Merger and acquisition activity in the banking sector has not been robust with financial regulation changes still on the table, but the landscape could change very soon, said Craig Siegenthaler, analyst at Credit Suisse.
“Financial regulatory reform is weighing on everything, but we’ll have some disclosure around July in terms of what the rules are,” Siegenthaler told CNBC.
“With those as the support, plus continued credit quality improvement, we should start to have better visibility in terms of bank M&A.”
Siegenthaler said the biggest problems right now with the FDIC-assisted deals are that they’re “very small and competitive.”
“So I expect these super-regionals, some of the Canadian and the foreign banks to move upstream and look at these mid-cap regional banks as they are very cheap right now,” he said. “That’s where I see the most upside in the banking sector.”
“Timing wise, you have to buy them now,” said Siegenthaler of the mid-cap financials. “You’re going to get continued credit quality improvement and continued price improvement.”
Fifth Third —Siegenthaler's "favorite candidate."
Scorecard—What He Said:
- Siegenthaler's Previous Appearance on CNBC (Apr. 7, 2010)
More on Banks & FinReg:
- Banks Must Raise Capital for Another Year: Strategist
- Market Would Jump 2,000 Points if Reform Bill Died: Forbes
- 'Fundamentals in Place' for M&A Activity: JPMorgan's Lee
CNBC Data Pages:
CNBC's Companies in the News:
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Siegenthaler does not own shares of KEY or FITB.