Cross-border financial services M&A remains active in 2019 and beyond, driven by continuing innovations in fintech
2 May 2019 – Cross-border financial services transactions and valuations are on the rise this year, according to Hogan Lovells’ Deal Dynamics M&A data. Despite a dip in cross-border financial services deal volume in the first three months of the year due to regulatory concerns, deal value is up, compared to the first quarter of last year. Q1 2019 saw cross-border deal value in the financial services sector reach US$25.7 billion, an increase of 17 percent compared with the previous quarter.
"Over the past few years, UK financial institutions have been less focused on expansive M&A and more focused on optimizing their core businesses and on dealing with the economic and regulatory changes resulting from the financial crisis," said John Allison, partner at Hogan Lovells. "Now that some uncertainty has subsided, there has been a shift in confidence about deal making and more financial institutions are starting to look again at pursuing M&A, particularly in areas of core business and in technology and digital delivery of services."
In Japan, low interest rates and ageing populations are driving increasing cross-border activity. Most notably, Japan-based MUFG Bank’s US$6.3 billion acquisition of Germany-based DZ Bank’s aviation finance business in Q1.
While in the United States, BB&T and SunTrust’s planned US$28 billion acquisition will be the biggest bank merger in over a decade.
In terms of areas of activity Fintech stands out as the area of focus. Fintech investment more than doubled, reaching US$111.8 billion last year globally, according to KPMG. One of the larger deals in the space included Fiserv’s US$38.4 billion acquisition of First Data.
"Traditional financial services organizations have recognized the increasing threat of startups entering the space and are protecting their positions through merger and by more actively investing in fintech," said Allison.
For more information on what is driving cross-border M&A in the financial services industry, visit our Deal Dynamics website.
About Deal Dynamics
In October 2018, Hogan Lovells launched a global cross border M&A tool in partnership with Mergermarket. Deal Dynamics is updated quarterly and combines interactive deal data by markets and sectors with exclusive editorial content to provide insights on cross-border M&A. Additional data, interviews and thought leadership pieces can be found here.
About Hogan Lovells
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