Debit Fee Fallout: Weekly Financial Recap
NEW YORK (
) -- As the end of 2010 nears, financial stocks this week got a boost from the government's further decoupling from
AIG
(AIG) - Get Report
and regional banks. This week also saw the beginnings of consolidation in the bank sector, despite further clarification on debit interchange fees.
The
Financial Select SPDR
(XLF) - Get Report
is up more than 7% this month, even after losing approximately 2% over the previous week.
|
First,
MasterCard
(MA) - Get Report
and
Visa
(V) - Get Report
shares got trounced late in the week after the
Federal Reserve
published two competing proposals for setting
.
Investors got spooked because the proposed fee cuts are higher than expected, even though the payments networks have little direct exposure to interchange fees. In addition, analysts said there was little clarity in the proposals regarding the network exclusivity arrangements that legislators are seeking to limit.
Still, analysts, for the most part, say the stocks should be bought, given strong long-term growth trends in the payments industry.
It looks as though the much-talked about
wave is starting.
> > Bull or Bear? Vote in Our Poll
On Friday,
agreed to be acquired by the
Bank of Montreal
(BMO) - Get Report
for $4.1 billion in an all-stock deal. The deal price represents a 35% premium to M&I's closing stock price on Thursday, but it is still technically a take-under because it is only 0.98 times the company's tangible book value, one analyst said.
The news of the acquisition pushed up shares of other regional banks that could be takeover targets, including
SunTrust Banks
(STI) - Get Report
and
Regions Financial
(RF) - Get Report
.
Earlier in the week shares of
and
BankAtlantic Bancorp (BBX) - Get Report
surged on speculation that
PNC Financial Services
(PNC) - Get Report
had been sniffing around banks in Florida.
BankAtlantic's CEO said that the company, despite wanting to remain independent, was "open to opportunities."
The news of bank consolidation coincides with more banks looking to repurchase preferred stock owned by the U.S. Treasury Department under the Troubled Asset Relief Program. This week
Huntington Bancshares
(HBAN) - Get Report
and
First Horizon
(FHN) - Get Report
announced capital raises that are efforts to repay TARP.
Elsewhere,
Bank of America
(BAC) - Get Report
once again found itself in the news this week. The Charlotte-based bank is reportedly in settlement discussion talks with several investors over mortgage putbacks.
At the same time,
, sort of like an annoying bug bite that won't go away, reasserted Friday that it does indeed plan to release damaging information about at least one major bank, which some have thought to be BofA.
And as a reminder, just because it's a holiday next week doesn't mean the news stops.
The Street's Weekly Financial Recap
will be published as usual next Saturday.
-- Written by Laurie Kulikowski in New York.
To contact the writer of this article, click here:
Laurie Kulikowski
.
To submit a news tip, send an email to:
.
Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.