Credit ratings agency Fitch says it expects to see  "further merger activity" by regional banks.In a statement  released at the end of last week Fitch said "the need for increased scale [will] be an important driver … with the operational environment remaining tough for regional banks."In recent months Bendigo and Adelaide Bank announced plans to buy Rural Finance Corporation, while Bank of Queensland is to buy Investec Bank (Australia)' professional finance, asset finance and leasing businesses.Fitch said the acquisitions "reflect an increasingly difficult operating environment for Australia's mid- and small-tier banks, which have struggled to build loan books organically and improve operating profitability amid intensifying competitive pressures," that lead to lower net interest margins.Greater scale via mergers "will help to improve the regional lenders' franchises, and facilitate faster revenue growth and better cost efficiency," Fitch said.