3,000 US Banks to Be Acquired in 2-3 Years: Bob Diamond

Bob Diamond, Founding Partner and CEO of Atlas Merchant Capital, has delivered one of the most dramatic predictions in recent banking memory. Speaking with Francine Lacqua on Bloomberg: The Pulse, the former Barclays chief executive outlined a vision of rapid industry transformation that would see the number of US banks plummet from 4,500 to between 1,000 and 1,500 within just 2-3 years. This represents a staggering reduction of approximately 3,000 banking institutions through mergers and acquisitions.

The scale of this consolidation would mark one of the most significant structural shifts in US banking history. Diamond’s projection suggests that nearly 67% of current banking entities would disappear through acquisition, creating a fundamentally different competitive landscape. His use of the word ‘literally’ emphasizes the concrete nature of this timeline, indicating this isn’t a distant theoretical possibility but an imminent industry reality.

Central to Diamond’s prediction is the role of regulators in facilitating this consolidation wave. The former Barclays CEO explicitly stated that regulators are ’embracing consolidation of the industry,’ suggesting a significant shift in regulatory posture toward bank mergers and acquisitions. This regulatory acceptance could remove traditional barriers that have previously slowed consolidation in the fragmented US banking market.

The regulatory environment has historically been a major factor in maintaining the US’s unusually large number of banking institutions compared to other developed economies. Diamond’s comments indicate this may be changing, potentially driven by regulators’ desire for stronger, more resilient banking entities following recent regional banking stresses. This regulatory shift could accelerate merger approval processes and create a more permissive environment for acquisitions across the banking spectrum.

The consolidation forecast by Diamond would represent a fundamental restructuring of American banking. Moving from 4,500 to 1,000-1,500 banks would bring the US closer to the more concentrated banking models seen in other major economies. This transformation would likely create both winners and losers, with larger institutions gaining scale and market share while many community and regional banks face acquisition pressures.

For Atlas Merchant Capital, where Diamond serves as Founding Partner and CEO, this prediction carries particular significance given the firm’s focus on financial services investments. The anticipated consolidation wave presents substantial opportunities for strategic acquirers and financial sponsors. The dramatic reduction in banking entities would also likely impact competition, customer choice, and potentially even credit availability in certain markets.

The timing of this prediction—coming just years after the regional banking stresses of 2023—suggests Diamond sees current market conditions as ripe for accelerated M&A activity. His deep industry expertise, gained through leadership roles at Barclays and now Atlas Merchant Capital, lends credibility to this bold forecast. The banking sector appears to be at an inflection point, with Diamond’s comments signaling that the coming years may see the most rapid consolidation in modern US banking history.