Which Bank Will Be Next?
With Wednesday's announcement that J.P. Morgan Chase & Co. will merge with Bank One Corp., the list of bank takeover targets is now missing another one of its most attractive names and the race by the nation's largest banks to bulk up their consumer-banking muscle took on added urgency.
After the punishing economic downturn and corporate scandals of recent years decimated investment banking operations, the nation's big, or "money center," banks have become obsessed with retail banking, which offers an alluring proposition: regular revenue with low risk.
Coming less than three months after Bank of America Corp. staked its claim to FleetBoston Financial Corp.'s almost 5,700 branches across the country, the latest deal gives branch-light J.P. Morgan Chase the ability to fly its colors at some 1,800 new locations in 14 states, from Illinois to Texas to Florida.
No one expects that the action will stop here. With Fleet and Bank One paired up, the industry is buzzing about other major deals in the pipeline, and investors are once again breaking out their lists of regional banks with the potential to add to the footprints of the coastal banking giants.
Among the remaining potential names on the dance card are Detroit-based Comerica Inc., KeyCorp in Cleveland, U.S. Bancorp of Minneapolis, SunTrust Banks Inc., in Atlanta, National City Corp. of Cleveland, Sovereign Bancorp Inc. of Wyomissing, Pa., Union Planters Corp. of Memphis, Tenn., and SouthTrust Corp. of Birmingham, Ala.
While the big money-center banks are looking for partners, investor pressure is building on those banks that aren't large enough to compete with Citigroup and the new J.P. Morgan Chase, and haven't been able to increase earnings at a rapid clip, investors say.
"Given the size and magnitude of the Bank One deal, any bank that isn't making investors happy will become a target," says Anton Schutz, a portfolio manager at the $317 million Burnham Financial Services fund.
Mr. Schutz, who has been betting on a wave of mergers for months, says he will add to his holdings of U.S. Bancorp and SunTrust this morning -- as long as the stocks don't jump at the opening -- on the expectation that they could be targets in the months ahead.
"U.S. Bancorp is a very attractive franchise, and they could be a great match for Wachovia [Corp.]," he says. Investors say that Comerica, Key Corp. and PNC Financial Services Group Inc. also could feel pressure to find a merger partner.
Besides building up branch networks, J.P. Morgan will also receive a huge boost to its credit-card business with Bank One's First USA credit-card unit, one of the nation's largest. Like branch networks, credit cards have proven to be a profitable and rapidly growing sector that has been fairly immune to swings in the economy.
Among the large credit-card operations viewed as potential takeover candidates are Capital One Financial Corp., Providian Financial Corp. and MBNA Corp. Among these companies, MBNA is viewed as less likely to feel a need to find a suitor because the company has focused on higher-quality borrowers and wins kudos from investors for a top-notch management team. But Providian and Capital One are seen as more likely targets. Capital One is up about 15% in the past month or so, though Providian has edged lower.
"MBNA can stand on its own, but Providian and Capital One are definitely targets," says Mr. Schutz, who owns shares of both Providian and Capital One. "There's a question of growth for those companies, Providian has been turning itself around but there's a question of growth at the company."
Providian jumped 4% in after-hours trading Wednesday to $12.15 after the Bank One deal leaked out.
The J.P. Morgan-Bank One deal creates a financial powerhouse that rivals Citigroup Inc. and Bank of America, offering customers banking, money management, credit cards, insurance and just about any other financial service.
Citigroup has proven adept at leveraging its customer base to sell these products and that is the goal of any big bank merger these days. The newly combined J.P. Morgan and Bank One will have a larger branch network than Citigroup.
The industry has taken notice of the results posted by the big banks courting the retail market. Large banks adopting a retail strategy have outperformed their peers in recent years, the federal Comptroller of the Currency noted in its annual report on the condition of the industry. In 2003, the largest 10 banking companies increased their share of retail assets to 49%, from just 27% in 1984.
For investors looking for the next banking target, analysts suggest scouring for poorly performing banks, rather than stellar performers. David Hendler, an analyst at CreditSights Inc., argues that Bank One was amenable to an offer from J.P. Morgan because it has been unable to step up its lending business amid persistent economic weakness in the Midwest, and has seen some problems in its credit-card operations.
"Bank One ran out of ideas, they had to do this deal," says Mr. Hendler. Chief Executive "Jamie Dimon had cut costs as much as he could and was running out of growth drivers."
