The prospect of a tie-up between large European lenders makes it a good time to reflect upon the state of regional bank mergers and acquisitions. Danielle Myles analyses the biggest post-crisis deals. 

There was speculation in October that several European banks had shown an interest in acquiring Commerzbank, Germany’s second biggest lender. Crédit Agricole chief Philippe Brassac quashed talk that his company was a potential suitor by stating in its quarterly telephone conference that it has no plans to buy all, or some of, Commerzbank. But others were reported as potential suitors, including UniCredit, which told The Banker that it does not comment on rumours or speculation.

Regardless of whether a deal with any counterparty emerges, the prospect of a tie-up between sizeable European lenders highlights the state of regional bank mergers and acquisitions (M&A).

Europe bank M&A by target country

Data collected by The Banker shows that a takeover of, or merger with, a bank such as Commerzbank would buck every trend in European-targeted bank M&A. With $27.9bn in Tier 1 capital at the end of 2016, as a target it would dwarf anything seen since before 2011. The biggest deal during this period (measured by the target’s capitalisation, and giving the buyer a controlling stake) was Santander’s acquisition of struggling Spanish competitor Banco Popular earlier in 2017 after EU authorities declared it was failing or likely to fail. While the purchase price was just €1, Banco Popular had $8.22bn in Tier 1 at year-end 2016.

Growth, not failure

It would also be a rare example of growth-oriented M&A. Like Banco Popular’s buyout, many of the biggest deals since 2011 have been the result of distress scenarios. During the eurozone crisis, Bank of Cyprus absorbed the performing assets of Cyprus Popular Bank. Several deals struck as part of the Spanish government-led restructuring of its troubled bank sector starting in 2012 also appear in the top 15, including BBVA’s 2015 acquisition of Catalunya Banc from the national bailout fund. Portfolio sales also feature, including CaixaBank’s purchase of Barclays’ Spanish retail, wealth management and commercial banking units.

But there were still some sizeable strategic deals. In 2016, Germany’s third and 11th biggest lenders – DZ Bank and WGZ Bank – merged, while in 2015 Banco de Sabadell took over the UK's TSB. CaixaBank is arguably the region’s most acquisitive bank, most recently upping its stake in Banco Portugues de Investimento (BPI), Portugal’s fourth biggest lender, to 84.5%.

The BPI deal also stands out for being cross-border. Of all European-targeted bank M&A since 2011, just 10.3% (by volume) has involved a foreign buyer, rather than domestic consolidation as in the majority of cases. The restructuring of Spain’s bank sector has been a big driver, for example, with its banks making up nearly 43% of the region’s transactions. Germany is a distant second, with 16.14%, boosted by Deutsche Bank’s acquisition of Deutsche Postbank.

Europe bank M&A since 2011

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