Some of the biggest consolidations like Bank of America's ( BAC) $50 billion purchase of Merrill Lynch, Wells Fargo's ( WFC) buy of Wachovia and PNC's ( PNC) acquisition of National City in the fall of 2008 and JPMorgan's ( JPM) takeout of Bear Stearns earlier that March reshaped some of America's largest banks. As larger banks hit the deals sideline with a vengeance post-crisis, the common theme is a lack of government assistance in consolidations.

After the multi-billion dollar takeovers of IndyMac and BankUnited ( BKU) by private equity buyers with the help of Federal Deposit Insurance Corporation guarantees, a pullback in assistance programs on consolidations among struggling players - in addition to an aversion for Federal Reserve-backed "Too Big To Fail" mergers - has led to a significant drop in large U.S. bank deals.

For banks struggling to repay TARP funds or those with still weak capital ratios, a lack of assistance in doing deals, along with new regulations may be preventing M&A. "Putting restrictions on private equity and locking them up has limited the amount of options for struggling banks to attract capital," says Sponseller. As a result, he expects few large mergers in the near future outside of superregionals looking to wrench out synergies through a consolidation.

Nevertheless, European banks potentially looking at asset sales to raise capital for an escalating crisis may move the deals market forward. "A lot of my clients are bullish on the opportunities that are coming out of Europe, whether they in Europe or in the U.S.," adds Sponseller. In 2011, three of four billion dollar plus deals involving U.S. bank assets involved a foreign seller, notes Chan of BMO Capital Markets.

Those deals included Capital One's ( COF) still to be completed $9 billion deal for ING Direct ( ING), PNC's ( PNC) acquisition of RBC's ( RBC) U.S. retail bank for $3.45 billion and First Niagara's ( FNFG) $1 billion purchase of HSBC's ( HBC) upstate-New York bank branches. The only U.S. consolidation over $1 billion was Comerica's ( CMA) purchase of Sterling Bancshares for $1.03 billion.

2. More asset purchases likely.

While traditional bank M&A may continue to be sluggish at the open of 2012, deal activity could be driven by asset purchases, especially as European banks look for quick ways to raise capital. "As banks increasingly seek to bolster and diversify earnings, we expect near-term deal activity to be dominated by asset generating targets i.e. aircraft and rail leasing, ABL, factoring, indirect auto, card and non-bank businesses," writes Andrew Marquardt of Evercore Partners in a January research note.

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