Insights on Financial Services M&A September 2020

Explore topics impacting financial services and banking M&A along with a current overview of financial services valuation trends.



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COVID-19: Eight main impacts on global banking M&A

After a period of record M&A activity over the past decade, the banking industry is now facing unprecedented disruption. M&A activity was down by approximately 21 percent (in terms of deal volume) in the Q1-20 (January- March)1 compared with that of the previous year. In terms of deal activity:

  • Some acquisitions and divestitures have still been completed, particularly those near to signing and/or closing, and some others have accelerated to overcome additional disruption from COVID-19.
  • Some deals have been put on hold due to the high volatility in the financial market, as well as uncertainty over business resilience, while a few others have been canceled.

Within this context, we expect banking M&A activities to increase in the second half of the year, primarily driven by domestic consolidation aimed at improving bank efficiency and at creating larger scale in order to compete with international peers.

In addition, acquisition of fintech and digital solutions capabilities will have a key role in the M&A landscape to help banks re-design their business models in order to survive in the long run in a low interest environment.

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Price / last-12-months EPS

 

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Source: S&P Global Market Intelligence website (August 2020).
 

Price/Book

 

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Note: Insurance brokers and investment advisors are excluded from the chart.
Source: S&P Global Market Intelligence website (August 2020).
 

Return on average shareholders' equity (%)

 

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Note: Insurance brokers are excluded from the chart.
Source: S&P Global Market Intelligence website (August 2020).
 

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Timothy Johnson

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Financial Services Industry Leader, Deal Advisory, KPMG US

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Advisory Managing Director, Financial Due Diligence, KPMG US

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