Corporations are sitting on mounds of cash, and now they’re starting to go shopping. M&A activity in the regional banking sector is expected to pick up, and it could be a rewarding shopping spree for their exchange traded funds (ETFs).
The recent takeover of Marshall & Ilsley Corp. (NYSE: MI) by Bank of Montreal (NYSE: BMO) was the largest sign yet that regional banks may be looking for even more mergers and acquisitions. David Benoit for The Wall Street Journal reports that the moves are a sign of health for the banking industry, especially if those deals can be completed without government aid. [Why Financial ETFs Are Standing Tall.]
The ETF Professor for The San Francisco Chronicle feels that 2011 will be the year of M&A activity in regionals as the better financially positioned banks snap up the weaker ones. [Financial ETFs Spring Back to Life.]
You can grab exposure to a number of regional banks through two ETFs in particular: SPDR KBW Regional Bank (NYSEArca: KRE) and iShares Dow Jones U.S. Regional Banks (NYSEArca: IAT).
Tisha Guerrero contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.