Banking merger fever around the world
As we've commented before, the big bank mergers of the past two months (Morgan Chase-Bank One and Bank of America-Fleet Boston) have launched a series of new deals and rumors, both in the US and in Europe. As in an arms race, banks are looking to bulk up so as not to be overwhelmed by the competition. We are likely to see mergers at an even more frenzied pace.
Italy
One previously unthinkable merger that is rumored to be in the works is that between Italian banks UniCredito Italiano SpA and Sanpaolo IMI SpA. Sanpaolo's biggest shareholder in turn is Spanish banking power Santander Central Hispanico SA, which itself has been a major player in the merger wars. The merger, if it goes through, would create a bank with over $500 billion in assets, giving it total dominance over the Italian market. This would be the first Italian bank "truly capable of competing on a European scale," according to the Wall Street Journal, ("Once Unthinkable Mergers May Emerge from Woes of Italy's Central Banker", 1/3/2004). It would also cause a crisis for other Italian bankers Capitalia SpA and Banca Nazionale del Lavoro, perhaps, the article speculates, forcing them to merge with foreign banks.
Germany
US Citigroup has made overtures to acquire Deutsche Bank AG, Germany's largest bank. Apparently, talk have broken down for the moment.
Deutsche Bank has recently unloaded several holdings after a weak showing of the past few years. A Reuters report quotes experts saying the talks could heat up again, as Citigroup tries stay ahead of its competitors with a major presence in Europe, and others state that finding a US partner for Deutsche Bank is "only a matter of time." Other candidates mentioned for merger might be either Bank of America or HSBC.
Mexico
Spanish Banco Bilbao Vizcaya Argentaria SA (BBVA) has made a bid to take full control of Mexican subsidiary Bancomer SA. With the euro valued so high and the peso so low, this is a good opportunity for BBVA to up its investment in the company. Bancomer has a 24% market share in Mexico, and its chief competitors are an alliance between US Citigroup and Banco Central Santander SA.
USA
We've already chroncied several smaller bank acquisitions last months.
The Bank of Montreal, through its Harris Bank subsidiary, has bought yet another small bank in the Chicago area. It plans to buy New Lenox State Bank to expand its suburban presence. According to Reuters, it is the Bank of Montreal's 11th US acquisition since 1999. (The company acquired another small Chicago-area bank, Lakeland Community Bank, last November.)
Meanwhile, Independent Bank Corp. (Michigan) announced it will buy Midwest Guarantee Bancorp. This is a relatively small deal, but symptomatic.
