In fact, while the partial nationalization of Spain's Bankia shows that some mid-sized European banks are facing a crucible, Europe's biggest banking giants may not have their back against the wall and be forced to sell assets at any price, even as sovereign debt woes, ratings downgrades and the prospect of a Greek default linger.
"RBS, BNP Paribas, Santander and BBVA are not forced sellers (all have excess capital) and based on conversations with our European bank analysts, we believe they would only part with their US franchises on attractive terms," notes Penala of Bank of America. It's still worth exploring why some super regionals might want to explore acquisitions of European-owned U.S. bank assets.
Penala analyzed four of Europe's largest remaining U.S. assets, pointing out that Bank of the West and Compass are likely to find the strongest strategic fit. Cannon also highlighted Bank of the West as a particularly attractive asset. So how big are the assets and how could deals emerge?
RBS's Citizens Financial is the largest U.S.-based asset held by a European bank, with $129 billion in assets, followed by Santander-owned Sovereign Bank, with $78 billion in assets. BBVA Compass Bancshares and BNP Paribas-owned Bank of the West have just over $60 billion in assets."Given Bank of the West's size, wide ranging footprint across the western US and likely high asking price, we believe USB would be the more likely suitor if the franchise ever came for sale," writes Penala, who highlights expected synergies and the ability for US Bancorp to use its stock to pay for a deal that could be valued at two times Bank of the West's tangible book value. Birmingham, AL-based Compass Bancshares may be the most coveted of any European-owned U.S. bank asset because of its toehold in Texas. "Texas is a desired market for expansion for many banks, and an acquisition of Compass would be a rare chance to acquire scale in the state," says Penala, citing US Bancorp and BBT as the best positioned buyers. USB could pay up to 1.5x tangible book, while BBT could pay 1.25x and still find a deal compelling, calculates Penala. "It is possible that