Big Banks May Be Left Out of Next Bank Takeover Surge
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Price: $57.63 +576,200.00%
Overall Analyst Rating:
SELL (= Flat)
Dividend Yield: 3.8%
EPS Growth %: +13.5%
Overall Analyst Rating:
SELL (= Flat)
Dividend Yield: 3.8%
EPS Growth %: +13.5%
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U.S. Bancorp (NYSE: USB) and PNC Financial Services Group Inc. (NYSE: PNC) may initiate a surge in bank takeovers, while the largest lenders may have to stand by and watch, according to a report from Bloomberg on Wednesday.
Since October 2008, outstanding loans at banks have dropped 10 percent, marking the largest contraction in more than 35 years. The banks have been left with unused lending capacity, cash and depressed market values, setting up for consolidation, according to KBW Inc., Rochdale Securities LLC and CreditSights Inc.
Possible targets for consolidation according to the Bloomberg report include KeyCorp (NYSE: KEY), SunTrust Banks Inc. (NYSE: STI) and Regions Financial Corp. (NYSE: RF).
The report notes that buyers will likely see favorable prices for acquisitions, as the four biggest U.S. lenders will not be in on any bidding.
Bank of America Corp. (NYSE: BAC), JPMorgan Chase & Co. (NYSE: JPM) and Wells Fargo & Co. (NYSE: WFC) each are too close to owning the 10 percent of U.S. deposits allowed by regulations. Citigroup Inc. (NYSE: C) is in sell mode and in no shape to acquire assets.
The absence of the top lenders will open the door for banks like U.S. Bancorp and PNC to make a move. U.S. Bancorp has been active since the credit crunch, acquiring at least 10 banks, while PNC acquired National City.
According to Richard Bove, an analyst for Rochdale Securities, movement could begin after the announcements in November for minimums for capital and liquidity from international regulators. Bove noted that those banks which cannot meet the levels required could become targets and those which exceed the minimums will know what the requirements to make capital deals.
U.S. Bancorp has said that it will look to “opportunistically” make acquisition, and the bank’s CEO Richard K. Davis said that the recent weakness in the economy could make potential targets more open to selling.
Since October 2008, outstanding loans at banks have dropped 10 percent, marking the largest contraction in more than 35 years. The banks have been left with unused lending capacity, cash and depressed market values, setting up for consolidation, according to KBW Inc., Rochdale Securities LLC and CreditSights Inc.
Possible targets for consolidation according to the Bloomberg report include KeyCorp (NYSE: KEY), SunTrust Banks Inc. (NYSE: STI) and Regions Financial Corp. (NYSE: RF).
The report notes that buyers will likely see favorable prices for acquisitions, as the four biggest U.S. lenders will not be in on any bidding.
Bank of America Corp. (NYSE: BAC), JPMorgan Chase & Co. (NYSE: JPM) and Wells Fargo & Co. (NYSE: WFC) each are too close to owning the 10 percent of U.S. deposits allowed by regulations. Citigroup Inc. (NYSE: C) is in sell mode and in no shape to acquire assets.
The absence of the top lenders will open the door for banks like U.S. Bancorp and PNC to make a move. U.S. Bancorp has been active since the credit crunch, acquiring at least 10 banks, while PNC acquired National City.
According to Richard Bove, an analyst for Rochdale Securities, movement could begin after the announcements in November for minimums for capital and liquidity from international regulators. Bove noted that those banks which cannot meet the levels required could become targets and those which exceed the minimums will know what the requirements to make capital deals.
U.S. Bancorp has said that it will look to “opportunistically” make acquisition, and the bank’s CEO Richard K. Davis said that the recent weakness in the economy could make potential targets more open to selling.
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