NEW YORK (TheStreet) -- Bank M&A will see a "massive increase" in the second half of 2012, argues Tom Brown, a longtime sell-side bank analyst who has spent several years running financial services hedge fund Second Curve Capital.
Brown, who made the comments during an interview with Bloomberg TV late Tuesday, believes the bulk of the deals will occur among banks with between $1 billion-$50 billion in assets, since the roughly 30 banks with between $50 billion-$600 billion in assets will need to pass regulatory "stress tests" before they are allowed to make acquisitions, a policy Brown claims has "made it hard for large banks to continue to grow."
|Second Curve Capital CEO Tom Brown|
Brown did not specify which banks he believes will be involved in the dealmaking frenzy, though industry observers have been arguing ever since the 2008 crisis that major consolidation among small and mid-tier players is inevitable on the theory that new regulatory requirements make it difficult to make a profit and it is hard for lesser-known banks to meet higher capital standards.
Financial services-focused investment bank Keefe, Bruyette & Woods has kept a close eye on completed and expected bank deals, publishing a weekly report on the topic. The latest report, published Sunday, lists 23 institutions KBW sees as likely takeout targets, including Synovus Financial Corp. (SNV), BancorpSouth (BXS) and Astoria Financial Corp. (AF). A separate list names 14 "potential buyers who could become sellers," including BankUnited Inc. (BKU) and TCF Financial Corporation (TCB). The list of potential buyers includes more than 50 names, among the largest of which are U.S. Bancorp (USB), BB & T (BBT), and M & T Bank Corp. (MTB). -- Written by Dan Freed in New York.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
24/7 market commentary from Jim Cramer and 20+ veteran Wall Street gurus. Get access to the latest trading ideas on stocks, options, and ETFs as well as a real-time forum to see the pros exchanging their investment ideas.
- Jim Cramer + 20 Wall Street pros
- Intraday commentary & news
- Real-time trading forum
- Actionable trade ideas
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.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
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.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV