Expected Banking M&A: How Communicators Can Prepare in 2024

By Doug Donsky

Last year’s regional banking crisis saw a number of financial institutions forced into “shotgun marriage” sales because of lost confidence and shareholder pressure. It also spurred federal banking regulators to move on implementing parts of international banking regulations known as Basel III, originally agreed to after the 2008 financial crisis. In addition to implementing the “Basel III Endgame,” regulators also proposed revising large bank capital requirements, recommending higher common equity tier 1 capital for banks holding over $100 billion in assets.

If enacted and then phased in, these new capital rules are expected to force many regional and super-regional banks to merge or consolidate, to achieve the necessary economies of scale to comply with higher capital rules and, in effect, “leap over” the $100 billion asset threshold rather than grow more slowly and organically as they might otherwise do. Regulators seem fine with that. As Treasury Secretary Janet Yellen told Reuters: “This might be an environment in which we’re going to see more mergers, and that’s something I think the regulators will be open to, if it occurs.” With nearly 4,500 U.S. commercial banks, there is no shortage of dance partners available.

For any bank or financial institution, the trust and confidence of its key stakeholders are critical to its license to operate. And in today’s age of instant news, siloed information gathering and false social media rumors, narratives about the health and soundness of any financial institution spread fast, making it difficult to respond quickly to reassure shareholders, employees, customers and regulators. People forget that Lehman Brothers had over $600 billion in assets at the time of its bankruptcy, and Credit Suisse over $1 trillion in assets when sold to UBS.  Any institution is, therefore, vulnerable to a bank run on confidence.

In time-pressed situations with national news breaking, there is often little time to educate reporters as the specific media need is typically a short-written response or comment to meet a daily deadline. The ability to obtain accurate information, analyze facts and be in a position to respond as quickly as possible with a clear, informed and effective response can be the difference between reassuring stakeholders or sowing market confusion.

With increased banking M&A expected in 2024 and beyond, chief communication officers and other financial communicators can take steps today to ensure their institutions are ready to communicate if ever an existential moment arrives:

• Update corporate messaging to integrate into communications and quarterly financial reporting.
• Assess strength of national media relationships and editorial “gaps” needing to be supported.
• Conduct perception audit to understand market sentiment and identify information gaps, as well as potential reputational issues.
• Organize editorial board meetings and leadership intros to educate reporters on background.
• Undertake vulnerabilities audit to update crisis planning, spokespeople and response protocols.
• Hold half-day simulation of a “mock crisis” event, representing a realistic threat to business.
• Ramp up social media monitoring of chat boards, blogs and websites where rumors start.
• Provide refresher media training to leadership, focused on real market scenarios.

For over 25 years, ICR has advised and supported banks and financial institutions in their most important communications, sitting at the intersection of major stakeholders including investors, analysts, regulators, employees, customers, media and other influencers.  Want to get deeper into what’s on the horizon for the banking market and banking M&A, in particular? Get in touch.