Christopher Menkin's  Instablog

By Alem Husain, SNL Financial

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Deutsche Bank AG sits atop the European banking world in terms of total assets. The German giant is the only banking conglomerate that crosses the €2 trillion mark in total assets, although BNP Paribas SA and HSBC Holdings Plc are not far behind.

Deutsche is the only German bank in the top 10 ranking, which is dominated by French and British institutions.

SNL Financial's data is pro forma, taking into account pending deals and transactions that have closed on or before May 1, 2011, and that involve a European bank as either the buyer or seller.

One overriding theme in the ranking is the banks' quest to shed assets. That has been the case at HSBC, particularly in the U.S. It sold 195 branches to First Niagara Financial Group Inc. - a deal it announced in late July 2011 - before selling its U.S. card and retail services business to Capital One Financial Corp. These transactions, which reduced HSBC's assets by €30 billion, were a big reason why the U.K. lender found itself in third place in our ranking.

Royal Bank of Scotland Group Plc similarly has been divesting, offloading 318 branches to Banco Santander SA.

Other acquisitions have been on Banco Santander's radar. Case in point: The bank expanded its presence in Poland with its acquisition of Kredyt Bank SA earlier this year from KBC Bank NV.

Meanwhile, deal-making in Spain is often looking like banking's version of musical chairs. A wave of consolidation in Spain has led to Banco Sabadell SA acquiring Caja Mediterráneo, Banco Popular Español SA buying Banco Pastor SA, La Caixa purchasing Banca Cívica SA and Unnim Banc being sold to Banco Bilbao Vizcaya Argentaria SA.

Overshadowing all these moves is the looming deadline of Basel III's requirement for banks to meet the minimum capital requirements by either raising capital or shedding assets. Only time will tell if size truly matters.

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Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.