Still, other analysts say investors hoping M&A activity will lift banks this year will end up disappointed.
“Predictions of accelerating industry consolidation have failed to materialize thus far as the economic recovery has proved painfully slow and capital requirements remain uncertain. Fair value accounting, uncertain capital and earnings, and irrational expectations on the part of sellers continue to stall consolidation activity—at least for now,” Sterne Agee analysts said in a June 9 research note.
“Depressed valuations, director/management fatigue, persistently weak fundamentals and high compliance costs will likely spark a return to traditional M&A in 2012—not too dissimilar from past cycles,” they wrote. “However, we believe pricing will stay more rational and acquisition activity will likely trend toward the smaller end of the spectrum, at least initially.”
Financial Select Sector SPDR Fund
