Mergermarket Predicts Asset Disposals Among Financial Institutions to Continue at Pace
Following the most damaging fiscal crisis in almost 80 years, much of Europe’s financial sector has been required to ease their anaemic-looking balance sheets. Much of this has been fashioned through mergers and acquisitions – either enforced or voluntarily so.
While some financial institutions that suffered huge losses received EU state aid handouts so as to ensure their survival, others managed without. But both have largely had to undergo an asset disposal strategy to either pay back the capital loaned or bolster their books as the EU tightens its grip on capital requirements that banks must adhere to.
RBS being forced to sell 318 of its UK retail branches is a typical example of such a trend, something that the likes of Santander – which ended buying the branches for US$2.6bn – have benefitted from. Allied Irish Bank, Bank of Ireland, Commerzbank, Dexia, ING, KBC and Lloyds are among many of other banks that have been heavily disposing, or in the process of, assets as a result of the current climate and conditions.
“With many institutions having until 2013 to make a number of disposals to pay back bailouts in accordance to EU agreements and guidelines, we will continue to see billions of dollars worth of deals throughout the sector within the coming two years,” mergermarket financial services specialist, Paul Francis-Grey said.
The volume of deals being made throughout the financial sector is closing in on boom levels of 2006 and early 2008, according to mergermarket data. But while the number of deals may well be on the rise, the value of such sales has dipped somewhat from those periods as enforced sales have led to bargains being snapped up by more predatory and healthier institutions.