Dimon on M&A: ‘There are still too many banks’

Regulators ought to make it easier for smaller financial institutions to merge, the CEO of the country's largest bank said Tuesday.

“I think other banks need to merge — there are still too many banks,” Jamie Dimon said, speaking at JPMorgan Chase’s annual investor day in New York. “Part of the solution with small banks is [allowing them] to merge again — as you know, there have been so few [deals], because they’ve been so hard to get done.”

Though Dimon has made headlines in recent years by fanning the flames of the big-bank-small-bank divide, his comments Tuesday probably weren’t intended as a dig. They were offered up, in response to a question about potential changes in the regulatory environment for M&A in the years ahead, as a solution to a vexing industry problem. Namely: small lenders are struggling, but they often don’t sell because regulators make the process too difficult.

Simon Dawson/Bloomberg

There were 5,913 banks in the industry as of Dec. 31, down 269 from a year earlier, according to the Federal Deposit Insurance Corp. Mergers absorbed 251 of those banks.

Regulatory scrutiny has been a factor in preventing bank deals from getting done in recent years. The most glaring example is the acquisition of Hudson City Bancorp by M&T bank, which faced a three-year delay.

Concerns about commercial real estate concentrations may have also been a factor in the decision by New York Community Bancorp and Astoria Financial last December to terminate their proposed deal.

When it comes to JPMorgan’s M&A plans, though, Dimon said the bank might acquire a fintech firm, payments company or overseas company down the road. But even if the regulatory environment changes under President Donald Trump, in a way that is conducive to dealmaking, there’s no rush, he said.

“I don’t like relying on an acquisition to fix a problem, which is what all of us have been doing for years,” Dimon said. “You get share. You get size. You get scope. You get brand.”

No matter how you cut it, acquisitions are tough to do, Dimon said. It’s something he’ll leave to other bank CEOs to deal with.

“Being able to say that we can grow organically is a great thing,” Dimon said.