Market shake-up is driving financial institutions M&A | White & Case LLP International Law Firm, Global Law Practice

Market shake-up is driving financial institutions M&A

As the global economy shows promising signs of recovery, M&A deals in the financial services sector are set to pick up. Tighter controls and sell-offs by banks form the backdrop to an exciting financial services M&A market as the global economy continues to recover.

The regulatory tidal wave that has engulfed the financial services sector since 2008 still stretches all the way to the horizon. But despite a couple of minor downgrades and aftershocks, the economic picture on a global basis is more positive than it has been for some time.

Nonetheless, regulatory pressures are likely to continue to suppress any serious appetite for big, expansionary M&A deals in the financial services sector, even more so because regulators themselves remain nervous about approving them. On top of this, there are the quite staggering costs of penalties for past misconduct. Banks, especially, will continue to be forced to sell assets rather than buy.

As long as there is no big shock in Europe or elsewhere in the world, we are confident about the prospects for financial services M&A in the foreseeable future. The sorts of exciting acquisitions being made now by better capitalised (usually smaller) banks, alternative asset funds, private equity firms, sovereign wealth funds and other investors are set to grow in number and in size. Banks will continue to drive financial services M&A by offloading non-core assets as they pull back from unprofitable business lines and territories, be it under pressure from regulators or because of a desire to refocus.

In the coming five to ten years, banks will become stronger than they are now. Some will retain their investment banking divisions, others will not. There will also be many more small and medium-sized private banking, wealth and asset management businesses emerging alongside the larger banks, partly as a result of the banks’ divestments.

In this report, we have canvassed the opinions of leading experts in the world of financial services M&A to paint a picture of the trends in the market, set against a backdrop of tight regulatory pressures. We examine the global picture and the state of play in the UK and Europe. We also look at the emergence of alternative investors in financial services M&A deals in Europe.

 

To read the full report please click here.

 

Contents

Testing time for banks could trigger more deals
Regulatory pressures on banks, in the wake of the financial crisis, are forcing some to reorganise and divest assets

Global financial services M&A snapshot
• Mergers & Acquisitions: Global deal flow 2013 (US$bn) • Value of European financial services M&A deals 2011 - 2013 (€bn) • Top 10 global deals by disclosed value (2013) • European financial services M&A deal value (€bn)

Europe's banks welcome wave of alternative investors
New sources of capital are helping to power European deals

UK banking shake-up is driving acquisitions
Sell-offs by banks will refocus priorities and strengthen the sectorStates

 

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