PwC: M&A activity in European financial services at lowest level in six years
By contrast the outlook for increased deal activity in 2010 is positive and the level of private sector activity is expected to increase significantly.

Fuente:  Fecha: 17.02.2010

PwC: M&A activity in European financial services at lowest level in six years

2009 saw a steep decline in European financial services M&A activity with values, excluding government led deals, hitting their lowest levels for 6 years.

Nick Page, partner, PricewaterhouseCoopers (PwC), said: “The level of deal activity in the European financial services market plummeted to a 6 year low in 2009. However, a restructuring-led wave of deal activity has started to gather momentum across the financial services industry and the private sector is predicted to see a resurgence in M&A activity through 2010."

According to the latest ‘European Financial Services M&A Insights’ report from PwC, just €80bn-worth of deals was announced during 2009, compared with €178bn for the whole of 2008 and €208bn in 2007. Government involvement cooled significantly throughout 2009 and with the exclusion of government activity, the figures would be just €41bn for 2009 compared with €70bn for all of 2008 and lower than the €45bn total in 2004.

Despite the absolute decline in the value of transactions, private sector deals accounted for a growing proportion of the total. Government-led transactions, declined to 24% of total deal value in the second half of 2009, compared with 58% for the first half. Cross border activity as a proportion of private sector deals increased to 65% from 41% in 2008.

As industry restructuring gathers pace, M&A activity will begin to recover during 2010. 59% of deal professionals surveyed[1] felt that financial institutions will be the most prominent bidders for financial services targets during 2010 and into 2011. 73% of respondents expect appetite for large financial services deals to increase during the year. This represents a marked change in optimism when in 2008 only 42% gave a positive response to the same question.

Shaun McNamee, partner, PwC, said: “The lion’s share of deal activity will sit with the private sector during 2010. Many European governments have switched their focus from the targeted support of certain financial institutions to planning their exits from bank share holdings in the medium to long-term future. However, we believe it unlikely that large scale exits by European governments will materialise during 2010.”

Key themes for 2010 will also include:

British banks back in the sights of foreign investors:
With Britain’s banking sector stabilising, growth prospects improving and EU competitor rulings set to bring more acquisition targets onto the market, now is the time for foreign players to take a fresh look at the UK.

The impact of Solvency ll on the insurance market:
Achim Bauer, partner, PwC, said: “Solvency ll will attract fresh investment into the insurance industry as the rethink of strategic options emanating from Solvency ll will lead to a pick up in deal activity.

“Robust strategic rationale for how divestment or acquisition will improve capital efficiency models will be critical to securing stakeholder support.”

Non core disposals by banks to continue:
According to 62% of survey respondents, non-core disposals by banks will continue to play a major role in 2010.

Fredrik Johansson, director, PwC, said: “Asset management businesses will continue to change hands and we will see further consolidation in the market as asset managers seek to harness the potential benefits of scale.”

Private equity on the sidelines:
Nick Page, partner, PwC, said: “Private equity will continue to take part in European financial services M&A primarily in niche areas. Private equity could play a role in carve-outs during 2010, particularly where the businesses have a solid funding structure.”

[1] Between December 2009 and January 2010, PwC conducted an online survey of a sample of its European Financial Services clients, gathering their responses to key questions about the development of M&A activity during 2010 and 2011. The survey was completed by 212 individuals (Nov 2008 – Jan 2009 online survey, 292 respondents) located throughout Europe.