Regional lenders at the heart of last year's banking crisis are cutting more deals to shore up their balance sheets and compete with rivals, extending a wave...
- Regional lenders at the heart of last year's banking crisis are cutting more deals to shore up their balance sheets and compete with rivals, extending a wave of consolidation in the sector that may attract anti-trust scrutiny.
"The regionals need to consolidate to compete more effectively," said Macrae Sykes, banking portfolio manager at Gabelli Funds. "There are over 4,000 individual banks, many of which are not competitive in today's landscape." Around 45% of paper losses banks had amassed on their securities holdings have been erased from their peak two years ago, Wells Fargo analyst Mike Mayo wrote in a report this month.
NYCB was followed by Valley National, Hope Bancorp, Banc of California, Texas Capital Bancshares and Fulton Financial, whose assets range from $17 billion to $62 billion and all trade at a price-to-book ratio of less than one. Both the OCC and FDIC this year proposed tougher merger policies, especially for deals that create banks with more than $50 billion in assets, to ensure the best mergers are approved and do not increase systemic risks.
"The industry logic for banking sector consolidation is very strong and I think that is recognized by the regulators,” he said.
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