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."
Cryan said Wednesday at a conference that banks in the EU may need M&A not only on a national level, "but also across national borders" in order to remain profitable and competitive on a long-term basis.
Deutsche Bank declined to comment to CNBC; Commerzbank did not respond to CNBC's request for comment.
European banks' shares have not recovered the same way U.S. bank stocks did after tumbling to begin 2016. That could turn into an advantage for American firms at a critical time.
While the likelihood of rising interest rates and stabilizing energy prices in the U.S. buoyed shares stateside, EU banks currently face a more complicated credit picture at home, as well as monetary policy that can best be described as in flux. Because German regulators are unlikely to sign off on a bank's sale outright, asset purchases including energy credits would be attractive for U.S. investors, including banks and private equity firms.
"You would be surprised at how good the bids for energy loans would be," said Christopher Whalen, senior managing director at the Kroll Bond Rating Agency.