Wells Fargo and Citigroup Eye Major Bank Acquisitions

Wells Fargo and Citigroup explore potential acquisitions of regional banks as regulatory barriers drop, paving the way for major consolidation.

Wells Fargo and Citigroup find themselves at a pivotal moment in the banking industry, where opportunities for mergers are burgeoning. With the regulatory window for significant bank mergers now wide open, the nation’s third- and fourth-largest banks are considering potential acquisitions of major regional banks.

Regulatory barriers that kept these financial giants at bay for years have lessened, allowing them to entertain large acquisitions once again. Banks such as JPMorgan Chase and Bank of America are still restricted due to their existing market share surpassing 10% of national deposits. However, with abundant room under this cap, both Citigroup and Wells Fargo are well-positioned to pursue large regional banking targets, say investment bankers and market analysts.

Brian Graham, co-founder of the advisory firm Klaros, stated, “Two years ago, it was impossible for a bank of that size to get approval to acquire almost anything. Now, it’s possible they can get a deal done. I’d be shocked if they aren’t exploring it.” Factors like past consent orders and growth restrictions had hampered both institutions, but they have now cleared significant regulatory hurdles.

The potential benefits of a large acquisition are significant, as it would grant Wells Fargo or Citigroup access to thousands of branches and an influx of deposits. For Citigroup, which currently operates around 650 U.S. branches, acquiring a regional bank would provide a much-needed source of cheaper funding. Wells Fargo, with its larger branch network, would gain the opportunity for cost reductions.

As noted by KBW analyst Chris McGratty, “There’s a massive race for scale, and the shot clock is running. If you want to do something, this is the time to do it.” Despite over 4,200 banks in the U.S., only a select few might serve as suitable acquisition targets, as they must be sizeable yet small enough to stay underneath the deposit cap while also providing a good fit in terms of branch network and cultural alignment.

Five regional banks have emerged as potential acquisition candidates: Fifth Third Bank, which provides a strong commercial and retail presence across the Midwest and Southeast; Huntington Bank, known for its low-cost deposits in high-growth regions of Texas and the Carolinas; Citizens Bank, which has a solid retail and commercial footprint in affluent areas of the Mid-Atlantic and New England; KeyCorp, which reaches from the Great Lakes to the Pacific Northwest; and Regions Bank, showcasing a retail presence in the fast-growing Southern corridor.

For Wells Fargo specifically, Zions Bancorporation could represent a valuable addition, while Citigroup’s potential targets could include First Horizon due to its operations in the growing Sunbelt region.

However, both Wells Fargo and Citigroup have remained tight-lipped on this matter. They declined to comment for this article, as have most of the regional banks mentioned—except for Zions and First Horizon, who did not respond.

In prior statements, Citigroup CEO Jane Fraser mentioned a focus on organic growth rather than acquisitions. Analysts believe Citigroup is still in the phase of proving it can enhance returns without absorbing large additional risks associated with a big acquisition.

Conversely, Wells Fargo’s CEO Charlie Scharf expressed a willingness to consider transformative deals, reiterating that they would look into opportunities that present themselves, even while maintaining a focus on organic growth.

Yet, the anticipated wave of mergers following the return of the Trump administration hasn’t transpired as once thought. Instead, the total value of regional banking mergers in North America dropped by more than half to $30.1 billion during the first half of 2026 compared to the previous year.

Despite this downturn, Frank Sorrentino, a mergers banker at Stephens, sees the present landscape as highly conducive for mergers: “Probably the best environment that we’ve seen since the financial crisis.” Moreover, with Congress rolling back previous restrictions on bank mergers, the path is clearer for potential consolidations.

Wells Fargo boasts something Citigroup does not—a stronger stock currency, which could make pursuing a deal easier to justify, especially if it addresses geographic or product gaps.

In a landscape rife with possibilities, the question remains whether regional banks will remain independent or look to merge among themselves to keep pace with the larger institutions.