Hot M&A Market Intensifies Banks’ Talent Wars

The revival of bank mergers is sparking a talent war, recruiters and industry observers say, threatening to diminish the potential promise of some M&A deals.

Competing banks, touting juicy sign-on bonuses, are poaching employees at institutions undergoing deals. Those lenders are fighting to keep key bankers and their client networks. And bank employees are dialing up headhunters in search of greener pastures.

Some talent shakeout is always expected, since mergers often rely on job cuts and synergies to bring savings, observers say. But the size and speed of recent mergers is making staff retention even more critical, they say, since banks’ hopes of post-merger growth hinge on whether key employees stay.

“Let’s face it: Every merger model assumes expense saves, but very few adequately model human disruption risk,” says Rob O’Halloran, managing partner of the bank recruiting firm BDS Yarmouth & Choate. “That’s where a lot of M&A deals fail — some quietly and some disastrously.”

Bank M&A isn’t as hot as in the 1980s and 1990s, when thousands of banks consolidated at a pace that left many employees and customers rankled — and throttled merger models. But it is finally picking up, after a relative dearth of deals during an M&A-skeptic presidential administration of Joe Biden. 

Some 181 deals were struck in 2025, up from 125 in 2024, marking the highest pace since 2021, according to S&P Global Market Intelligence. That includes deals among prominent regional banks, such as Fifth Third Bancorp and Comerica; Pinnacle Financial Partners and Synovus Financial Corp.; and Huntington Bancshares and Cadence Bank. 

The rebound in M&A is making the already competitive job market even hotter, says Brian Love, head of banking and fintech at the financial services talent firm Travillian. Any bank undergoing a merger knows “the sharks are going to circle XYZ bank” to pick off talent, Love says. And employees are becoming more aggressive, gunning for bigger roles elsewhere and entertaining more offers. “I just feel like we’re on fire,” Love says. “Things have ticked up quite a bit.”

Competition is particularly fierce for commercial lenders and other income-producing roles, rather than back-office positions, O’Halloran says. Bonuses are getting bigger and increasingly paid up front. Equity offers are becoming sweeter, as are forgivable loans that banks offer when recruiting talent.

“We’re seeing things that we never expect to see,” O’Halloran says, pointing to “the amount of money that is really being thrown at candidates.”

It may be a structural change, he says, since the vast pool of people retiring in the industry is making talent a scarce commodity. And it’s heightening pressure on banks involved in M&A, forcing some to pay up to keep talent. “Anybody in a fee and income producing capacity, if their bank gets acquired, they’re going to get love-bombed,” O’Halloran says.

Whether that love-bombing will prove successful is something bank analysts are keen to figure out. Retention is “the biggest risk of any M&A transaction” in banking, says Stephen Scouten, a regional and midsize bank analyst at Piper Sandler & Co. Yet bank disclosures on the topic are often spotty or nonexistent, he says, with frequent announcements on new hires yet little news on departures. 

“People are going to get a little more discerning in the questions they ask on conference calls,” Scouten says, as they attempt to see whether the hiring will prove to be more than just a mere swapping of desk chairs.

Banks that succeed in retaining key employees should enjoy above-peer loan growth in coming years, he says. And those that struggled may see a hit to earnings as loan growth stays sluggish. 

Indeed, banker retention is “the earliest warning signal that you as an investor should be looking at” after mergers, said Kevin Blair, CEO of Atlanta, Georgia-based Pinnacle, when asked about the topic at a Bank of America Corp. conference last month. “I can get up here and wax poetically and tell you what a wonderful company this is and how great we are,” he said. “But people vote with their feet. They decide whether they want to be part of that.”

Blair had been the CEO of $61 billion Synovus in Columbus, Georgia, which merged with Pinnacle in January, creating a $117.2 billion-asset institution. And it has not seen “any unexpected attrition,” Blair said. That should help the company stick within its annual goal of 7% in voluntary turnover — even in a merger year, he says.

Banks eyeing a merger of their own need to have a solid retention plan in place, says Brett Mastalli, the banking lead at the consulting firm West Monroe. That means deciding which employees are the most valuable to retain — and figuring out the right set of incentives to keep them. “If you’re not building these programs and thinking about these groups strategically, then you are not going to realize the value of the transaction,” he says. 

Banks need to budget for that in M&A planning, says David Hilborn, who leads West Monroe’s organization, people and change practice. Some banks’ retention budgets are based on the percent of the deal’s value, while others are based on the combined company’s payroll or earnings, he says.

Institutions must decide how deep that retention plan will go — executives, VPs or further down the organization chart. They’ll need to identify which employees and divisions would qualify for retention awards. They’ll need to figure out the right incentives — cash versus equity, up-front or over time. 

And most importantly, they’ll need to tie any incentives back to key performance indicators (KPIs) that help ensure the deal is hitting its marks. That, for example, may be goals to limit deposit run-off, meet regulatory timelines or migrate client data smoothly. “Everything has to be tied back to those KPIs,” Hilborn says. “That is the most important part of, frankly, any incentive design.”

But even the best of merger plans can flop if CEOs don’t address the uncertainty for employees up-front, says BDS Yarmouth & Choate’s O’Halloran, stressing the need for a “thoughtful, proactive plan of communication.” Banks don’t lose talent in most cases during M&A because someone else pays 15% to 20% more,” he says. “They lose talent because the best people no longer believe in the direction of the franchise.” 

Too many bank CEOs have “consumed too much of their own Kool-Aid and thought their culture could withstand everything,” he says. But employees want to know what to tell their families about the future, and it’s vital that executives develop a consistent and honest message. Personal outreach to up-and-comers at the bank can go a long way, O’Halloran adds.

“Boards and executive leaders just need to remember balance sheet preservation is pretty darn important, but without people and people believing in the vision, people being comfortable — without that, that’s when these mergers go horribly wrong,” he says.