SOURCE: Rothman Research

Rothman Research

June 23, 2010 08:32 ET

A Quick Overview of the Banking Sector

JOHANNESBURG, SOUTH AFRICA--(Marketwire - June 23, 2010) - www.rothmanresearch.com -- Against all odds the first quarter of 2010 has been a dazzling display of what the banking sector could achieve given that they have been in the firing line since the financial crisis started. Earnings throughout most of the sector have been an apparent exhibit that the banks were moving towards stability. The truth remains, however, that a number of blemishes still linger as more than a few negatives continue to plague the banking sector; asset-quality troubles and enduring high levels of C&D (Construction & Development) loans and CRE (Commercial Real Estate) loans being some of the most alarming. Whilst these issues can be considered as contained cancerous cells within the sector, a pending financial reform has been hanging over this space with the intention of inflicting radical changes.

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Although the banking industry still continues to tackle the different set of challenges, many of the more stabilized and stronger banks are looking to take advantage of the underlying weakness and are contemplating at the myriad of buyout possibilities that are currently available in this space as failed banks continue to rise. Conventional bank Merger & Acquisitions are anticipated to become a growing trend in banking headlines in 2011 with super regional banks such as BB & T Corp. (NYSE: BBT) fueling the tempo. Buzz on the street has already been spreading on the potential acquisition targets in the mid-cap banks category, and one of those banks could well be Synovus Financial Corp. (NYSE: SNV). Synovus, a $32 billion asset regional bank, has recently been upgraded to Neutral by Credit Suisse. Credit Suisse considered the likeliness that the regional bank could soon be taken over as one of the reasons for this upgrade. 

*Free downloadable research reports on BB&T Corporation and Synovus Financial Corp. are available by signing up now at http://www.rothmanresearch.com/article/bbt/23610/Jun-23-2010.html or http://www.rothmanresearch.com/article/snv/23611/Jun-23-2010.html

While the financial reform is still brewing in an atmosphere of uncertainty concerning its overall impact on how the banking system will be regulated, some encouraging news from the U.S. Treasury Department last week indicated that the repayment of the Troubled Asset Relief Program (TARP) has been officially in excess of $4 billion as compared to the amount still owed. The TARP repayment is a major psychological milestone for banks and taxpayers. The recent news may be a way for banks to regain some of the lost esteem from taxpayers and investors.

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