The first half of 2009 saw extremely low levels of European financial services M&A activity, but an increase in deal activity is on the cards as we move into 2010, according to Nick Page, partner at PricewaterhouseCoopers.
Page says: “’Steady as she goes’ has been the ethos throughout the 2009 financial services deal market to date. However, a restructuring-led wave of deal activity will gather momentum across the European financial services landscape as we move into 2010. We anticipate that financial institutions will continue to identify, evaluate and sell their non-core businesses."
According to the latest European Financial Services M&A Insights report from PwC, just EUR32bn worth of deals was announced during the first half of 2009, compared with EUR178bn for the whole of 2008.
Government involvement has cooled significantly throughout 2009 and if government activity were excluded, the figures would be just EUR19bn for the first half of 2009 compared with EUR70bn for all of 2008.
Page says: "The post-crisis restructuring in European financial services could bring an increase in the number of private equity backed deals in the sector. An increasing number of firms have expressed interest in the sector – both in the intermediary and services area as well as in the businesses that take underwriting risk."
The UK building society sector has already been in focus and is expected to remain one of the hot areas for M&A activity over the coming 12 months.
According to PwC, the European asset management industry has stabilised and a number of positive trends are emerging. As a result, there will be attractive opportunities for both trade and financial buyers to return to inorganic growth strategies in the short-to-medium term.
Pars Purewal, partner at PwC, says: “We believe some large financial services institutions will need to continue to strengthen their balance sheets and as a result, large asset managers may become available for acquisition.”
European financial services look set to undergo major restructuring, with any increase in M&A activity in the sector being determined by the pace of restructuring in the major financial institutions, says PwC.
