This site uses cookies to provide you with a more responsive and personalized service. By using this site you agree to our use of cookies. Please read our cookie notice for more information on the cookies we use and how to delete or block them.

Bookmark Email Print this page

Top Issues for Banking M&A in 2014

Searching for growth and scale


DOWNLOAD  

Banking analysts and executives had hoped 2013 would offer an improved Merger & Acquisition (M&A) environment after a disappointing 2011 and 2012. Although more deals were transacted at higher multiples and were well-received by investors, the year remained difficult.

Fortunately, a number of catalysts could generate a steady pickup in M&A deal volume during 2014: Larger banks are looking to retool their product mix and geographic footprint, regional/midsized banks are seeking asset growth, small banks are looking for scale and a rising interest rate environment makes deals more palatable across market segments.

However, a lack of substantive targets and a longer regulatory approval process could slow M&A’s momentum, especially for large banks. This paper takes an in-depth look at the following factors which are expected to influence deal activity in the coming year:

  • New regulatory paradigm — Regulatory restrictions continue as a major hurdle, although increased clarity may also bring increased confidence.
  • Rising interest rate environment — If interest rates rise, banks should generally benefit because they may lead to greater margins and profits. Yet, some banks may have been over-reaching asset duration in trying to maximize short-term earnings, which could be problematic.
  • Search for capital-efficient growth — Banks are looking to acquire fee-based businesses that are not capital-intensive, such as wealth management. However, increasing M&A activity is driving up prices.
  • Geographic and business line rationalization — As the trend of returning to core and capital efficiency continues, M&A that supports specialization — customers, products and geographies — may increase in 2014.
  • Branch strategy — Banks’ efforts to reduce their footprint, optimize branch networks and adopt an omni-channel approach to differentiate the customer experience may drive new M&A.
  • Valuation — With the recent uptick in valuations, driven by a rising stock market and improving economic fundamentals, many sellers are looking for stock deals to generate longer-term benefits. 
  • Technology and data for business generation — M&A may help organizations more efficiently attain technology improvements and capabilities to bolster data management functions.
  • Tax — Deferred tax assets and the Foreign Account Tax Compliance Act (FATCA), two focus areas for M&A transactions in 2013, may continue in 2014.
  • M&A Readiness — Banks need to be well-prepared buyers and/or sellers so they are able to pull the trigger on potential M&A deals quickly and as a well-oiled machine.

Please download the above attachment to learn more.

As used in this document, "Deloitte" means Deloitte LLP and its subsidiaries. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting.

Related links

Share this page

Email this Send to LinkedIn Send to Facebook Tweet this More sharing options

Stay connected