He argues that the deal is a good move for J.P. Morgan Chase because Mr. Dimon, who eventually will run the bank, will be able to create savings by slashing overhead once the merger is completed.
Some potential banking acquisition targets
Wednesday's Stock Close Share Performance Over the Past 52 Weeks Market Capitalization, in Billions Assets, in Billions
SunTrust Banks $70.00 20.30% $19.60 $125.40
National City 32.69 12.8 19.7 118.3
KeyCorp 29.08 8.5 12.1 85.2
PNC Financial Services 53.11 19.3 14.7 66.4
MBNA 26.28 30.6 33.2 52.9
SouthTrust 31.63 21.6 10.4 50.6
Capital One Financial 64.79 66.6 14.9 37.4
Source: Reuters Research
Steven Wharton, an analyst with investment manager Loomis Sayles & Co., maintains that, given the right offer, Sovereign, PNC, U.S. Bancorp and SunTrust would all consider selling. "It has to be economic as well as strategic, otherwise we're going to have another round of dumb mergers like we had in 1998," he says.
One final ingredient that is necessary, he added: A CEO willing to sell. "You either have to have an activist board or a compelling offer," he explains.
Many regional banks have done well in recent years by riding the mortgage-refinancing boom, which has slowed dramatically as interest rates have moved up from last year's lows. Without that growth engine, the banks may feel even more pressure to merge.
KeyCorp, PNC and Comerica are among the banks that may not be able to increase earnings at a fast pace in the years ahead and may feel the need to sell, says Mr. Hendler. But these banks aren't as big as Bank One and don't have an attractive unit like Bank One's credit-card business, so they may have to merge among themselves, he argues. "They're more drab than Bank One," he says. "They're not the transformational deal that big banks look for."
Though some say Wachovia could be a buyer of a banking rival, Mr. Hendler argues that the bank has been cutting costs and may be open to a lucrative takeover offer on the heels of the Bank One deal.
Foreign banks could add some spice to the merger stew.
Royal Bank of Scotland PLC, the parent of Citizens Financial Group, one of the largest retail banks in New England, has been open about its desire to expand in the U.S.
"As the dollar gets weaker it becomes more palatable" for foreign banks to buy a U.S. bank because the target becomes cheaper, says Paul Fusco, a bank analyst at John Hancock Advisers LLC in Boston.
Some investors are guessing Royal Bank will buy Sovereign Bancorp to expand its footprint in the Northeast.
下一家是谁
又一位壮士栽倒了。
随著摩根大通公司(J.P. Morgan Chase & Co., JPM)周三宣布收购美一银行(Bank One Corp.)，银行业的收购目标名单上又少了一家最具吸引力的候选人，而各家大银行壮大零售业务的竞赛显得更加紧迫了。
