March, 22, 2010

The long-anticipated wave of mergers in the banking sector could soon be upon us. The buyers, however, may not be from the United States.Canada's Toronto Dominion Bank (TD) and Royal Bank of Canada (RY) have both in recent months publicly expressed their interest in expanding their U.S. footprint sometime soon.And investors were abuzz earlier this month following a Wall Street Journal report that British banking giant Barclays (BCS), which acquired the North American assets of Lehman Brothers, may soon try to complement its already big presence on Wall Street with the acquisition of a retail bank.

"A lot of that has to do with buying Lehman Brothers," said Bruce Packard, a London-based analyst who covers UK-based banks at Seymour Pierce. "[Retail banking] is clearly an area they want to grow."For many foreign banks, American soil is fertile ground for future growth. With smaller lenders failing at a rapid clip and industry leaders struggling to shore up their public image after their bailouts, many experts argue the opportunity is ripe for banks from outside the U.S. to steal market share from their American peers.

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