Among European Union banks, someone's got to sell — it's just a matter of time. More importantly, could be who will be doing the buying.
At a time when the U.S. banking system is enjoying relatively better performance on public markets than their EU counterparts, there's a chance American banks could get bigger as European banks get smaller.
It doesn't look like Commerzbank or Deutsche Bank will sell to each other. Deutsche Bank CEO John Cryan was quick to scuttle a report from Manager Magazin that suggested his company and another German bank, Commerzbank, discussed a merger. But the mere idea that Deutsche Bank would weigh some form of mergers and acquisition was enough to lift shares more than 2 percent Wednesday.
For Cryan's bank, and for Commerzbank, there are still lingering questions; each has seen shares plummet by more than 34 percent this year. If the banks cannot answer questions with each other, selling all or part of the banks could provide a better response.
"Both banks are likely to sell assets," said Dick Bove, vice president of equity research at Rafferty Capital Markets. But selling everything is less likely, he said. "Germany is politically unlikely to allow another country to take over Deutsche Bank. U.S. regulators are not likely to allow any major purchases by U.S. banks."