Deal set to send European shares soaring
Tuesday 14 April 1998
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.
Culinary experts in The Netherlands thought it was 'fresh' and 'tasty'
Of all the computers Apple has ever made there’s only one that Steve Jobs had to sell his car to finance
Actress sees off speculation about her face in an amazing way
Marvel has released first teaser trailer week early after it leaked online
The sound of Goodfellas mafioso Frankie Carbone demanding $250m in “damages” would be chilling enough on film, let alone in real life.
- 1 Nokia no more: Microsoft drops once-ubiquitous mobile name – in favour of its Lumia brand
- 2 Renee Zellweger on plastic surgery: 'I'm living a fulfilling life and I'm thrilled that perhaps it shows'
- 3 Banksy not arrested: Internet duped by fake report claiming artist's identity revealed
- 4 Australian café owner sparks debate after saying 'No' to having unruly children on premises
- 5 Paralysed man Darek Fidyka walks again after treatment by British doctors on brink of 'cure' for paralysis
Ottawa shooting: Canadian soldier dies after being shot at National War Memorial – with one gunman killed inside parliament
Renee Zellweger on plastic surgery: 'I'm living a fulfilling life and I'm thrilled that perhaps it shows'
Isis releases first video showing the stoning of woman accused of committing adultery as her father shouts 'don't call me Dad'
Banksy not arrested: Internet duped by fake report claiming artist's identity revealed
Diwali: What is the festival of lights and how is it celebrated around the world?
Cameron is warned 'no possibility' of UK reducing immigration and that bid to bring in quota on migrant workers would be illegal
Of course, teenage girls need role models – but not like beauty vlogger Zoella
Support for EU membership 'at highest level since 1991' with most Brits wanting to stay 'in'
Residents should throw a street party and mix with immigrant neighbours, councils told
Russell Brand threatened with arrest after filming outside Fox News headquarters
London bus driver 'kicks gay couple off for kissing'
iJobs Money & Business
£24000 - £28000 per annum + bonus & benefits: Ashdown Group: IT Business Syste...
£18000 - £23000 per annum + Commission: SThree: The SThree group is a world le...
£18000 - £23000 per annum + Comission: SThree: The SThree group is a world lea...
£20000 - £25000 per annum + OTE £Competitive: SThree: SThree Group and have be...