0 $ EHQH 4WV IRU WKH EDQNLQJ VHFWRU FRQVROLGDWLRQ · 2020-05-10 · expansion by acquisition or expansion to QHZ FRXQWULHV LV FRPLQJ LQ WKH &)2V WRS WKUHH SULRULWLHV IRU 0RUH JOREDOO\

$Page 1: 0 $ EHQH 4WV IRU WKH EDQNLQJ VHFWRU FRQVROLGDWLRQ · 2020-05-10 · expansion by acquisition or expansion to QHZ FRXQWULHV LV FRPLQJ LQ WKH &)2V WRS WKUHH SULRULWLHV IRU 0RUH JOREDOO\$
Inside magazine Issue 18 | Part 03 - From corporate strategies & people perspectives


Baptiste Guionnet Director

Partner

ever before. In Europe, this trend is further exacerbated by the

to the US. However, M&A in the banking sector has risen

group priorities in the coming months.


2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Inward non-EU Inward EU Cross border

Outward non-EU Outward EU Domestic

100

80

60

40

20

0

38 34 33 33

15 11 7

7 76

6

9 9

5

2

23

3

4

21 21 18 19 2215

19

814

1914 10 13

5

11

12

77

8 910

7 7

2

10

4 4

56

5 1

10

16

3

22

2

2

2

3

711

4

7

1923

29

8

12

5

54

4 36 3

23

3

3

5

5

22

2 2

Trend post-crisis

out by euro area banks outside the euro area.

F

of cross-border M&A activity in Europe.

However, since the start of the crisis in 2008, M&A activity in the European

Indeed, even if other causes can be

fragmented than in the United States,

In the current economic context and given

that the number of M&A transactions rose

these transactions have, to some extent,


Trend post-crisis

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

RoW incoming Across states

RoW outgoing Within state

100

120

80

60

40

20

0

26

48

32

45

11

5

44

4

13

31

2

37

24

35 5

45

44

4

10

34 35

2833

4

3 35

2617

32

7

10

17

5

8

2

1

3

2

22

14 16 1928 27

15 13

45

5

16

524

2

22

3

4349

56

22

4 34

3

27

United States acquiring shares in banks in the United States.

fragmented than in the United States.


in recent years compared to other mature

without creating issues in the competitive

EU and the US in terms of the volume

explained by:

compared to the US

More heterogeneous markets

of each country remains a key consideration preventing certain cross-border transactions

of Brexit or announcements addressing

been overridden by attractive M&A opportunities.

Over the last few quarters, we noted

also in Europe.

• Globally:

transactions were announced, whichcorrespond to a 60 percent increase

registered in 2007.

• In Europe:

compared to the same period in 2017.

survey1 showing that:01.

02. There is now a shift from defensive toan expansionary mindset at the top

In 7 out of the 19 countries surveyed, expansion by acquisition or expansion to

expansionary strategies outnumber defensive ones in 11 of the 19 countries surveyed.


Between 30% and 40%China, Norway

Between 40% and 50%Sweden, Denmark, Czech Republic, Russian Federation

Between 60% and 70%Canada, USA, Netherlands, Belgium, France, Finland, Poland, Hungary

Between 50% and 60%Mexico, Brasil, Ireland, Spain, Romania, Greece

Between 70% and 80%United Kingdom, Portugal, Switzerland, Austria, Italy

Between 80% and 90%Germany


80

70

60

50

40

3020 40 60 80 100

More fragmented More concentrated

Cost

/inc

ome

rati

o

Market concentration index2

DE

AT

UK

ITFR

HU

PLSI BE

DKFI

CYESSE

RO

CZ

LV

BG

LT

GR

EE

MT

PT

HRNL

LUSK

IE

R2 = 0.36

order to achieve further growth.


to design a robust strategy to sustain growth and

organic growth prospects0102


, the country is indeed hosting branches or subsidiaries of many

of European banks forming part of our

management and private banking activities

of brick and mortar branches as main

the bank secrecy, the enforcement of the

costs and investments required to keep

pushed some banking groups to consider

M&A activity spiked in Luxembourg, with this trend expected to continue in the coming months.

200

250

150

100

50

1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 20160

6.000

7.000

5.000

4.000

3.000

2.000

1.000

0

Nb of banks (left axis)

Average B/S per bank in €m (right axis)

Other transactions are about to occur in 2018, supporting an

for M&A activity in Luxembourg,

Banking sector but

management and servicing industry.


Havilland's acquisition of Banque Pasche & Banco Populare Luxembourg2015

2016

2017

2018

Julius Baer's acquisition of Commerzbank's private banking business

EFG's acquisitionof UBI and BSI Luxembourg

Legend Holding's acquisition of BIL (Banque Internationale à Luxembourg) form Precision Capital

Safra Sarasin's acquisition of Hapoalim Banque

Hauck & Aufhaeuser Privatbankiers'acquisition of Sal. Oppenheim jr & CieLuxembourg and OppenheinAsset Management Services

UBS' acquisition of Nordea'swealth management business

BGL BNP Paribas' acquisitionof ABN Amro bank'swealth management and insurance businesses

Warburg's acquisition of Nord LB

desiring to strengthen their footprint in certain markets.

2017 and Q1 2018. Others are about to occur

management and servicing industry.


According to a recent survey4

engage in a joint venture with a FinTech in the next two years.

20 %Technologyacquisition

16 %Expand/diversify

products or services

19 %Expanding Customer

base in existing markets

12 %Digital Strategy

9 %Talentacquisition

11 %Enter into new geographic markets


On recent M&A transactions, where we

showstoppers on certain transactions.

•expect to engage in a joint venture witha FinTech in the next two years

• One-third say they expect to acquire5.

Inadequate IT setups

been considered as important showstoppers on certain transactions.

5 Source: MergerMarket


Despite the importance of the

portion of M&A activity remains driven by size with the objective to reach an adequate cost-income ratio. According to a recent survey, recent

• Expand the customer base in core

• Enter into new geographic markets

often to re-focus on fewer core

The banks in Luxembourg might be

countdown has started; if they are not growing enough, private banks

forward.

The banks in Luxembourg might

but the countdown has started; if they are not growing enough,

going forward.


Investing or divesting?Low interest rates in Europe together with

continue to put pressure on banks revenue

ratio of banks remains under pressure,

footprint in certain juridictions.

bring an answer to the strategic questions

• BUY strategy: Has the entity reached

Is the return on equity adequate given

• SELL strategy: Is the entity performinga core activity for the group? Is it active in

the business? Is the business undersized

the future?

divesting might be perceived as a sign of weakness. This perception together with a certain resistance to change prevents

strong market momentum, timing seems

these strategic questions.

peak in M&A activity and strong market momentum, timing seems about

answer those these strategic questions.

Documents

0 $ EHQH 4WV IRU WKH EDQNLQJ VHFWRU FRQVROLGDWLRQ · 2020-05-10 · expansion by acquisition or expansion to QHZ FRXQWULHV LV FRPLQJ LQ WKH &)2V WRS WKUHH SULRULWLHV IRU 0RUH JOREDOO\