By Jane SearleNEW YORK ( TheStreet) -- Deal activity in the American banking sector is at its highest level in nearly three years, a stark contrast to the global scene, where sector M&A has hit lows not seen since the credit crisis. For the year to date, there have been 274 bank deals in the U.S., a lift on the prior two years and on par with deal numbers for 2010, according to Dealogic. Globally, bank M&A, at 704 deals for the year to date, is at its lowest level since 2008, when 694 deals were struck. A stricter regulatory and sluggish economic backdrop has challenged all banks, though U.S. institutions overhauled balance sheets and purged themselves of toxic assets more quickly than their European peers. "A lot of
By contrast, European bank deals are still dominated by government and state bailouts. Greece's bank rescue fund -- the Hellenic Financial Stability Fund -- has led three of the largest European bank "deals" for the year to date, taking majority stakes in the National Bank of Greece SA, Piraeus Bank SA and Eurobank Ergasias SA for a collective $28.28 billion. Many smaller European banks struggling to fund themselves though larger peers such as UniCredit SpA, Banco Santander SA, BBVA Compass Bank and Intesa Sanpaolo SpA can access wholesale funding markets. The largest global bank deal that does not involve a bailout for the year to date has been Japan's Mitsubishi UFJ Financial Group's ( MTU) $5.7 billion purchase of a 75% stake in Indonesia's Bank of Ayudhya. Separately, many U.S.-based banks labeled systemically important have watched their legal costs mount. JPMorgan Chase ( JPM) has the highest legal costs above its reserves, at around $6.8 billion, according to Barclays plc's estimates. Regulators are investigating the bank's handling of its "London whale" trading scandal, while other claims against JPMorgan include its alleged deception concerning the quality of mortgages it sold during the credit crisis, its manipulation of energy trading markets and its hiring practices in China. Citigroup ( C) faces legal costs of around $5 billion, followed by Bank of America Merrill Lynch, with liabilities of $2.8 billion.