With the European debt crisis keeping the Continent’s large banks under intense pressure, a new report predicts some of these financial institutions will be forced to unload their U.S. subsidiaries, creating attractive investments for well-capitalized U.S. banks.
The report by SNL Financial analysts Robb Soukup and Tyler Hall suggests that last week’s Eurozone Greek rescue plan, now called into question by the Greek government’s call for a referendum, may be inadequate to address European banks’ capital shortfalls. The analysis concludes “it seems likely that a number of banking giants may ultimately be forced to sell assets outside of Europe, including those in the U.S., as they look to stabilize their balance sheets amid growing uncertainty in their home markets.”
Soukup and Hall cite Dutch banking giant ING Group’s pending sale of its U.S. banking franchise ING Direct to McLean, Va.-based Capital One Financial Corp as a paradigm for such asset sales, since European regulators forced ING to restructure.
A more recent example is Allied Irish Banks’ sale last week of its commercial loan portfolio to the Blackstone Group and Wells Fargo at what The Wall Street Journal reported was a 15% to 20% discount off face value.