NEW YORK (
) -- The euro zone crisis may be the best opportunity for U.S. regional banks to grow the top and bottom line that's come around in a while.
(COF - Get Report)
is already being transformed into the nation's fifth largest bank after buying
from Dutch banking giant
in 2011. It's a strategy that other super regional banks might consider if European banking conglomerates begin shedding U.S. assets.
There's been a constant murmur as U.S. banks recover from the financial crisis that choice U.S.-based assets owned by European firms would hit the selling block. So far only a handful of deals have emerged, and super regional bank CEOs have been more focused on returning capital to investors through dividends and share repurchases.
The transformational acquisition by Capital One, though, could lead to a reassessment of M&A prospects for
(USB - Get Report)
(BBT - Get Report)
, super regional financial institutions that stand to benefit most from the acquisition of assets owned by the likes of Spain's
(RBS - Get Report)
of Great Britain.
(PNC - Get Report)
may also see a reason to cut deals.
"Given the continued financial stress in Europe, it appears highly likely that some European banks may continue to shed non-core assets in the U.S. to raise capital, refocus on their core markets or deploy the capital to other growth opportunities," writes Erika Penala, a Bank of America Merrill Lynch analyst in a Tuesday note to clients. "We believe USB and BBT would be the best positioned among the US regional banks to capitalize on such an opportunity."
After a pre-crisis sector consolidation put the likes of
Bank of the West
into the hands of European conglomerates, the prospective need to raise capital to meet an escalating European crisis and new stress test measures may put assets on the selling block.
Already, U.K and Dutch regulators have prompted
to ensure a speedier return of bailout funds. Meanwhile, some of the rare cross-border bank deals
are proving profitable
and expectations are high for Capital One's
ING Direct acquisition
Penala concedes that the timing of prospective asset sales is highly uncertain -- if they occur at all -- and her analysis is not based on any known discussions of M&A deals.
When the sovereign debt crisis first flared up and jeopardized the health of many European banks, some wondered if U.S. retail bank
asset fire sales
would follow, but few deals have emerged.
Nevertheless, other financial sector analysts think euzo zone crisis-linked M&A is a trend to watch.
"We do think that there are some quality European properties that U.S. banks would love to buy," says Fred Cannon, a bank analyst with KBW. "We would expect that given the challenges in Europe, ultimately we could see some divestitures."
Liquidity injections like the
European Central Bank's
LTRO and the strategic and financial import of U.S. bank assets may have tempered the pace of sales. The importance of U.S. based liquidity and deposits may also be slowing sale plans, adds Cannon.