It's been a bumpy ride for ASX shares and the S&P/ASX 200 Index (ASX: XJO) so far this Tuesday. At the time of writing, the ASX 200 has gained 0.17% at just over 6,610 points after initially surging to almost 6,650 points this morning. But it's a bit of a different story when it comes to the ASX banks today.
Most ASX bank shares are doing very well this Tuesday. Take the Commonwealth Bank of Australia (ASX: CBA) share price. It's currently up a rosy 0.98% at $93.46. National Australia Bank Ltd (ASX: NAB) is doing even better, having risen more than 1.3% to back over $28. The gains are more muted for Westpac Banking Corp (ASX: WBC) and Australia and New Zealand Banking Group Ltd (ASX: ANZ), but both are still in the green.
We haven't had any news out of the banks themselves today that could easily explain why some are displaying such a strong performance. However, we do have some news out of the buy now, pay later (BNPL) space that could be playing a part here.
It's been a tough few weeks (and months) for ASX BNPL shares. Earlier this week, my Fool colleague Brooke looked at how some BNPL shares, including Zip Co Ltd (ASX: ZIP) and Sezzle Inc (ASX: SZL), fell more than 90% over FY2022. Indeed, the Sezzle share price lost a painful 97% over the financial year just passed.
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Are ASX bank shares getting a BNPL boost?
BNPL and bank shares are not interchangeable of course. But nor are they completely independent from each other. For one, BNPL products arguably compete against the credit offerings of banks, most obviously credit cards. A case can be made that BNPL successes come at the expense of the banks.
So that might be why we are seeing some strength in ASX bank share prices today. For this Tuesday we got the news that the long-mooted merger that was planned between BNPL players Zip and Sezzle has been abandoned. As my Fool colleague covered this morning, Zip and Sezzle have agreed to leave each other at the altar.
This merger was first gazetted back in February. It would have seen Zip buy out Sezzle for what was then a $491 million, all-scrip deal. This would have resulted in Sezzle shareholders receiving 0.98 Zip shares for every Sezzle share owned.
But as both companies' share prices plummetted in the months following this announcement, concerns grew and ultimately sunk the deal. So perhaps investors are treating the loss of what would have been a more consolidated, larger BNPL share as a positive for the ASX banks today.
In CBA's case, the news might be especially positive. CBA owns a stake in the Swedish BNPL giant Klarna. It built out its position across 2019 and 2020, although it might have to take a $2 billion hit to its investment in 2022. If Klarna doesn't have to compete against a merged Zip and Sezzle, it could be good news for CBA.
Whatever the reason, it's certainly been a good day to hold some ASX bank shares today.