近年来，经济下滑和各种企业丑闻使美国的投资银行业务苟延残喘，那些被誉为"资金集散地"的大型综合性银行变得越来越沉溺于收入稳定而风险较低的零售银行业务。
最新宣布的这桩合并案将使分支机构稀少的摩根大通在14个州占领1,800处新领地，它的旗帜将飘扬在从伊利诺伊到德克萨斯和佛罗里达的广阔土地上。就在3个月前，美国银行(Bank of America)刚刚在FleetBoston Financial Corp.遍布全美的大约5,700家分支机构插上自己的大旗。
人们都认为，银行业的并购行动并不会就此止步。在Fleet和美一之后，并购机器依然轰然作响，其他的大单交易已隐约可见。投资者们也蠢蠢欲动，心里盘算著有哪些地区性银行有可能会被东、西海岸的银行业巨头们收入囊中。
目前，在潜在收购对象名单上的有底特律的Comerica Inc.、克利夫兰的KeyCorp和National City Corp.、明尼阿波利斯的U.S. Bancorp、亚特兰大的SunTrust Banks Inc.、怀俄明州的Sovereign Bancorp Inc.、田纳西州孟菲斯的Union Planters Corp.和阿拉巴马州伯明翰的SouthTrust Corp.。
在大型综合性银行物色合作伙伴的同时，那些在规模上不足以与花旗集团(Citigroup)或收购完成后的摩根大通分庭抗礼、不能迅速增加利润的银行也感受到了越来越大的压力。
Burnham Financial Services基金的投资组合经理安东?舒尔茨(Anton Schutz)说，既然连美一银行这样规模庞大的银行都能被人收购，看来只要不能令投资者满意，任何银行都有可能成为收购对象。
舒尔茨数月来一直预言银行业还将发生并购。他说，只要U.S. Bancorp和SunTrust不出现开盘跳升的情况，他就将增持这两只股票，因为他估计，这两家银行几个月后有可能被收购。 U.S. Bancorp是一家很有吸引力的银行，它与Wachovia Corp.很般配。
投资人士认为，Comerica、KeyCorp. 及PNC Financial Services Group Inc.也都会感受到寻找并购对象的压力。
摩根大通这笔交易除了能扩大它的分支机构网络之外，美一银行旗下全美最大的信用卡业务子公司First USA也将使它的信用卡业务获得极大提升。与分行业务一样，信用卡业务也是一个利润可观、增长迅速的领域，而且不易受经济形势动荡的影响。
有可能被收购的信用卡公司有Capital One Financial Corp.、Providian Financial Corp.和MBNA Corp.等。其中，MBNA被认为不太可能需要物色收购者，因为该行主要面对资质较好的借款人，且该行一流的管理团队在投资者中享有盛誉。而Providian和Capital One被收购的可能性很大。
Capital One在过去一个多月时间里上涨了15%，Providian则略有下降。
舒尔茨说，MBNA独立生存的能力很强，但Providian和Capital One绝对应该被收购。他管理的基金持有这两家银行的股票。他说，后两家银行在业务增长方面有问题。
在美一银行被收购的消息传出后，Providian在昨日的盘后交易中涨了4%。
摩根大通和美一的合并将催生一家足以与花旗集团和美国银行抗衡的庞大的金融帝国。它将提供从消费银行、资金管理到信用卡、保险等各项金融服务。
利用庞大的客户群推销上述各项业务一向是花旗的拿手好戏，而这也是各家大银行孜孜以求的目标。摩根大通与美一银行合并后，其客户网络将比花旗的还要大。
银行业已经注意到大银行争夺零售市场所产生的结果。美国财政部金融局(Comptroller of the Currency)在年度报告中指出，近年来，走零售战略的大型银行总体表现好于同类银行。2003年，美国最大10家银行的零售业务比重已从1984年的27%上升到49%。
在猜测哪家银行是下一个收购目标时，分析师的建议是，关注那些表现不佳的银行，而不是那些大银行。 CreditSights Inc.的大卫?亨德勒(David Hendler)说，美一被摩根大通收购的合理性和必要性在于，由于中西部地区经济持续不景气，它已无力推进贷款业务，其信用卡业务也出现了一些问题。
美一银行已经无计可施，它不得不走这一步。其当家人杰米?戴蒙(Jamie Dimon)已竭尽全力削减成本，再也没有其他办法推动业务增长了。
亨德勒认为，收购交易对摩根大通也是一步好棋，因为合并完成后，戴蒙（一段时间后他将掌管合并后的银行）就能通过裁员来节约成本了。
投资管理公司Loomis Sayles & Co.的分析师史蒂夫?沃顿(Steven Wharton)说，只要出价合理，Sovereign、PNC、U.S. Bancorp及SunTrust都可以考虑被收购。他说，合并必须在经济效益和经营战略上具有积极意义，否则1998年出现的盲目并购潮又会重演。
他补充说，促成收购还有一个必要因素，那就是，首席执行长必须有出售的意愿。有意收购的一方要么具有充分的游说能力，要么能给出诱人的出价。
近年，在抵押再融资业务一派繁荣之下，一些地区性银行表现相当不错，但随著市场利率开始从去年的低点回升，这部分业务开始降温。在这种情况下，这些银行或许会感受到并购的压力。
亨德勒说，KeyCorp, PNC和Comerica等银行未来几年可能难以迅速提高利润，而且会觉得有出售的必要。但是，这几家银行没有美一银行那么大的规模，也不像它有一块相当不错的信用卡业务，因此，他们可能不得不采取互相合并的方式，
外国银行可能也会来凑热闹。
苏格兰皇家银行(Royal Bank of Scotland PLC)就一直有意将业务拓展至美国。
John Hancock Advisers LLC驻波士顿的银行业分析师保罗?法斯科(Paul Fusco)说，随著美元走弱，美国银行的身价也变得便宜，这更使它们成了外国同行眼热的收购目标。
一些投资者猜测，苏格兰皇家银行将通过收购Sovereign Bancorp来扩展其在美国东北部的业务。
