Expect an "explosion in bank acquisitions" after November, said Dick Bove, analyst at Rochdale Securities.
“That’s when the capital rules are supposed to be set for the sector,” Bove told CNBC in a live interview Tuesday. “As a result, there’s a whole bunch of banks that are selling at significant discounts to their book value…perhaps 50 percent of them will be bought out within the next 12 months.” (Scroll down to see Bove’s full list of potential M&A targets and acquirers.)
"If you think the outlook for your industry is not particularly good, in other words, internal earnings growth is going to be weak for the second quarter—and if you have a lot of cash and capital—then you have to make acquisitons and they will," he added.
Earlier, the Federal Deposit Insurance Corp revealed some encouraging figuresabout the banking sector, saying the industry earned $21.6 billion during the second quarter largely due to firms putting away less money to cover expected loan losses.
“Despite what was said by [FDIC Chairman Sheila] Bair, concerning the results in the second quarter, the results in the were actually quite bad,” Bove said. “All of the factors, which led to core earnings, were down and the only reason that these banks showed an increase in earnings was because they reduced their reserves…so it was not a good quarter by any means.”
“And in the third quarter, you're going to get the same type of result,” he warned.
Potential Acquirers:
Bank of New York Mellon
Northern Trust
State Street
BB&T
Comerica
PNC Bank
US Bancorp
Potential M&A Targets:
Fifth Third Bank
SunTrust Bank
Regions Financial
First Horizon
KeyCorp
Marshall & Ilsley
M&T Bank
Zions
Scorecard—What He Said:
- Bove's Previous Appearance on CNBC (Aug. 4, 2010)
CNBC Data Pages:
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CNBC Slideshows:
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Disclosures:
No immediate information was available for Bove or his firm.
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