Don't be surprised to see large regional banks making acquisitions in the banking sector this year, as healthier banks are pushed to scoop up weaker competitors.
The federal government is expected to complete stress tests on the 19 banks with at least $100 billion in assets later this month. Some banks are expected to receive new cash infusions from the government or private sources after the tests, much of which will be needed to cushion the companies against rising losses. But analysts and observers also believe this recapitalization effort may be a pre-emptive move encouraged by regulators to position some banks to make acquisitions, as weaker competitors go under.
Large regional banks such as BB&T (BBT) , SunTrust (STI), KeyCorp (KEY), US Bancorp (USB) and other banks with market caps between $2 billion and $20 billion are the "logical consolidators," says Robert Patten, an analyst at Morgan Keegan.
"While these banks may not need the capital because of credit, our view is that the regulators may need these banks to take the capital in order to take care of the consolidation, which must happen," Patten says. "
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV