The news: Citi executives are reportedly exploring a major acquisition, per Bloomberg: the purchase of a large US regional bank. Potential targets include banks with about $500 billion in assets.

Zoom out: This would be a radical move in a yearslong strategic overhaul. CEO Jane Fraser has been reducing the bank’s international footprint, conducting layoffs, and restructuring its divisions. If the rumors become fact, Citi could have $2.38 trillion to $2.41 trillion in assets: The two US banks with close to $500 million in assets are PNC ($591 billion) and Truist ($535 billion).

Citi has a small footprint—957 branches—relative to megabank peers JPMorgan Chase (5,324), Bank of America (3,843), and Wells Fargo (4,202). In addition, PNC (2,326) and Truist (1,931) have footprints that Citi can only dream of.

Trendpotting: The bank merger wave under the Trump administration has included some large regional banks in addition to dozens of smaller transactions:

• Fifth Third and Comerica recently closed a $10.9 billion deal, creating a $290 billion bank.
• Huntington Bank and Cadence Bank just closed their $7.4 billion merger, creating a $263 billion bank.
• PNC and FirstBank closed a $4.1 billion deal that created a $591 billion bank.

Implications for banks: For Citi, a dramatic domestic expansion would be a second act following its retrenchment abroad. It emphasizes that the war for deposits is happening even among megabanks. The implication for Citi would be to compete more efficiently with its peers.

For the banking industry, it could foreshadow megabanks’ further investment in their physical presence. Small financial institutions already struggle to compete on digital services, and the fights will become more intense as large banks pour money into the branch experience.