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26 April 2007 — M&A deal values in Europe’s financial services sector increased by 77% over the previous year to reach €137 billion, reports ‘Financial Services M&A: Going for growth in Europe’, the annual analysis of financial services M&A activity in Europe from PricewaterhouseCoopers LLP. Domestic transactions in 2006 also tripled in value over 2005 levels to reach approximately €76 billion.

The Banking sector was the most dynamic across Europe, with the total value of banking deals reaching almost €99 billion in 2006. The insurance sector also experienced growth in the total value of deals during 2006, however M&A activity in asset management dropped substantially.

Nick Page, partner in the transaction services financial services group at PricewaterhouseCoopers LLP, said:

“The ongoing pressure for consolidation, led by the banking sector, is expected to continue. We also anticipate increased activity across emerging Europe as larger European players position themselves for growth, as well as a greater number of private equity backed deals throughout the European financial services industry.”

Leading European markets

Geographically, Italy was the most active European market in 2006, accounting for 48% of total activity. Eight of the top twenty European deals involved Italian targets, collectively worth €62.7 billion—almost half of Europe’s M&A activity by value.

Although French targets accounted for the second largest total value of bids, the majority of activity was domestic in nature.

Activity in Germany declined steeply to just 1.7% of the total deals by value in 2006, compared with 28% last year.

Main trends

  • The ongoing drive to build national champions, particularly in Italy
  • European banks, and the French ones in particular, continue to develop second home markets in search of growth and for strategic positioning
  • Focused disposal of insurance assets by bancassurers
  • Interest from private equity houses continues although volumes are down

Sector Focus

Banking sector

  • The value of banking transactions more than doubled on 2005, representing 72% of the value of all financial deals
  • Fifteen of the year’s largest twenty deals involved banking targets
  • The recent and ongoing banking M&A is set to continue across emerging Europe, including in Turkey and Greece, although the rising deal prices may put pressure on some acquirers, possibly resulting in reversal of some acquisitions in due course
  • Europe is not considered to be the preferred market for US banks during the next 12–24 months

Insurance

  • M&A activity in the insurance sector reached €25 billion, representing an increase of 34% on the previous year. Distribution will continue to represent a major area of interest
  • In the motor and personal lines market a period of hardening rates and anticipation of improving profits may also encourage increased investments and contribute to a period of interest by private equity in the non-life sector

Investment management

  • M&A volumes in the asset management sector dropped to less than €2 billion in 2006 from more than €7 billion in 2005
  • Despite continuing consolidation in the US investment management sector, European banks and insurers seem to be holding on to their asset management businesses as they can support groups’ P/E ratios and offer synergy potential in cross-border deals

Russian market


Michael Knoll, Head of M&A Lead Advisory, commented on the situation in Russia’s financial services sector:

“The Russian financial services industry was one of the most active sectors in terms of M&A activity in Russia, outpaced only by the energy&utilities and manufacturing sectors. The value of disclosed deals in the financial sector amounted to USD 7.3bn or 8.2% of the total deal value in Russia (up from 6.9% in 2005). Moreover, the number of M&A transactions in the financial industry (225) almost doubled compared to 2005.*

“Foreign banks demonstrated a great interest in the Russian retail banking market, which led to a number of significant acquisitions by large European banks. Another trend was for large Russian banks to begin their expansion abroad with the acquisition of several medium-sized banks in the CIS region.

“Major players in the Russian insurance market continued to acquire smaller companies and to expand into the regions of Russia. Foreign players were still hesitant as to M&A as a means for growth during 2006, but in the first quarter of 2007, strong interest in the market was demonstrated by two larger acquisitions. Besides, we expect regulatory changes also accelerate consolidation in the sector.”

Notes to Editor:

  1. For additional information please call Vera Totskaya, PR Senior Manager.
  2. Central and Eastern Europe (CEE) is defined as Poland, Hungary, Czech Republic, Romania, Estonia, Lithuania and Croatia and South Eastern Europe (SEE) is defined as Greece, Turkey, Cyprus, Serbia and Montenegro, Bulgaria.

  3. Top 10 FS deals announced in Europe

    Rank Date Target Bidder €m
    Company Country Company Country
    1 Aug 06 Sanpaolo IMI Italy Banca Intesa Italy 29 586
    2 Jun 06 Natixis France Banque Populaire; Caisse d’Epargne France 10 000
    3 Feb 06 Banca Nazionale del Lavoro Italy BNP Paribas France 9 000
    4 Oct 06 Banca Popolare Italiana Italy Banco Popolare di Verona e Novara Italy 8 055
    5 Jun 06 Winterthur Insurance Switzerland AXA France  7 900
    6 Jun 06 Euronext Belgium, France, Netherlands NYSE Group USA  7 473
    7 Nov 06 Banca Lombarda Italy Banche Popolari Unite Italy  6 087
    8 Jun 06 Abbey National Life business UK Resolution UK  5 226
    9 Nov 06 Sampo Bank Group Finland Danske Bank Denmark  4 050
    10 Jun 06 Toro Assicurazioni Italy Assicurazioni Generalli Italy  3 850
  5. * Source: PricewaterhouseCoopers CEE M&A survey. (back to text )

“PricewaterhouseCoopers” refers to the network of member firms of PricewaterhouseCoopers International Limited, each of which is a separate and independent legal entity.