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U.S. regulators may be tempted to force bank marriages and asset sales to fill multi-billion dollar capital holes exposed by their stress tests.

But a rapid redrawing of the banking landscape like the one last fall may not be in the cards, banking industry experts say, even though the capital shortfalls at the 19 largest U.S. banks are much larger than analysts had expected.

Citigroup analyst Keith Horowitz wrote that banks, other than his own, may need to raise $75 billion after the tests.

The results are due on Thursday, and about 10 of the 19 banks may need capital, according to media leaks.

While seeking stronger partners could be tempting to the weaker banks, their healthier brethren will likely want to repay money they got under the Treasury Department’s $700 billion Troubled Asset Relief Program (TARP) before they use their capital for acquisitions.

And regulators may not have the needed leverage to force these banks to buy their needy rivals, the experts said.

Still as some banks find it hard to raise money, and with mergers often offering significant cost savings, regulators may try to forge a handful of deals, they said.

Some companies may try to sell assets to raise capital, but regulators are unlikely to give weaker banks six months to raise capital unless they have assets they can plausibly sell in that time, said Seamus McMahon, chief executive of bank consulting firm McMahon Advisory LLC credit scores.

“If what you are saying is that you are waiting for market conditions to improve and you have no plausible plans in place by June, I don’t think they will hesitate to force some of these banks together,” McMahon said.

The list of likely acquirers could include banks such as US Bancorp, JPMorgan Chase & Co and Morgan Stanley, McMahon said.

Targets could include banks such as SunTrust Banks Inc, Regions Financial Corp, KeyCorp and Fifth Third Bancorp, he added.

Citigroup Inc, which a source said needs $5 billion, could be an acquirer as well despite all its troubles, as takeovers could be a way for it to get much-needed deposits, McMahon said.

RELUCTANT BUYERS?

In urging any mergers, though, regulators will want to be careful that they do not create a new problem instead of solving one.

“You don’t want to put two stones together and see if they float,” said Jonathan Weld, a banking lawyer at Shearman & Sterling. 

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