Hedge Funds Shake U.S. Banks Amid Rising M&A Surge

In a move that has Wall Street buzzing, Florida-based hedge fund HoldCo Asset Management helped trigger the $10.9 billion sale of Texas’ Comerica to Fifth Third Bancorp, highlighting a rising wave of activist-driven deals in the U.S. banking sector. Traditionally overlooked by corporate agitators, banks are now becoming prime targets for investors seeking change.

HoldCo, with just $2.6 billion in assets under management, has already set its sights on several other regional banks, including Eastern Bankshares and First Interstate, pressing them to explore potential sales. The trend is gaining momentum amid favorable market conditions and regulatory reviews that make bank acquisitions more attractive.

The industry has seen multiple big-ticket moves this year. Northern Trust resisted a $24 billion takeover approach from Bank of New York Mellon over the summer, showcasing banks’ newfound appetite for strategic growth. Huntington Bancshares’ $7.4 billion acquisition of Cadence Bank, its second notable deal in four months, underscores the potential for regional banks to execute multiple transactions rapidly.

Investors’ confidence in smaller banks remains fragile. Recent disclosures of bad loans by Zions Bancorporation and others triggered sharp drops in the KBW Regional Bank Index, signaling vulnerability that corporate activists may exploit. According to market sources, persistent underperformance has left many regional banks exposed, providing fertile ground for hedge funds to push for transformative changes.

Activist campaigns targeting banks are still relatively rare, particularly against larger regional lenders. But HoldCo’s approach to Comerica—publicly calling for sales and highlighting underperformance—signals a shift. With stakes often small, these investors leverage analyst concerns and shareholder unrest to apply pressure, potentially reshaping the landscape of U.S. banking.

Despite the rising activism, many bank executives continue to favor acquisitions over being acquired, balancing growth ambitions with the preservation of institutional independence. Succession planning, leadership ego, and strategic priorities often play as much a role as market pressures in determining the future of these regional institutions.