Mergers & acquisitions and the European banking landscape
Integration is key
For many years commentators have been forecasting the arrival of European banking mega mergers in some shape or form. In 2005 Deloitte analysed the US mergers and acquisition (M&A) experience and the European financial services market to identify specific M&A trends; these included the removal of barriers and the imperatives of shareholder value creation. We predicted that by 2010 M&A activity would indeed transform the European banking landscape.
According to a European Central Bank report (Financial Integration, March 2007), from 2000 to 2004 cross-border banking M&A accounted for only 14% of all banking M&A in the eurozone, but in 2005-2006 this proportion increased to 38%, mainly due to a few large value transactions in 2005. The report also identified 33 banks with significant cross-border activities, which accounted for more than half of the eurozone's banking assets, and 16 of these banks were active in at least half of the eurozone's countries.
Now in 2007, we can see how the increasing number of actual and proposed transactions combined with the more recent emergence of Private Equity firms targeting the financial services sector, is starting to change the European banking landscape. However, experience in other industries suggests the reality of merger benefits is often disappointing. It is therefore even more critical for the management of banks to identify the major issues that need to be addressed so that identified benefits are actually realised in transactions.
For further information, download our publication Mergers & acquisitions and the European banking landscape (PDF, 415 KB).