The headquarters of Deutsche Bank in Frankfurt. Germany’s biggest bank, trading at a quarter of its book value, was the most popular dance partner, as deals were suggested with a variety of other lenders. Image Credit: AFP

Eight years after the financial crisis, bank bailouts are being discussed once again in Europe.

Low and even negative interest rates, the weight of soured assets, high legal bills and new digital competitors are all depressing shares and executives. Britain’s decision to leave the European Union has further undermined confidence in the banking sector.

Last week, an index of European bank shares fell to the lowest since 2011. With another potential crisis looming and political uncertainty throughout Europe, large cross-border bank deals have perhaps never been as unlikely. But that doesn’t mean they wouldn’t help.

In nearly every other industry, the combination of stagnant growth, distressed valuations and need for consolidation would lead to a raft of mergers and acquisitions. In finance, disastrous bank combinations and bailouts of too-big-to-fail firms are fresh in regulators’ minds.

The volume of deals involving North American and Western European banks in the past six years has been less than half that of the previous six. Yet glimmers of financial industry consolidation are starting to emerge in places like Abu Dhabi, China and North America.

Based on discussions with more than a dozen merger advisers, as well as analysts and investors, here are some major deals that could make sense — if they were allowed to happen.

Barclays buys Deutsche Bank

Germany’s biggest bank, trading at a quarter of its book value, was the most popular dance partner, as deals were suggested with a variety of other lenders. One path Deutsche Bank AG CEO John Cryan can take is to pursue a deal that doubles down on investment banking and trading.

Barclays Plc CEO Jes Staley has preached the need for a European champion in that business to ward off American dominance, and this would provide that: the combined company would pass Staley’s alma mater JPMorgan Chase & Co. as the world’s biggest trading firm. The deal would also give London-based Barclays a firmer foothold in continental Europe if Brexit were indeed to go through.

The earnings from the often volatile investment banks could be cushioned somewhat by Barclays’s credit card and consumer arm. Since 2006, profit from Barclaycard has quadrupled, while earnings at the securities unit have fallen by a quarter.

Still, it’s unclear whether the deal would solve the banks’ problems or double them. Capital rules that are meant to punish size and complexity would probably put the combined firm at a funding disadvantage to peers. And many investors have been pushing the banks to scale back their securities divisions, not make them more important.

Santander buys Deutsche Bank

Cryan could also try to arrange a deal that diversifies away from the downtrodden trading business. Banco Santander SA has the strong retail presence that Deutsche Bank has sought, while the deal would provide the Spanish lender a buy-low opportunity to enter new businesses.

Germany is one of Santander’s 10 core markets, and it already has a large presence in consumer finance there.

A takeover would also give “Santander a bigger footprint in asset management, which they don’t have at present,” Chris Wheeler, a bank analyst at Atlantic Equities, said about the theoretical deal. “What Deutsche Bank needs is to be part of a bank which has business lines that balance investment banking.”

However, this is unlikely to get a blessing from the German government, which considers Deutsche Bank its national champion, and Santander has now put acquisition plans on hold as Chairman Ana Botin pledges to boost capital.

JPMorgan buys Standard Chartered

This deal has been kicked around as far back as when Jamie Dimon took the helm of JPMorgan in 2005. The US lender was a rumoured bidder for a stake that was eventually bought by Temasek Holdings Pte in 2006, and analysts predicted a potential merger when both banks emerged from the financial crisis in better shape than rivals.

With a market cap of under $25 billion, Standard Chartered Plc is easy to swallow for JPMorgan, which has a value around nine times the size. Bankers said that JPMorgan could get its hands on a company with exposure to Asia, the Middle East and Africa.

Dimon said last year the bank wants a presence in more African countries to spur growth, even after regulators in Ghana and Kenya refused the lender entry.

One of the main complications might be whether Standard Chartered chief Bill Winters would favour a sale to Dimon, who ousted him from the New York-based firm in 2009. Other questions include whether US regulators would support such a big, foreign acquisition, especially after fines against Standard Chartered related to alleged money-laundering and Iran sanctions violations.

