The first quarter was lackluster for financial services mergers and acquisitions, with only 37 deals, compared with 57 in the first quarter of 2008, Jefferies Putnam Lovell reported.

But because so many banks are looking to raise capital, they are likely to sell their asset management divisions, and M&As should have a good year, Jefferies Putnam Lovell added.

“As they seek ways to raise capital, distressed banks and insurers are finding their fund businesses are among the most saleable assets, with pure-play asset managers and private equity firms the most motivated buyers,” said Aaron Dorr, a managing director with the investment banking firm. “While we anticipate large transactions to occur this year, M&A volume in the global asst management sector will be down, reflecting the market and economic stresses worldwide.”

Fifty-one percent of the deals in the first quarter were divestitures, compared with 28% in the first quarter of 2008.

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