The Keefe, Bruyette & Woods bank stock index, which tracks the performance of the 25 largest U.S. banks, ended the week down 2.5%.
The topic of bank consolidation has been hinted at in the sector for several months now as more banks turn back to strategic M&A deals rather than acquisitions of failed banks. Until this week, just a few small traditional M&A deals had been done this year.
|First Niagara CEO John Koelmel|
Early in the week market rumors abounded that M&T Bank (MTB - Get Report) and Banco Santander (STD) were rekindling acquisition talks. The two banks had been in merger discussions about a possible tie-up earlier in the year, but those talks stalled in the spring. The speculation is that one possible combination could be for M&T Bank to acquire Sovereign Bank, which is owned by Santander. The Spanish bank would then take a minority stake in the newly combined bank. Shares of M&T rose 5.2% this week on the speculation. The stock is up roughly 36% year-to-date. (At press time no official announcement of a deal had been made, but check back at TheStreet Monday morning at 7 a.m. EDT for Maria Woehr's and Laurie Kulikowski's Bank Stock Buzz video on what an M&T/Santander deal would mean for both banks and the industry.)