Number of mergers and acquisitions among banks in Europe in 2021 may outstrip the total in 2020, with deals where buyer and seller are based in the same country making up the lion’s share. The flurry of deals can be attributed to “a confluence of conducive conditions,” including the need for scale, the availability of compatible targets and support from regulators. The ECB has recognized that newly combined banks must take large costs up front and wait for the potential synergy benefits. With that in mind, it has said it will not penalize banks with credible M&A plans by setting higher Pillar 2 capital requirements based on the front-loading of costs. For years, bank M&A in Europe largely consisted of domestic or in-market deals, in which the target, buyer and seller are based in the same country. That trend is continuing this year. Of the 39 deals so far, 29 are in-market, Market Intelligence data found. Nordic banks lead the pack with 10 deals. Banks in Switzerland, Germany and Austria have signed four deals, while those in Central and Eastern Europe have signed five.
Noteworthy deals in the Nordics this year include Norway-based DNB Bank ASA acquiring peer Sbanken ASA. In Denmark, A/S Arbejdernes Landsbank bought a minority stake in Vestjysk Bank A/S, while Jutlander Bank A/S and Sparekassen Vendsyssel merged. Nordic banks also made up 14, or nearly a third, of the 43 domestic deals in 2020. Spain-based CaixaBank SA acquiring smaller peer Bankia SA was among the biggest deals in 2020. Unicaja Banco SA also bought Liberbank SA. In Italy, Intesa Sanpaolo SpA successfully merged with Unione di Banche Italiane SpA, while Crédit Agricole Italia SpA — a unit of France-based Crédit Agricole SA — bought Credito Valtellinese SpA. The momentum for consolidation “shows no signs of slowing down” and is set to continue in 2022, Scope Ratings said, adding that the focus would likely still be with domestic deals, which would take “the lion’s share of activity” despite a supervisory push for cross-border deals.