European Banks and Asset Managers Poised for Consolidation
The pressure is mounting on European banks and asset managers to consolidate and compete with their larger US counterparts. After years of lagging behind, 2025 may be the year that marks a significant shift in the industry.
Record Profits and Soaring Shares
European banks have enjoyed a remarkable run of record profits and soaring shares over the past two years. However, they still trail behind their US peers in terms of size and scale. The gap is expected to widen further as US President-elect Donald Trump takes office, promising to slash regulations and give US lenders a competitive edge.
M&A Activity on the Rise
Industry experts predict a surge in M&A activity in 2025, driven by the need for European banks and asset managers to bulk up and compete. “It’s clear that M&A bankers will be very busy in 2025, with record revenues on the horizon,” said Patrick Lemmens, a fund manager at Robeco.
Alternative Investments and FinTech in Focus
Deal activity is expected to increase in areas such as alternative investments and FinTech, with politics playing a significant role in shaping the landscape. The fate of recent hostile takeover bids, such as BBVA’s €12 billion offer for Sabadell and UniCredit’s €10 billion bid for BPM Banco, remains uncertain, but industry experts believe that successful deals will pave the way for further consolidation.
Asset Managers Under Pressure
Asset managers are facing intense competition from cheaper passive products, which favor larger US players. To stay competitive, they will need to explore tie-ups or attract interest from banks. BNP Paribas’s bid for AXA’s fund arm is a prime example of this trend.
Consolidation in Italy
Italy is seen as a ripe market for consolidation, with Banca Ifis making a surprise €298 million offer for specialty lender illimity earlier this year. The country’s largest asset manager, Amundi, has also been in talks with Allianz about a potential tie-up.
US Players Circling
Experts warn that US players may swoop in to acquire undervalued European rivals, particularly in asset management. Mid-sized active managers with weak share prices, such as Britain’s abrdn and Schroders, are seen as vulnerable to takeover bids.
Challenges Ahead
While the likelihood of deals is increasing, executives and experts caution that political opposition and regulatory challenges remain significant hurdles. UniCredit’s stake in Germany’s Commerzbank sparked a political storm, and the ECB’s treatment of banks’ insurance holdings will be crucial in deciding the viability of deals.
Integration and Regulatory Approval
Big institutions in Britain, such as Aviva, Barclays, and NatWest, are likely to focus on integration after making acquisitions. Regulators are expected to approve UniCredit’s request to own up to 29.9% of Commerzbank, but the ECB’s stance on banks’ insurance holdings will be closely watched.
The Unexpected Ahead
As the industry navigates this complex landscape, one thing is certain: the unexpected will happen. Deals will be announced that nobody was expecting, and the European banking and asset management landscape will continue to evolve in response to changing market conditions.
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