The Generation of Mega-Banks

After vying with Wells Fargo (WFC - Analyst Report) in considering buying out the banking operations of Wachovia Bank (WB), Citigroup (C - Analyst Report) kept pace with the acquisition-heavy undertakings of Financial Big 3 brethren Bank of America (BAC - Analyst Report) and J.P. Morgan Chase (JPM - Analyst Report) by scooping up the beleagured Wachovia this morning.  Both stocks were down as the market opened -- Citi by 2.5% or 50 cents per share, WB by 90%, reflecting the bargain that Citigroup (facilitated through the FDIC) received.

Citigroup's year-over-year growth estimate had been -103%, but in taking over the troubled retail banker it shadows JPM's takeover of the remnants of Washington Mutual (WM - Snapshot Report) on Friday and Bank of America's grab for investment giant Merrill Lynch (MER) a week earlier.  The Wall Street crisis seems to be generating a tiny group of mega-banks.  How many of the smaller fish will be able to swim free until the upcycle begins again?

Wachovia had been troubled since the mortgage crisis that began over a year ago.  In fact, its past year of quarterly earnings results were all negative surprises, and weren't looking up from there.  And when the option is failing completely, like WaMu, suddenly options formerly considered unfathomable make their way to the table.