It seems like we've been predicting for a while now that more regional banks will be forced to merge. The real catalyst may be the availability of TARP funds. PNC's deal for National City--there had been talks going on even before the TARP was announced--was really made possible by federal funds. PNC will sell preferred shares worth $7.7 billion to the government. The proceeds will pave the way for the National City deal, allowing for "attractively priced" government assistance to help absorb the potential impact on PNC's balance sheet. U.S. Bancorp was in the running for National City, reports the Financial Times. It may be looking for another deal soon. You have to think that other banks are mulling their TARP options with expansion in mind.

For more:
- here's the Financial Times article

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