Recordkeeping Clients of BB&T and SunTrust Wait for More Merger News

This week, B&T and SunTrust announced they are seeking to enact a “merger of equals” transaction valued at approximately $66 billion.

The proposed combination would create the sixth-largest U.S. bank holding company, “with 275 years of combined history and culture serving clients and communities in high-growth markets,” according to a statement announcing the transaction.

Press releases from the firms suggest they want to achieve estimated net cost savings of at least $1.6 billion by 2022. The core management teams of BB&T and SunTrust will remain in place as the merger takes off, according to public statements from the firms. The combined company will operate under a new name and will be headquartered in Charlotte, North Carolina, “while maintaining significant operations and investment in Winston-Salem, North Carolina, and Atlanta, Georgia.”

While the companies’ combined retail and institutional banking operations would create a new top-10 banking provider by client asset size in the U.S., the firms’ respective footprints in the institutional defined contribution (DC) retirement plan recordkeeping market are much more modest. As it stands, plan sponsor clients of the two firms will have to wait for more detail from the companies regarding what the impact of this merger will be over time. None of the publicly issued press releases detailing the merger explicitly mention this side of the business, and a representative for SunTrust told PLANADVISER that plan sponsor clients should expect business to continue as usual for the time being. 

There may be some hints about what may be to come for DC plan clients included in the public statements made so far, however. The firms say their effort to build an organization of far greater scale will “accelerate investment in transformative technology to embrace disruption and create a more distinctive client experience.” Beyond this, the firms say the “expanded fee income base will create opportunities to build scale in specialized businesses across a larger client base.”

The merger is still at a preliminary stage and expected to close in the fourth quarter of 2019, subject to satisfaction of customary closing conditions, including receipt of customary regulatory approvals and approval by the shareholders of each company. Several members of Congress and other political leaders have already stated publicly that they will scrutinize the deal to make sure it is in the best interest of the firms’ customers and stakeholders.

According to the latest PLANSPONSOR Recordkeeping Survey, BB&T’s recordkeeping survey stats from 2018 rank the firm as 37th in terms of total assets, 43rd in terms of number of plans served and 41st in terms of number of participants served. The firm reported that its recordkeeping platform is powered by FIS Omni. Looking at the breakdown of the number of participants served within different plan size segments, the business is concentrated in the less than $50 million range. However, the firm serves at least one client with more than $1 billion, as well as several clients in the $50 million to $1 billion range.

SunTrust, for its part, last participated in the PLANSPONSOR Recordkeeping Survey in 2015. Those results, while dated, show a presence in the marketplace that was less than half the size of the recordkeeping business run today by BB&T. Like BB&T, the SunTrust recordkeeping business is focused on small plans. 

Neither BB&T nor SunTrust representatives could at this stage provide additional information specifically pertaining to the recordkeeping portions of their respective businesses. They said more information for plan sponsor clients will be made available as the deal progresses towards the projected closing in the fourth quarter of 2019.