Don't expect banking industry consolidation to slow anytime soon. That's according to Dino Mauricio, a managing director of M&A integration at the management and financial consultancy Getzler Henrich. Over the next six to eight months, Mauricio predicts we'll see financially stable banks on the hunt.
"Weaker banks in this environment are extremely vulnerable," says Mauricio. "Some of them can't solve their problems with equity infusions or selling troubled assets and will welcome advances from larger, well-capitalized banks."
The group of possible buyers includes the usual suspects such as Bank
of America Corp., J.P. Morgan Chase & Co. and Wells Fargo & Co., and investment banks Goldman, Sachs & Co. and
Morgan Stanley. But it also includes well-capitalized regional banks, he says,
such as PNC Bank NA, Fifth Third Bank, Northern Trust, Comerica Bank
and UnionBanCal Corp.
Certainly with more consolidation comes more layoffs. And Mauricio says it's not just new deals that will lead to further industry downsizing. He believes we'll be hearing about more layoffs from announced deals in the months ahead. Mauricio says BofA and Barclays plc, in particular, may have underestimated by up to half the number of layoffs resulting from their recent deals. BofA has announced a 10% work force reduction as a result of its acquisition of Merrill Lynch & Co., and Barclays says 3,000 jobs will be lost as it integrates Lehman Brothers Holdings Inc.
"Based on what we saw in the 1990s, I think we could see double those numbers to get to the efficiencies these banks promised when they announced their acquisitions," says Mauricio. "The banking environment is tough, and outside personnel, there aren't many levers to pull. There are real estate options [to achieve cost savings], but those will also result in layoffs." -
Suzanne Stevens
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