that the current business and regulatory environment makes it easier for banks to merge. Lighter rules in recent years have allowed banks to explore bigger deals without facing too many hurdles.

After the deal was announced, Comerica’s stock rose by 12.3% in premarket trading and reached a three-year high. In contrast, Fifth Third’s stock fell by 3.7%. Shareholders of Fifth Third will own 73% of the new company. Comerica shareholders will own the remaining 27%. The new bank will also operate in 17 of the 20 fastest-growing metro areas in the US, including regions in Texas, California, and the Southeast.

Fifth Third said that Comerica’s strength in middle-market banking and its strong regional presence will help the new company grow. It also said the merged company will have two businesses, one in commercial payments and one in wealth and asset management, that each make over $1 billion every year. This is the biggest bank merger since 2021, when BMO Financial Group said it would buy Bank of the West for $16.3 billion.

1. Why is Fifth Third buying Comerica?
   To grow in size, enter new markets, and compete better with large US banks.
2. What will Comerica shareholders get in the deal?
   They will receive 1.8663 shares of Fifth Third for each Comerica share.
3. How big will the new bank be after the merger?
   It will have $287 billion in assets and become the 11th largest US bank.