Financial firms seen boosting M&A

By Dane Hamilton

NEW YORK (Reuters) - While the market for mergers and acquisitions has slowed in recent months due to a credit crunch, financial services firms are expected to seek more opportunistic acquisitions, senior executives predicted at this week's Reuters Finance Summit.

Among the likely moves will be well-capitalized Asian banks looking to buy stakes in U.S. and European financial services markets through acquisitions, executives said.

And European institutions may extend their reach into the U.S. market after assets get cheaper from a falling dollar, they said.

Others expect investment banks to expand restructuring divisions through acquisitions, looking to build bigger franchises for an expected boom in services for debt-strapped companies facing a possible business slowdown.

"There is potentially an unbelievable opportunity for banks in Asia ... to buy into markets that were hitherto not open to them," said Alex Wilmot-Sitwell, UBS's (UBSN.VX: Quote, Profile, Research, Stock Buzz) global co-head of investment banking.

While Wilmot-Sitwell said Asian banks may face regulatory hurdles in buying Western banks outright, they have already begun buying stakes -- such as China's CITIC Securities (600030.SS: Quote, Profile, Research, Stock Buzz) swapping stakes with Bear Stearns Co Inc BSC.N and Singapore's Temasek recently buying a stake in Barclays Plc (BARC.L: Quote, Profile, Research, Stock Buzz).

The moves would come as many global banks like Citigroup Inc (C.N: Quote, Profile, Research, Stock Buzz), Merrill Lynch & Co Inc (MER.N: Quote, Profile, Research, Stock Buzz), UBS and Bear Stearns collectively take billions of dollars in write-downs in structured credit securities tied to defaulted home loans.

Charles Peabody, partner in research firm Portales Partners, predicted one or more Wall Street investment banks will do deals with better-capitalized buyers in coming months, possibly with government-backed investment funds in China, Dubai or Singapore. But a stronger U.S. acquirer, such as JPMorgan Chase & Co (JPM.N: Quote, Profile, Research, Stock Buzz) or Bank of America Corp (BAC.N: Quote, Profile, Research, Stock Buzz), could also make a move, the banking analyst said.  Continued...