Europe's post-GFC leaner and better-capitalised banks are put to the test by the COVID-19 pandemic
Banks with stronger balance sheets capitalise on M&A opportunities amidst COVID-19 market turmoil, while their weaker peers consolidate to survive.
The COVID-19 pandemic has ravaged the European financial services sector, sending shockwaves across the FIG M&A landscape. It is no surprise that M&A volumes have plummeted. Yo-yoing valuations, buyer conservatism and the promise of "cheaper" stressed / distressed opportunities have compounded a cavernous rift between seller and buyer expectations. Reality is slowly sinking in—as the possibility of a v-shaped economic recovery becomes increasingly bleak, concern is growing around whether IFRS 9 loss estimation is much more than educated guesswork.
But all is not lost. The resilience of established financial institutions, fortified in the decade since the global financial crisis, agility afforded by digitalisation and evolution of customer interaction with financial services have contributed to M&A hotspots which burn bright amidst market gloom.
In this edition, we hone in on those hotspots and highlight the key M&A trends across Europe and the UK. Focusing on Banks, Fintech and Other Financial Services, we also provide our insights on the outlook for M&A in H2 2020 and beyond.
Key highlights from H2 2019 include the following:
H1 2020 heralds an entirely new era for fintech, a market segment which scarcely existed at the time of the global financial crisis. Many founders and investors, who have enjoyed a bull run since 2015, have had their first taste of the bear markets which banks endured in the years following 2008.
Financial Institutions M&A sector trends: Consumer finance — H1 2020 and outlook for H2 2020
A time of temperance as COVID-19 covenant breach forbearance, payment holiday and repossession deferral relief measures take their toll.
Disruption across the European consumer finance market is likely to continue in the medium-term as the true impact of government-backed COVID-19 consumer relief measures becomes clearer. M&A is likely to remain flat until equity valuation volatility settles
ZipCo shares surged in June 2020 on its expansion into the US through QuadPay. ZipCo inherited an initial stake in QuadPay through its acquisition of PartPay. White & Case advised ZipCo on its acquisition of PartPay in 2019, a strategic transaction which gave ZipCo access to markets in the US, UK, New Zealand and South Africa
Poland's UOKiK introduced new regulations which cap the maximum noninterest costs of credit and interest charged for late payment on consumer loans
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