More M&A activity could spur increased lender opportunity

Lenders in the equipment industry can stay ahead of disruptions from continued M&A activity by joining the party through acquisitions and by finding other opportunities in the M&A landscape. 

Bank M&A, including the recent deal involving Fifth Third acquiring Comerica, PNC acquiring FirstBank and Huntington acquiring Veritex, can be disruptive to the equipment finance sector and create opportunities for other lenders, Rich Raffetto, senior executive vice president of commercial and private banking at Flagstar Bank, told Equipment Finance News. 

“If both banks have a bank-owned equipment finance platform … there’s always a little bit of merger angst and strategic realignment,” he said. “You always wonder, in a situation where there’s organizational change, how that’s going to shake out for the equipment finance platform going forward … and it may result in a change in senior management overseeing the equipment finance business.” 

Flagstar plans to lean on its strong capital, liquidity and high core capital to expand its relevance as consolidation reshapes the bank-owned equipment finance sector, Raffetto said. 

“We just see an opportunity to double down,” he said, adding that when other firms are sidetracked by M&A there is an “opportunity to gain market share.” 

Opportunities for growth 

Meanwhile, PNC capital markets and advisory revenue rose 35% year over year in the third quarter to $111 million, driven by stronger M&A, underwriting and loan syndication activity, while liquidity and rising utilization supported overall loan growth despite continued weakness in real estate, PNC Chief Executive William Demchak said during the company’s Oct. 15 earnings call. 

“Everybody is all excited about M&A, but there actually aren’t many visible sellers who have any sort of decent retail share,” he said. 

As financial institutions pursue scale and digital transformation amid rising private credit activity and potential U.S. regulatory easing, these trends could fuel further M&A, investment, and competition across the financial services sector, Christopher Sur, global financial services deals leader at PwC Germany, said in June 24 PwC report. 

“The trend of megadeals in the [financial services] sector continues,” he said. “In addition, the rising importance of less-regulated ‘free style’ private credit offerings is one of the most significant trends for financial services today and will continue to mark M&A activity in the years to come.” 

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