The COVID-19 pandemic has changed the way of our living as well as how businesses are run. The trends have drastically changed in all departments from shopping to running a business. One of those changes includes the banking trends that have also been for the worse.
The banking markets remain fragmented during the pandemic. The top three banks only hold 39 percent of last year’s global average. This number is surprising because of the steady M&A market in recent years. Predictions say that the pandemic can cause even more consolidation in the banks.
According to estimations, there are a total of four key trends that will see a major change in M&A.
- · First will be that there will be more domestic deals. These deals will be driven by cost and regulatory pressures.
- · More cross-border deals for a few top tier banks, especially in Europe. Regulators may want to strengthen the banking sector. There is also an estimation that the leading 20 regional banks in the EU will shrink by ¼.
- · More scope related deals as banks are looking to acquire new technologies with lower costs.
- · Divestments to increase from non-core businesses and aggregation of subscale banking operations like insurance, payments and PE funds.
The top five banks in the EU are expected to have an increased market share from 51 percent to 61 percent.
Infographic by: bain