European financial services M&A deal volume fell in 2023, and total deal value hit a decade-low

The European financial services industry announced a 3% year-on-year fall in M&A deals in 2023, with 641 deals across the region, compared to 661 deals in 2022, according to the latest EY financial services M&A analysis. The total disclosed deal value also fell; from €50.0bn in 2022 to €34.7bn in 2023, representing the lowest annual value recorded since 2013.

Benoit Gérard, EY EMEIA Financial Services Strategy and Transactions Leader , comments: “The challenging macroeconomic environment compounded by the banking crisis in March last year were key drivers of investor caution and the resulting decline in M&A activity across Europe last year. Market uncertainty and higher financing costs for private equity firms and declining valuations explain that decline, although mid-market activity remained sustained for capital-light assets, for example in the insurance and wealth management sectors.”

Sector specific M&A activity across Europe’s financial markets

• The number of European insurance deals rose from 223 in 2022 to 240 in 2023, but the total publicly disclosed deal value halved year-on-year, falling from €18.8bn in 2022 to €9.4bn in 2023.
• The number of deals in the European wealth and asset management industry in 2023 was on par with the 206 in 2022. However, again, the total publicly disclosed deal value decreased year-on-year; from €6.6bn in 2022 to €4.9bn in 2023.
• In the European banking sector, there were 195 deals in 2023, down from 232 in 2022, with the total publicly disclosed deal value also decreasing year-on-year from €24.6bn to €20.4bn.

The number of non-European firms acquiring European targets was down from 96 in 2022 to 81 in 2023, and the total disclosed deal value fell from €18.5bn in 2022 to €17.1bn year-on-year. European firms acquiring targets from other markets fell from 62 in 2022 to 47 in 2023, with total disclosed deal value decreasing from €7.0bn to €2.9bn year-on-year.

Benoit Gérard concludes: “While ongoing macro-economic uncertainties and geopolitical risk will continue to drive a certain degree of investor caution, we expect that a combination of factors will support an increased level of acquisition and consolidation activity throughout 2024. These factors include a certain level of pent-up demand following market deceleration in 2023, the expected decrease in interest rates and the appetite of multiple financial corporations to streamline and strengthen their portfolios.”

Notes to editors:

• Deals include transactions (announced or completed) where the target is in one of the three financial services sectors: banking, insurance, or asset management
• Equity investments are included, but joint ventures are not
• Deals where less than 20% (disclosed) of the company was acquired have been excluded from this analysis
• The total number of deals relate to where there was either a European target or European acquirer
• Data range: 1 January 2023 to 31 December 2023
• There is no minimum disclosed value deal threshold