Thu, May 12, 5:40 AM
- While 2015 was a record-breaking year for M&A, 2016 so far will go down as what could have been. Nearly $400B of deals - most recently the Staples/Office Depot merger - have fallen apart so far this year, according to Dealogic, whether thanks to regulators, rocky markets, or reluctant targets. Even if no other deals fall through for the rest of the year, that amount would still be a record.
- It's bad news for banks - particularly as business continues to slow in areas like trading. Also, advisors typically only pocket most of their money when deals close, meaning there's been a lot work for naught this year.
- The breakups of just the Pfizer/Allergan, Halliburton/Baker Hughes, and Staples/Office Depot deals cost banks more than $300B in advisory fees (and potentially much more than that).
- ETFs: XLF, FAS, FAZ, UYG, VFH, IYF, BTO, IAI, IYG, FNCL, SEF, FXO, RYF, KCE, FINU, RWW, XLFS, FINZ, FAZZ
Oct. 31, 2015, 2:04 PM
- Sizable bank mergers were supposed to be no-brainers as lenders - weighed down by a sluggish lending environment, overlapping branch networks, and high regulatory costs - sought operating synergies. Unfortunately, regulators since the financial crisis have had different ideas about what banks should be doing with their capital (namely, storing it for a rainy day).
- The M&T/Hudson City merger finally getting approval (after a three-year delay), along with quick green lights for a couple of BB&T purchases began to give investors hope, and this week they got KeyCorp (NYSE:KEY) agreeing to buy First Niagara (NASDAQ:FNFG), and New York Community Bancorp's (NYSE:NYCB) deal for Astoria Financial (NYSE:AF).
- The reaction: KeyCorp is lower by more than 10% since the news was announced, and First Niagara by more than 6%; NYCB is off nearly 14%, and Astoria 11%.
- "This level of selloff is not typical," says Sterne Agee's Peter Winter. "Early reactions to bank transactions often are bumpy," says KeyCorp CEO Beth Mooney.
- CLSA's Mike Mayo calls Key's purchase "strategically good," but isn't a fan of the bank's plan to fund a major portion of the deal with stock. NYCB is also funding much of its buy with stock, and the deal includes a cut in the dividend - maybe not the greatest move considering the income-oriented lean of the bank's investor base, says Winter.
- Previously: More losses for NYCB as secondary prices; Astoria lower too (Oct. 30)
- Previously: KeyCorp not expecting M&T-like deal hold-up (Oct. 30)
- ETFs: XLF, FAS, FAZ, UYG, KRE, VFH, KBE, IYF, BTO, IAT, SEF, IYG, FXO, FNCL, KBWB, FINU, QABA, KRU, KBWR, RWW, RYF, FINZ, KRS, XLFS
Jul. 22, 2015, 3:01 PM
- The OCC yesterday gave the green light to CIT Group's $3.4B purchase of OneWest Financial, and earlier this month regulators approved BB&T's $2.5B acquisition of Susquehanna Bancshares.
- Possibly lifted now is concern nearly any sizable deal would get nixed (or delayed to death) by D.C. a la M&T's attempt to purchase Hudson City Bancorp (originally announced three years ago).
- Both the CIT and BB&T deals, however, were approved within a year of their announcement, maybe making the M&T/Hudson experience the outlier rather than the norm.
- While it still appears unlikely much bigger deals could win approval, the path could be clear for smaller-to-medium sized lenders to do business. Drexel Hamilton's David Hilder believes the CIT approval is a "positive catalyst" for acquisitions of lenders with up to $25B in assets.
- Previously: CIT Group gains after winning regulatory green light for OneWest purchase (July 21)
- ETFs: XLF, FAS, FAZ, UYG, KRE, VFH, KBE, IYF, BTO, IAT, SEF, IYG, FXO, FNCL, KBWB, FINU, QABA, KRU, KBWR, RWW, RYF, PSCF, FINZ, KRS
Feb. 15, 2013, 7:38 AM
"The Goldilocks era of post-crisis M&A has never been an if, but a when," says JPMorgan (JPM) vice-chair James Lee. "CEOs are declaring that day has come." Including the Berkshire buy, $40B in deals were announced yesterday and $140B this month. Transaction volume is up 27% Y/Y vs. an 8% slump for 2012. It should mean sweet profits for the newly lean banks.| Feb. 15, 2013, 7:38 AM | 8 Comments
Nov. 29, 2011, 3:21 PM
Just as U.S. banks are trying to aggressively cut their eurozone exposure, foreign banks are doing the same for their U.S. exposure. Deutsche considers this a positive for U.S. banks, to the extent it allows them to acquire assets (I, II) at reasonable prices. Banco Santander (STD) still holds $56B in U.S. loans; Banco Bilbao (BBVA) $45B; and Deutsche Bank (DB) $32B.| Nov. 29, 2011, 3:21 PM
Aug. 1, 2011, 4:49 AM
Major European hedge fund Lansdowne Partners has reportedly sold its entire $850M stake in Goldman Sachs (GS), underlining concerns about banking prospects due to regulatory changes. The divestiture has echoes of Lansdowne's exit from the industry in 2008, ahead of the financial crisis.| Aug. 1, 2011, 4:49 AM
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