In banking circles, the biggest story of 2019 was unquestionably the blockbuster merger between longtime rivals BB&T and SunTrust Banks. The merger was easily the industry’s largest since the mega-mashups of the early 2000s, creating not just the nation’s sixth-largest commercial bank, with roughly $470 billion of assets, but also an entirely new banking brand, Truist Financial.
Still, the deal was not just about scale. BB&T’s Kelly King and SunTrust’s Bill Rogers also pitched it as a tech play, promising to invest a large chunk of the estimated annual $1.6 billion in cost savings into difference-making technologies that would allow Truist to better compete with deep-pocketed behemoths like JPMorgan Chase and Bank of America. In 2020, investors, customers, regulators and rival bankers will be watching King and Rogers closely to see how well they manage the integration — and what they may have up their sleeves.
Another big story in 2019 was Wells Fargo’s continued inability to move past the 2016 sales-practices scandal that has done untold damage to the bank’s reputation and cost two CEOs their jobs. In 2020, all eyes will be on its newest CEO, Charlie Scharf, to see if he can deliver the turnaround his predecessors could not.
Others under the microscope this year include new CEOs of regional banks Santander, Comerica and KeyCorp, fintech disruptors with big ambitions in financial services and one governor looking to make good on a campaign promise to create what would be just the second state-owned bank in the continental U.S. Here are American Banker’s leaders to watch in 2020.
Governor Phil Murphy, New Jersey
Bankers will want to keep an eye on New Jersey Gov. Phil Murphy, who campaigned on a pledge for a public bank and hasn’t backed off in the two years since.
Public banks hold municipal tax dollars and fee revenue as deposits and lend that money to small businesses, student borrowers and municipalities for affordable housing and infrastructure projects. Currently, the U.S. has just two public banks — the Bank of North Dakota and the Territorial Bank of American Samoa — but recent progress in New Jersey could provide momentum to efforts elsewhere.
Supporters often stress that public banks would work with — not against — community banks and credit unions, but they still face stiff opposition from state banking groups and the American Bankers Association.
Specifically, bankers will want to monitor developments out of New Jersey’s new Public Bank Implementation Board. The first real step toward a public bank in the state was Murphy’s creation of that task force via executive order in November. Later this year, the 14-member board should deliver a plan for making a public bank happen, addressing capitalization needs, governance and operational structure.
The details of the plan could be copied in other states.
In California, municipalities now have a framework to create public banks thanks to a bill Gov. Gavin Newsom signed into law in October. The law initially caps the number of public banks at 10 statewide and limits the state to issuing two public banking licenses per year.
Meanwhile, activists in New York, New Mexico, Pennsylvania and several other states are pushing for legislation. And Stephen Smith, a West Virginia Democrat running for governor, is endorsing a public bank as part of a broader rural revitalization plan.