Alan Bainbridge and Albert Weatherill highlight key trends across the banking sector and share their insights on the forces shaping deal activity.
There continues to be longstanding speculation in the market about when a next big round of consolidation in the banking sector might occur. Will it be 2023? That seems unlikely, particularly “mergers of equals”, for a variety of reasons. However, in a rising interest rate environment there remain grounds to expect an active year for many banking groups on the M&A front. Below are five key themes that might drive that activity.
Banks will continue to look at carve out activity for high cost, low margin businesses in jurisdictions where their group is not close enough to the leading competitive set of banks in a given business or product line. The structure of any such carve outs, however, will be informed by local regulatory restrictions, tax and employment laws. Deals focused on particular business or product lines are likely to tend more towards conversion target pricing than locked box or completion valuations.
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