Exelon, the second-largest US public utility, said today it may have to drop its proposed merger with Public Service Enterprise Group after strong resistance from local regulators. The news does not bode well for the investment-banking advisers who have been working on the deal for nearly two years.

Exelon is using Lehman Brothers and JP Morgan for advice on the $18.5bn (€14.4bn) deal, while PSEG is depending on Morgan Stanley.