Financial institutions M&A: Sector trends - July 2017

Financial institutions M&A: State-aided banks

Increasing pressure from the ECB and local regulators— alongside challenges faced by government stability funds—is continuing to drive M&A

Current market

  • Upward, significant

We are seeing

  • Strategic M&A deals
  • Financial sponsor interest
  • NPL management and disposals
  • Non-core disposals
  • Bank consolidations
  • M&A activity involving government stability funds


  • Government stability funds' exit strategies are under pressure. Temporary financing measures are necessary to allow breathing space as auction processes are becoming increasingly challenging. Stability funds' pockets are not deep enough to finance temporary measures while auctions are run
  • Rising borrowing costs for struggling banks
  • Few committed buyers and tough deal financing market conditions
  • Hard to sell to the market while governments attempt to redefine regulatory landscapes
  • Stringent auction process rules
  • Private equity buyers seeking to extract buyer-friendly deal protection from sellers
  • Buyer sentiment adversely impacted by inconsistent attitude towards implementation of EU legislation
  • Heightened litigation risk: 'private' litigation from market participants' reaction to government action, 'public' litigation from regulatory inconsistency and 'public' litigation from application of new Member State regulatory reforms

Trends to watch

  • There is a perception that local prudential regulators are being lenient on sellers. But it is not clear whether direct supervision of Significant Institutions by the European Central Bank will result in strict compliance with resolution ability
  • Conflict between antitrust and prudential regulatory imperatives continues to complicate processes

Our M&A forecast

A constant flow of M&A activity as EU governments seek to offload 'good' banks, and the European Central Bank exerts pressure on market participants, especially across Italy, Greece, Spain and Portugal.


Publicly reported examples

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Financial institutions M&A: Sector trends


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