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NEW YORK (
Citigroup(C - Get Report) and
Bank of America(BAC - Get Report), both of which are shrinking by selling off businesses, are the models for current U.S. deal activity in the financial services industry, according to Gary Parr, vice chairman at
Lazard(LAZ) and one of the top advisers to financial companies.
"Traditional bank A merging with bank B is nonexistent. It's the rearranging of portfolios: what's core, what's non-core and so on that is very active. Extremely active," Parr said during a panel discussion Tuesday at the
Bloomberg Dealmakers Summit.
Financial restructuring deals have been so active, in fact, that it provided an opening for Alan Schwartz, executive chairman of Guggenheim Partners, former CEO of Bear Stearns, and a top dealmaker among media companies, to tease Parr, who had earlier said that "At Alan's age, when he wakes up in the morning, he is, above all, happy to wake up."
"Gary's got the easy job, which is good at his age, too," Schwartz shot back. "Gary's got the only sector that's forced to raise capital when their stocks are trading at 50% of book, so what do you do? I'd rather sell one of my assets at book or a multiple of book. We don't have that," said Schwartz, referring to the relative dearth of big deals in the media sector.
Citigroup and Bank of America have already sold several businesses each. Bank of America has sold several stakes in foreign institutions, and it recently sold its Canadian credit card business. Among Citigroup's more prominent moves was its sale of a controlling stake in its Smith Barney brokerage unit to
Both companies continue paring down their portfolios, as do other large financial institutions, and Parr expects some of the buyers will be smaller U.S. players.
"Some number of the buyers of these assets are going to be U.S. companies. The assets that are sold tend to be good businesses that are not so capital intensive," he said, adding that "selling a big investment bank today is somewhere between really hard and impossible."