Europe's banks are expected to scour Wall Street in search of investment banks following Wednesday's announcement by US financial services giant Travelers Group that it is buying Salomon. Analysts say the purchase will speed up consolidation in the US and put European banks with global aspirations like Deutsche Bank AG, Dresdner Bank AG and SBC under increased pressure to make their own bids.
The $9 billion (£6.16 billion) merger between Travelers Group's brokerage arm Smith Barney and Salomon is set to create an investment powerhouse that will boost the global dominance of US firms, already regarded by Deutsche as its principal rivals in Europe.
Under threat in their own back yard by the so-called "bulge bracket" elite of Goldman Sachs, Merrill Lynch, Morgan Stanley Dean Witter and JP Morgan, the Europeans now fear they could be left further behind unless they take part in the Wall Street shakeup, analysts said.
"It has clearly initiated another period of consolidation frenzy on Wall Street and as European banks want to get a presence there they may get sucked into that frenzy," said Mr Bryan Crossley, banking analyst at ABN Amro Hoare Govett.
Lehman Brothers, Donaldson Lufkin & Jenrette, Bankers Trust and PaineWebber are now being touted as takeover candidates for European banks.
