Financial services M&A activity falls by 40%

MergingM&A activity in European financial services reduced in the first quarter of 2012.

It fell by 40% to €9.7 billion compared to Q4 2011, according to business services firm PwC. Activity was also down 1% from Q1 last year.

Had it not been for Royal Bank of Scotland’s sale of RBS Aviation Capital to Sumitomo Mitsui for €5.8 billion, the quarterly deals figure would have been only €3.9 billion – one of the lowest quarterly deal figures of the last nine years.

There were only four deals valued between €250 million and €1 billion, compared with eight in Q4 2011 and six in Q1 2011.

Nick Page, transaction services partner at PwC said: “What was perhaps most exceptional was the low level of banking deals in Q1 2012. The total value of banking transactions was €1.9 billion [compared with] an average quarterly deal value of more than €6 billion in the banking sector over the past two years.”

As growth slows and tougher capital requirements come into play, financial services businesses are facing increasing pressure to shore up their balance sheets, PwC notes.

In April, Dutch lender Rabobank said it was reviewing options for its fund management arm. Like other banks it faces new capital rules aimed at preventing a repeat of the 2008-9 financial crisis.

©2012 funds europe