Over the years, pressure on European banks and asset managers to increase competition with US banks has increased. This year may mark a turning point as more boardrooms explore combinations, executives, advisors and investors say.
European banks have enjoyed record profits and soaring stock prices in the past two years, but they, like asset managers in the region, remain much smaller than their US peers as American institutions gain ground.
Competition will intensify in 2025 as US President-elect Donald Trump takes office, who is expected to cut red tape for US lenders.
“It looks like certain M&A bankers will be very busy in 2025 as the banks they work with post record earnings,” said Patrick Lemmens, a fund manager at Robeco, which has invested in European banks for decades.
“We are clearly seeing more deal activity in areas such as alternative investments and FinTech. “Whether there will be an increase in M&A deals between banks in Europe will depend largely on politics, even with deals in the same country,” he added.
Last year’s biggest banking offer was either unsolicited or hostile and its fate remains uncertain.
These include BBVA’s bid of 12 billion euros for Sabadell in Spain and UniCredit’s bid of 10 billion euros for its Italian rival BPM Banco. Both deals are opposed by the government but if they succeed, expect more consolidation moves, industry experts say.
Asset managers, faced with stiff competition from cheaper and profitable passive products from big US players, will explore more collaborations or attract new interest from banks such as BNP Paribas’ bid for the AXA fund, advisers say .
Allianz began talking to Europe’s largest asset manager, Amundi, about a potential tie-up with its Allianz Global Investors unit, but talks later broke down, Reuters reported last month.
Conversations that didn’t start before have now become conversations and “everyone is talking to each other,” said a senior bank executive in Italy.
This year, in Italy, a market considered ripe for consolidation, Banca Ifis made a surprise offer of 298 million euros to specialist lender illimity.
Last year was the year with the largest annual European financial services M&A deal volume since 2015, according to EY’s latest industry analysis. Total deal volume reached 52 billion euros ($54 billion), including 10 deals worth more than 1 billion euros, EY said.
Experts say the likelihood that US players will look to lower-valued European rivals is also increasing, especially in asset management, with mid-sized active managers with weak share prices, such as Britain’s Abrdn and Schroders, seen as a vulnerable group.
Source: Reuters
