JPMorgan Chase is itching to pull the trigger on one more big bank purchase, even after it bagged Bear Stearns in a Federal Reserve-assisted buyout a month ago.
The New York banking giant has compiled a wish list of coveted institutions, both struggling and strong, according to people familiar with the matter.
Of top interest are Washington Mutual and SunTrust, both of which have already received close looks, according to sources. The list also includes, in order of appeal, PNC Bank, Wachovia Bank and US Bancorp, sources said.
JPMorgan is among a select number of financial institutions seeking to identify potential merger candidates. Others mulling tie-ups are Wells Fargo, PNC Bank and US Bancorp.
It’s not clear if any formal discussions are underway, but casual CEO-level dialogues about partnerships and mergers have been increasing lately, bankers noted.
A JPMorgan spokesman declined to comment.
Driving many of the informal discussions is the expectation that the landscape for banks and brokerage firms will be significantly altered when the government ultimately imposes stricter rules on how much leverage banks can use.
For firms like JPMorgan, Wells and PNC, the uncertain times are presenting opportunities to pick at the bones of their rivals, which have been battered by billions in mortgage losses.
Wall Street observers also say investment banks Lehman Brothers, Merrill Lynch and even Goldman Sachs may have to purchase or merge with a commercial bank in order to ensure long-term access to the Federal Reserve for short-term borrowing.
Sources say there is a concern that the newly created access that brokers now have to the Fed’s discount window might be closed in the near future. That fear has increased speculation that the likes of Goldman Sachs could purchase a firm like US Bancorp, or Merrill Lynch could link up with Wachovia.
Even though the battle for target banks will take place among an elite few, the competition may also include the Royal Bank of Canada and Santander, the Spanish bank.
“There is going to have to be a huge wave of acquisitions,” said financial analyst Richard Bove of Ladenburg Thalmann.