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'Massive Increase' in Bank M&A Coming: Hedge Fund Pro

Stocks in this article: USBBBTMTBSNVBKU

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.

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

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