The failure of several banks in the US and the crisis at other financial firms raised severe concerns across the global markets recently. Notable among them were crisis at Credit Suisse and the collapse of Silicon Valley Bank, Silvergate Capital and Signature Bank. Though the failure of these banks marks a major setback for the banking industry, it paves the way for mergers and acquisitions (M&A) opportunities, according to GlobalData, a leading data and analytics company.
An analysis of GlobalData’s Financial Deals Database reveals that several big firms have come forward to the rescue and agreed to acquire the assets of such troubled banks. Some of these notable M&A deal announcements included UBS’ acquisition of Credit Suisse, HSBC’s acquisition of the UK arm of Silicon Valley Bank and Flagstar Bank’s acquisition of certain assets of Signature Bank.
Aurojyoti Bose, Lead Analyst at GlobalData, comments: “In what is being largely seen as a rescue deal for such troubled firms or an emergency move by authorities to prevent any further financial woes, the acquirers emerge as a big winner in many ways.”
For instance, the UBS-Credit Suisse deal is likely to add significant value for UBS. According to the terms of the agreement, subsequent to closing of the merger transaction, UBS will be the surviving entity. The deal is likely to see the creation of a global wealth manager with around US$5 trillion in total invested assets.
Bose concludes: “While such crisis-hit banks and financial firms could open doors for companies exploring M&A opportunities to strengthen their market position, there is also a downside to it, as these deals are likely to have an impact on the competitive landscape. Such acquisitions are likely to see the global banking space undergo massive consolidation, resulting in very few players dominating the industry.”