Financial institutions M&A: Sector trends - September 2023

In the 11th edition of our report, we bring you the key deal highlights and M&A trends across UK/Europe in the past 12 months which have shaped the financial services landscape. Focusing on the following verticals:

• Banks: Top 3 drivers of UK and European bank M&A in the past 12 months:
  • Regional & domestic consolidation across Europe: >50 domestic bank consolidations, aside from those related to the Russia/Ukraine conflict
  • Russia/Ukraine conflict necessitates M&A solutions: Sanctions forcing Russian banks to retreat within the Federation's borders, international banks leaving Russia and international conglomerates abandoning Federation banking outposts
  • High-profile bank rescues: UBS's acquisition of Credit Suisse for US$2 billion and HSBC UK Bank's acquisition of Silicon Valley Bank UK for £1
• Fintech: 3 reasons why fintech M&A activity remains high:
  • Consolidation: Market consolidation takes centre stage in the form of acquisitions of competitors and strategic tie-ups to conquer niches
  • Bank digital transformation strategies: Digital offerings are a "must have" tool in banks' arsenals. Europe's banks acquire equity/debt funds and partner to keep pace with customer demand
  • Financial sponsor investment appetite: Whilst, broadly speaking, VC-led funding has experienced a slowdown, first-mover fintechs which have attained, or are proximate to, profitability, continue to attract financial interest (particularly from PE and SWF investors)
• Asset/Wealth Management: Sub-sector M&A activity levels soar—market moving deals across wealth management, financial planning, fund management, debt servicing, trust administration, direct lending and private equity funds in the last 12 months.
• Payments: Deliver a burst of bright sunlight amidst storm clouds across the European financial services M&A landscape. Service providers merge, acquire, partner and de-SPAC their way to scale, scope and new technology.
• Stock Exchanges/Clearing Houses/Trading Venues: Decisive inorganic growth decisions by London Stock Exchange, Deutsche Börse, Nasdaq and Euronext set a furious pace for European trading venue M&A activity.
• Brokers/Corporate Finance: Pan-European banks, including Mediobanca and Deutsche Bank, seek senior dealmaker bench strength through high profile acquisitions.
• Consumer Finance: Europe's consumer finance decacorns stumble as their valuations crumble.
• Specialty Finance/Marketplace Lending: Appetite for consolidation increases as niche lenders seek access to new geographic markets and cutting-edge distribution technology.

We also provide our insights on the outlook for financial services M&A in H2 2023 and beyond.