Deal set to send European shares soaring

EUROPEAN banking shares are expected to soar today as shock waves from two of the biggest financial deals the world has ever seen reverberate around the world's stock markets.

Merger mania gripped Wall Street yesterday, adding billions to the value of US financial stocks, after BankAmerica and NationsBank announced a $60bn merger and Banc One and First Chicago unveiled a $30bn partnership which will create the largest and fifth biggest banks in America respectively.

Banking shares jumped for the second time in seven days yesterday as analysts predicted that the consolidation in the industry still had some way to go and more mega-deals could be just around the corner.

US financial stocks have already risen to record highs in the wake of last week's announcement that Citicorp and Travelers Group were to merge to create an $80bn financial powerhouse in the largest deal in corporate history.

The fundamental restructuring of the world's banking system initiated by the Americans is likely to change the face of the global finance industry and have widespread implications for most European banks.

The deals will once again turn the bid spotlight on UK banks, and analysts expect the news to send their shares, and the stock market generally, to new heights. The banking sector has already enjoyed a storming run over the last few months, comfortably outperforming the wider stock market and seeing stock prices rise to record levels.

The move will put increasing pressure on UK banks to consider mergers and some City observers believe that it is only a matter of time before several of Britain's financial giants have to join forces to compete with the banking goliaths being created across the Atlantic.

High street giants such as NatWest, Barclays, Halifax and Royal Bank of Scotland could be likely merger or takeover candidates, and consolidation in the sector could see some of Britain's best known banking names disappear over the next few years.

The American deals will also increase pressure for cross-border deals to create a pan-European bank.

The rapid consolidation of the US banking sector is likely to prompt banks such as Lloyds TSB, which has already announced it is looking for significant new purchases, to accelerate expansion plans and hit the acquisition trail.

As well as a sharp rise in the shares in all four American banks involved in the mergers yesterday, other financial stocks such as JP Morgan and Merrill Lynch and regional banking groups leapt upwards as US traders speculated on who would be next takeover target. However Citicorp's and Travelers' stock slipped after the sharp rise in their share prices last week as the market reacted to the creation of two significant new competitors.

US analysts said they expected Chase Manhattan, currently the largest US bank, to make a strike in the wake of the deals announced yesterday and believe it could be eyeing up Merrill Lynch. JP Morgan could attract a big investment bank such as Morgan Stanley Dean Witter.

Regional banks such as PNC Bank, KeyCorp, Wells Fargo & Co. and Fleet Financial Group are also likely to be considering mergers.

Sport
The sun rises over St Andrews golf course, but will it be a new dawn for the Royal and Ancient Golf Club?
sportAnd it's Yes to women (at the R&A)
Arts and Entertainment
Friends is celebrating its 20th anniversary this year
tvSeries celebrates 20th anniversary
Sport
Yaya Touré (left) and Bayern Munich’s Spanish defender Juan Bernat
footballToure's lack of defensive work is big problem for City
Voices
voicesApple continually kill off smaller app developers, and that's no good for anyone
PROMOTED VIDEO
Arts and Entertainment
Liam Neeson said he wouldn't
tv

Liam Neeson's Downton dreams

Sport
Wembley Stadium
footballNews follows deal with Germany
Arts and Entertainment
A spell in the sun: Emma Stone and Colin Firth star in ‘Magic in the Moonlight’
filmReview: Magic In The Moonlight
News
ebooksAn unforgettable anthology of contemporary reportage
Sport
A 'Sir Alex Feguson' tattoo
football

Arts and Entertainment
Ben Whishaw is replacing Colin Firth as the voice of Paddington Bear
tv

Thriller is set in the secret world of British espionage

Life and Style
life

News
ScienceGallery: Otherwise known as 'the best damn photos of space you'll see till 2015'
Life and Style
fashion

Bomber jacket worn by Mary Berry sells out within an hour

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SQL Developer - Watford/NW London - £320 - £330 p/d - 6 months

£320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

Head of Audit

To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...

Audit Manager Central Functions

To £85,000 + banking benefits: Saxton Leigh: You will be expected to carry out...

Credit Risk Audit Manager

Up to £90,000 + benefits: Saxton Leigh: Credit Risk Audit Manager required to ...

Day In a Page

Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam
'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

Exclusive extract from Janis Winehouse's poignant new memoir
Is this the role to win Cumberbatch an Oscar?

Is this the role to win Cumberbatch an Oscar?

The Imitation Game, film review
England and Roy Hodgson take a joint step towards redemption in Basel

England and Hodgson take a joint step towards redemption

Welbeck double puts England on the road to Euro 2016
Relatives fight over Vivian Maier’s rare photos

Relatives fight over Vivian Maier’s rare photos

Pictures removed from public view as courts decide ownership
‘Fashion has to be fun. It’s a big business, not a cure for cancer’

‘Fashion has to be fun. It’s a big business, not a cure for cancer’

Donatella Versace at New York Fashion Week