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Financial Institutions M&A: Sector trends - June 2019

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June 2019

We highlight the key European M&A trends in the first half of 2019, and provide our insights into the outlook for M&A moving forward


As global fintech funding in Q1 2019 approaches US$6.3 billion, London is poised to rival San Francisco as stable to the highest number of unicorns.

Established European financial institutions have joined the fintech race, hoping to harness the promise of technology—a smooth, tailored and safe consumer experience, available everywhere and to everyone. However, innovation is expensive, absorbing valuable resources at a time of unresolved trade concerns, fragmented markets, political uncertainty and unknown Brexit impact.

Do fintechs justify such high valuation multiples? Can fintechs really deliver the seemingly endless possibilities? Would resources be better allocated elsewhere?

In this series of biannual reports, we analyse inorganic investment strategies and highlight the key M&A trends across Europe and the UK in H1 2019. Focusing on banks, fintech, and other financial services (i.e., asset/wealth management, market infrastructure, consumer finance and Specialty finance), we also provide our insights into the outlook for H2 2019 and beyond.

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European financial services
M&A trends

Consolidation continues at pace—mega-mergers on the horizon

The wait is over. Whispers of mega-deals have matured into agenda items for boards of many larger European banks.

Financial Institutions M&A: Sector trends - June 2019

Stampede of the unicorns

H1 2019 has seen European fintech M&A hit new heights. Fintechs have enjoyed funding support from established financial institutions, financial sponsors, sovereign wealth funds, data giants and family offices. The next 36 months will be pivotal in identifying fintechs which will revolutionise financial services

Financial Institutions M&A: Sector trends - June 2019

Asset/Wealth Management

Fallout from MiFID II continues to drive industry consolidation. In the last 6 months, there has been a glut of smaller deals, but a dearth of megamergers

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Rapid rise of mobile commerce, e-commerce, growing merchant/ consumer familiarity with non-bank providers and accessibility by under-banked communities are all driving demand for electronic payments. It is no surprise that M&A levels have reached stratospheric heights, and show little sign of descending


Stock exchanges/Clearing houses

Seeking multijurisdictional scale, as concerns around long-term viability of the independent stock exchange operational model continue to grow

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Brokers/Trading service providers

Market consolidation continues. MiFID II, sluggish capital markets, increasing operational overheads and over-brokered European financial centres drives M&A

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Credit cards/Consumer finance

Financial sponsors provide dry powder to new entrants seeking to disrupt existing card providers, 'level-up' in-store consumer finance solutions/experience and fill the void left by payday lenders

Financial Institutions M&A: Sector trends - June 2019

Specialty Finance/Marketplace lending

Trade consolidators dominate the M&A charts, seeking scale, vertical integration and opportunities to conquer their own niches

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Brokers/Trading service providers

Financial institutions M&A sector trends: brokers/trading service providers — H1 2019 and outlook for H2 2019

2 min read

Current market

  • Consistent, high activity levels

We are seeing

  • Market consolidation across small/mid-cap UK and Western European broker dealers
  • Larger investment banks encroaching on smaller ones in search of revenues (e.g., Rothschild's new corporate investor advisory service)
  • Financial sponsors deploying buy-and-build strategies

Key drivers

  • Declining revenue resulting from:
    • Unbundling of equity research costs, required under MiFID II
    • Overly brokered UK and Western European markets (i.e., too many competitors chasing the same deals)
    • Unfavourable macroeconomic conditions (e.g., sustained low-interest rates, weak equity capital/IPO markets, etc.)
    • Growing demand for "unorthodox" asset classes (e.g., cryptocurrencies), which traditional broker-dealers do not service
    • Increasing operational overheads (e.g., MiFID II compliance costs, uptick in regulatory penalties for systems & controls deficiencies, etc.)
  • Fintech (lack of) reliance on broker-dealer services:
    • Availability of startup support (e.g., incubators, accelerator programmes, tech hubs and funding competitions) facilitating DIY early-stage fund raisings
    • Fintechs disrupting traditional models (e.g., SC Ventures Fintech Bridge) and providing automated stock-trading
  • Local regulators encouraging domestic market consolidation

Trends to watch

  • Cultural/Management personality mismatches hindering deal execution and/or effective business integration
  • Recalibration of broker business models—ultimately, resulting in fewer but more lean, efficient and diverse market participants

Our M&A forecast

High levels of market consolidation are likely to continue in the short term as brokers seek scale to stay competitive in a sector disrupted by transformational regulation, technology and unfavourable market conditions.


Other financial services—Publicly reported deals & situations


Market consolidation

  • Bryan, Garnier & Co: Acquisition of Beringer Finance (April 2019)
  • Mediobanca: Acquisition of 66% of Messier Maris & Associés (April 2019)
  • Catalyst Development & Sionic Advisors: Merger (April 2019)
  • AllianceBernstein: Acquisition of Autonomous Research (April 2019)
  • Shore Capital Markets: Acquisition of Stockdale Securities (April 2019)
  • The Progeny Group: Acquisition of Innovate Financial Services (February 2019)
  • FNZ: Acquisition of 9.1% of Embark (January 2019)


Mounting pressure

'Challenger' competition: 

  • Rothschild & Co.: Launch of corporate investor advisory service (February 2019)

Operational costs:

  • Linear Investments: FCA fine of 1/3 net profits (c. £400,000) for inadequate market abuse systems and controls (April 2019)






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© 2019 White & Case LLP