A Deloitte Research report reviewing financial services M&A activity and exploring the implications of the current surge in banking M&A 

European mergers and acquisitions have proceeded at a torrid rate across the past couple of years with the financial services industry setting the pace. We believe that this surge in activity is the opening round of mergers which will eventually lead to the creation of a handful of truly pan-European retail banks serving consumers across the length and breadth of the continent. 

Our thought leadership report draws five main conclusions:

1.  We are currently in the midst of a cross-border retail banking boom, with a step change occurring in the M&A market as activity is increasingly driven by big deals.  Looking across the past two years, eight (8) of the twelve (12) big European M&A deals have been cross-border retail banking deals.
2. One of the main drivers of this surge in activity is the erosion of both political and cultural barriers to cross-border retail banking consolidation.  Not only has the last 12 months witnessed large takeovers of a British, Italian and German bank by non-domestic acquirers, but we have also seen strong evidence that consumers are increasingly receptive to doing their banking with “foreign” banks.
3. Bank executives are being driven into cross-border deals through a quest for double-digit growth—a mandate that is proving increasingly hard to meet through organic growth.
4. Bank boards need to work diligently to secure the approval of their institutional shareholders before they can even begin to enter the acquisition market.
5. It is possible to create a broad roadmap of the future shape and pace of European bank M&A by carefully examining the experience of the US banking industry as it has consolidated across the past decade.  That experience leads us to predict that we will see roughly 700 banks acquired across Europe in the next four years while we simultaneously witness the emergence of truly pan-European retail banks.

Flowing from our conclusions are few recommendations for retail bank boards:  First, a serious board-level review of growth strategy is required; second, hard strategic growth choices regarding which markets to enter, which products to provide and what opportunities to pursue are required; third, bank’s need to earn the right to play the M&A game from newly assertive shareholders.

For more information, read our report A new playing field (PDF, 539 KB)

Related information
Press release: Retail banking 2010: 700 banks to be acquired over next 4 years.