Europe’s banks emerge from the COVID-19 pandemic resolute in their ambitions

High levels of M&A across the UK and Europe, notwithstanding uncertainty ignited by the Russia/Ukraine conflict. Europe’s banks have emerged from COVID-19 turmoil resolute in their ambitions to shed non-core assets, consolidate regional strongholds and rigorously pursue digitalisation strategies.

Our outlook for bank M&A is extremely positive despite current market uncertainty. Many of Europe’s lenders dedicated significant resources towards fine-tuning their development strategies during COVID-19 lockdowns. The result is emergence with clear goals into an increasing NIM environment.

Overview

Top 3 drivers of UK and European bank M&A in the past 12 months:

• Embracing the future: Pruning overcapacity through internal reorganisations and ambitious non-core disposal programmes 
• Banks get match fit: Regional consolidation M&A and opportunistic acquisitions in core geographies/ business lines
• Europe’s challengers dig their heels in: More than five new entrants, more than five consolidation M&A deals and more than 10 successful funding rounds, in the UK alone

Current Market

• Very high activity levels

We Are Seeing

• Focus on internal restructurings:
  • Corporate reorganisations (e.g., Société Générale’s merger of French retail bank with Credit du Nord)
  • Branch closures, as European banks cut costs and migrate to digital distribution models (e.g., Lloyds’ closure of 60 UK branches and NatWest’s closure of 56 UK branches)
• Non-core disposals:
  • Banks concentrate on core markets/business lines (e.g., BNP Paribas sold BNPP Private Banking Spain, Bank of the West, Hello bank! Austria and ClimateSeed in the past 12 months)
  • European banks with Russian exposures respond to sanctions (e.g., Société Générale’s disposal of Rosbank)
  • Russian banks are forced to retreat from international markets (e.g., Sberbank’s disposals of its Croatian, Slovenian and Bosnian banking subsidiaries)

TEXTO PROPIEDAD: https://www.whitecase.com/publications/insight/financial-ma-july-2022/banks