Potential buyers and sellers are also being deterred by the long wait for deal approvals by regulators, the experts said.
The uncertainty over capital rules has created a "chilling effect" that could put a lid on mergers, while rising interest rates and a looming economic downturn could also damp activity, Adams said.
That compares to $3.9 billion in bank deals for non-stressed institutions, the lowest seen over the first half of a year since 2010.
"Instead of evaluating mergers based on competition and the needs of the community, political factors have become too important," she said.
Regional banks will "have incentives to merge and reach larger scale since they will be subject to more regulatory scrutiny and capital,” Johnson said.
Persons:
”, Timothy Adams, Adams, Michael Barr, “, Meg Tahyar, Davis Polk, Janet Yellen, Tim Johnson, ” Johnson, Tatiana Bautzer, Saeed Azhar, Nupur Anand, Pete Schroeder, Lananh Nguyen, Deepa Babington
Organizations:
YORK, Institute of International Finance, Global, Federal, Treasury, Dominion Bank, First, KPMG, Thomson
Locations:
U.S, Canada's Toronto