EverBank Financial's (EVER) deal for a lending arm of GE Capital this week was the latest crack in the thawing market for U.S. and overseas loans.
The Jacksonville, Fla., company's $2.5 billion, cash offer for the Business Property Lending unit follows recent loan purchases by Wells Fargo (WFC), Citigroup (C), U.S. Bancorp (USB), City National (CYN), Ocwen Financial (OCN) and others.
Such deals are ripe for the picking as regulatory and economic upheaval prompt diversified financial institutions stateside and abroad to slim down, experts say. They present a welcome opportunity for U.S. banks that are highly liquid and eager to grow assets in the face of soft demand and depressed rates.
"You're seeing some of this stuff happen," says Peyton Green, a senior research analyst with the Sterne Agee & Leach brokerage firm in Birmingham, Ala. "For a variety of reasons, it fits well" with banks' strategic goals.
Line-of-business and loan deals are the only M&A options for megabanks like Citi and Wells, and their best options are in Europe because of business and regulatory reasons. Wells in the past two months has agreed to buy a fund-financing portfolio from Germany's WestLB, and Citi has agreed to buy an undisclosed slice of French bank Societe Generale's shipping-loan portfolio.
For regional banks such as EverBank, loan deals are also about diversification.
The $2.4 billion in performing business property loans it is to acquire from GE Capital would reduce its exposure to the fickle residential lending market. EverBank has also made a push into wealth management in search of a broader revenue stream.
City National of Los Angeles has taken a similar tack. In April it agreed to buy First American Equipment Finance, a private leasing company in Rochester, N.Y., as well as an a New York asset manager called Rochdale Investment Management.
City National Chief Executive Officer Russell Goldsmith has said both deals would enhance and diversify its existing equipment loan and asset management businesses. It completed the Rochdale acquisition on Monday.
In June, Ocwen closed its purchase of $1.8 billion in commercial loan servicing rights from Aurora Bank.