Like chess players adjusting to the loss of a piece, Europe's banks are surveying the board and pondering their next move after ABN AMRO succumbed to the world's biggest bank takeover.
Banks look reluctant, however, to undertake substantial M&A activity until their next round of earnings has cleared up uncertainty among investors over any exposures they may have after the credit crunch.
That could push a revival of merger activity into early 2008. But they are losing no time in planning ahead, and even holding early talks about their next moves ahead of market recovery.
It is very busy right now. It's like a game of chess, with different banks maneuvering their pieces into position to be ready to move when the market takes off again, one senior London-based M&A investment banker said.
While U.S. banks report quarterly results and many have come clean on their liabilities from the summer's credit crunch, others in Europe only report twice a year so the market is still waiting for full-year earnings.
That leaves potential bidders in a cloud of uncertainty that is putting them off moving on their targets.
We have had a credit crunch and there is still a sense that maybe not everything has been found out or stabilized, and we need to go to the year-end to know the full extent of the issues, another senior investment banker said.
The three-way deal to buy and split up Dutch bank ABN AMRO, by Royal Bank of Scotland, Spain's Santander and Belgian-Dutch bank Fortis may spark a ripple effect, however.
There could likely be domino deals in banking M&A off the back of ABN AMRO, said Daniel Stillit, a European restructuring and M&A analyst at UBS in London.
Most western European countries have experienced domestic consolidation in recent years. Italy's biggest banks, for example, merged into Unicredit and Banca Intesa. But there is still scope there for smaller domestic deals.
Countries including Germany still have potential for more domestic mergers and could also attract foreign interest. German Postbank, Commerzbank and Allianz's Dresdner are seen as the most likely targets.
There is also talk of possible deals in France, where both BNP and Societe Generale could be on the prowl for targets, and Scandinavia, where banks such as SEB are viewed as tie-up candidates, possibly with other Nordic banks such as Nordea.
The headline stuff will be big cross-border deals, said a third M&A banker.
There is scope for consolidation within Italy, in France, German-speaking Europe, Scandinavian Europe -- so everywhere you look there is FIG, he said, referring to the financial institutions group found within the major players.
National rivalries could still determine who is next to attempt a transformational cross-border deal, as some of Europe's biggest banks try to keep up with rivals, however.
The ABN deal, a big move for Fortis, could lead its Benelux rivals ING or Dexia into a catch-up deal.
In Spain, Santander's arch-rival BBVA could also pursue a major acquisition as it tries to keep up with its nemesis.
And in the UK, unsuccessful ABN bidder Barclays is considered likely to seek a merger to meet its investors' growth expectations.
There are a number of other parties who did not get ABN including Barclays and others who are looking at the situation from afar and are now under pressure to get synergies through mergers, the second banker said.
Apart from Barclays, BNP Paribas, SocGen and BBVA were squarely in this category, said the banker.
National rivalries could also play a part further afield. In Italy, Unicredit's recent acquisition spree, buying Germany's HVB in 2005 and then Italian rival Capitalia earlier this year, made it Europe's fourth-largest bank.
Banca Intesa, which bought SanPaolo-IMI in 2006, remains largely focused on Italy and emerging markets and could look to expand with a larger deal, for example buying into Germany.
Barclays itself could be a target for U.S. banks and there are others in the crosshairs in Britain, Greece and Germany.
There are clear M&A targets or junior partners in a combination, Dresdner Kleinwort bank analyst Arturo de Frias said, and these are Standard Chartered, Alpha and Commerzbank.