ICBC buys Standard Chartered

Winters’ firm was a popular target, given its low valuation and presence in many markets where other lenders have pledged to grow. Bankers offered the possibility of Chinese lenders making a bid as they seek to diversify outside their home nation and pursue more global ambitions.

China’s biggest bank, Industrial and Commercial Bank of China Ltd., may be the most likely as it has shown a greater appetite for deals, including buying a controlling stake in Standard Bank Plc’s global markets business last year.

The biggest obstacle may be the emerging-market slowdown, which has made Standard Chartered cheaper but weighs on Chinese lenders too. Any bidder would also have to make an offer that appeals to Temasek, the Singaporean state-owned investment firm and Standard Chartered’s largest shareholder.

Societe Generale buys UniCredit

UniCredit SpA, the lowest-valued of the major European banks, has just appointed investment banker Jean Pierre Mustier as chief to spearhead an overhaul as Italy considers state aid to avoid a banking crisis. Mustier will soon have to consider selling assets or turning to investors for capital after his predecessor’s efforts were viewed as insufficient.

Mustier’s former employer, Societe Generale SA, has been consistently profitable in recent years, which could allow the combined lender to boost capital ratios without a dilutive share sale.

SocGen’s revenue has been stagnant amid a slow European economy; it could seek growth by betting on an Italian rebound and UniCredit’s presence in Eastern European markets. And the deal could combine UniCredit’s larger presence in corporate finance in Germany and Italy with SocGen’s stronger trading business.

A crisis could spur this deal, or derail it. Italian authorities are trying to find a way within European bail-in rules to help their struggling lenders. And SocGen Chairman Lorenzo Bini Smaghi, an Italian, said that the nation’s issues could spark a banking crisis for the wider region.

Wells Fargo buys Credit Suisse

Wells Fargo & Co., one of the healthiest global banks, has shown a desire to dip a toe into investment banking. It also has excess cash that it’s considering how to use. Rival Jamie Dimon has said Wells Fargo will probably have to do an acquisition to compete in servicing the biggest corporations.

Bankers say that by snapping up Credit Suisse Group AG, Wells Fargo could access the Swiss bank’s wealth management and a manageable investment banking unit. The two banks have partnered before, as Wells Fargo added about 100 US wealth advisers earlier this year following a recruitment deal struck as the Zurich-based firm pulled back from that market.

Wells Fargo’s market cap has swelled to more than $230 billion, making it the most valuable US bank, because of its focus on retail and commercial lending, so there could be an investor backlash if they stray from their core into the riskier business of investment banking.

Credit Suisse’s CEO Tidjane Thiam said the bank he’s been leading for a year will neither be dismantled nor sold. “The group will stay intact,” Thiam told Swiss newspaper SonntagsBlick. “A takeover is not a subject.”

Dream Busters

A few bankers said large lenders have so much to fix internally that they shouldn’t be looking beyond their own walls; one said he shuddered to think of the biggest banks doing transformative deals again.

The world’s biggest banking takeover — Royal Bank of Scotland Group Plc paying 72 billion euros ($80 billion) for Amsterdam-based ABN Amro Holding NV with partners Fortis of Belgium and Spain’s Santander in 2007 — led to the world’s largest bank bailout a year later. Bank of America Corp.’s 2008 acquisition of Countrywide Financial Corp., originally carrying a price tag of $2.5 billion, ended up costing the lender about $70 billion after dozens of legal disputes and investigations.

The International Monetary Fund estimates there’s currently $1 trillion of bad debt on European banks’ balance-sheets. While combinations may offer chances to cut more costs, investors are already frustrated with the slow pace of reform without the added headache of new systems and duplicate structures.

“Show me one bank merger that is successful, and I’ll show you 20 that aren’t,” says Mark Williams, a lecturer at Boston University and a former bank examiner at the Federal Reserve.