Bank's Buying Spree Bodes Well for the Sector

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One reason bank stocks did so well in the 1990s was consolidation. There was always another bank out there to buy and always another acquirer.

But at the turn of the century, banks stopped acquiring each other. Banks had gotten so big that they couldn't take over other banks without incurring the wrath of the antitrust regulators.

Consequently, the air went out of a lot of banks and they now sell at very reasonable levels.

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Perfect for BNP Paribas (BNPQY - commentary - Cramer's Take), which this morning said it wanted to go on a bank acquisition binge in the next three years and has earmarked more than $8 billion for the spree.

Who are the targets? First, BNP says it wants to expand its West Coast presence to augment its buys of two recent California banks. Second, it says it wants to do fill-in acquisitions around the country.

That, to me, means anything from good California savings & loans such as TriCo Bancshares (TCBK - commentary - Cramer's Take) to Zions Bancorporation (ZION - commentary - Cramer's Take). But it also doesn't rule out the natural Eastern player: FleetBoston (FBF - commentary - Cramer's Take), which I have bought in part because I believe the bank can't stay independent much longer. (If you want to find out how I'm going to trade FleetBoston or any other stocks in my portfolio, sign up for Action Alerts PLUS by clicking here.)

I believe that this BNP statement, which I found on Bloomberg, coupled with the Merrill Lynch (MER - commentary - Cramer's Take) settlement, will lead to a nice day for the financials. Daytraders, I think you can scalp a buck or two from this group off this BNP gambit alone. Long-termers, you know I think this regional bank group is cheap and is a terrific place to be for the rest of the year.

Oddly, the best, by the way, is Commerce Bancorp (CBH - commentary - Cramer's Take), which will never be taken over but makes the most sense as an earnings growth story.

Random musings: Home Depot (HD - commentary - Cramer's Take) is rocking, just rocking, with a huge amount of cash on hand. Retail still rules.

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James J. Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. At the time of publication, Cramer was long FleetBoston and Commerce Bancorp. To see his personal portfolio and find out what trades Cramer will make before he makes them, sign up for Action Alerts PLUS. While he cannot provide personalized investment advice or recommendations, he invites you to send comments on his column to [e-mail]. Click here to get Cramer's book, "Confessions of a Street Addict."