This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

European, Regional Banks to Drive Mergers

Stocks in this article: COF PNC MBFI FNFG EWBC

NEW YORK ( TheStreet) -- Strong capital levels and solid core earnings are two factors that banks must have if they want to participate in bank consolidation as an acquiror.

Eighteen months ago, many banks were scrambling to raise capital; now those same banks are flush with capital and searching for growth - partly through acquisitions, said Eric Heaton, managing director and co-head of financial institutions group at Deutsche Bank.

Banks will focus on growth and ultimately the viability of their business models, Heaton said, during an investment banker panel discussion at the second annual SNL Financial Bank M&A Symposium held Tuesday in New York. The panel included Heaton and four other banking experts.

>>Bank CEOs Play Down M&A

As a sign of the changing times, Capital One (COF) is the same size as Nations Bank was in 1995, PNC Financial Services (PNC) has equaled Citigroup's (C) size in 1995, he noted.

These banks and others are "poised to drive consolidation," Heaton said.

Foreign banks, particularly European banks which are large and focused on growth, are also looking to expand in the U.S. as Europe's economy remains stagnant, he said.

Andrew Senchak, Keefe, Bruyette & Woods vice chairman and president, said that deal activity will pick up where there is lower concentration of banks, but the likely "new emerging players" in M&A will be mid-size regional banks like First Niagara (FNFG), East-West Bancorp (EWBC) and MB Financial (MBFI).

Senchak predicts that deal volumes could reach post-90s recession levels, "But what will valuation look like?" he posed to the audience. He expects deal prices to be 2 times book value at best.

However, the economic recovery will be the determining factor on the pace, intensity and ultimately price of new deals. Senchak expects the economic recovery to be "abysmal," he says.

Brian Sterling, Sandler O'Neill & Partners co-head of investment banking, said that there is capital available even for troubled institutions.

Sandler has advised on transactions where the banks at times had non-performing loans above 10% of total loan book, however investors have been willing to invest in those banks that have "significant capital pressures, but strong franchises," he said.

--Written by Laurie Kulikowski in New York.

To contact the writer of this article, click here: Laurie Kulikowski.

Readers Also Like:

Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

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.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

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.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,778.15 +421.28 2.43%
S&P 500 2,061.23 +48.34 2.40%
NASDAQ 4,748.3960 +104.0840 2.24%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs