Mike Mayo Sees 'Paradigm Shift' for Banks on Trump Deregulation

The re-election of former President Donald Trump has sparked optimism among bank executives, with analysts like Mike Mayo predicting a "paradigm shift" in the banking industry due to the expected deregulatory policies. Trump's win is seen as a positive development for banks, as it could lead to a more business-friendly regulatory environment and boost investment banking revenue.



Trump's victory is expected to expedite bank mergers and acquisitions (M&A) approvals. Analysts like Mark Fitzgibbon predict a "marked uptick" in deal activity, with approvals speeding up and processes becoming more clearly defined. Brian Graham anticipates a "very marked pick-up" in announced transactions among banks under $50 billion in assets, while Peter Dugas expects mid-sized banks to engage in more M&A. The OCC and FDIC may withdraw updated merger review guidance, further facilitating deals.



Trump's deregulatory policies could significantly boost investment banking revenue for major banks. Mike Mayo, a Wells Fargo analyst, predicts that Trump's win could lead to a "paradigm shift" in banking regulations, with more permissive activities and deals. This could spur a revival of dealmaking and capital-markets activity, potentially lifting lenders' investment-banking revenue above the 2021 highs. Additionally, Trump's vow to cut corporate taxes and eliminate regulations could create a more attractive environment for banks, further driving investment banking revenue growth.

However, not all aspects of banking regulations are expected to change drastically. The 2023 bank failures have left their mark on the federal banking agencies, and no political party or agency wants to deal with bank runs or face scrutiny for lax or ineffective supervision. The second Trump Administration may prove to be relatively more populist than the first, allowing for some crossover on policy issues, including fees and privacy.

In conclusion, Trump's re-election is seen as a positive development for the banking industry, with analysts predicting a "paradigm shift" in banking regulations. The expected deregulatory policies could expedite bank M&A approvals, boost investment banking revenue, and create a more attractive environment for banks. However, some aspects of banking regulations are expected to remain stable, ensuring a balanced approach to supervision and stability.