Off-topic: M&A in Europe
Thanks, Lawrence, for you kind reminder <g>.
IMO your observation that the M&A pace is picking up is absolutely correct for Europe. As an anecdotal piece of evidence I can tell you that the boyfriend of my sister is in M&A. He is with a not-so-big international partnership. They do a lot of relatively small and medium size transactions. He ususally works overtime anyway, but by his own admission, business is very brisk right now.
In big mergers, yes, the financial services industry is consolidating, for better or for worth. As you may know, in Switzerland UBS is merging with SBC. Some months ago, Credit Suisse announced it's merger with Winterthur Insurance. In Germany, 2 bavarian banks Bayern Hypo and Bayrische Vereinsbank will merge and create one of the biggest banks in Germany. In the last couple of days, Allianz Insurance has agreed with Generali Insurance on the proposed merger betweeen Allianz and AGF of France. Banque Bruxelles Lambert has agreed to merge with ING of the Netherlands. Zurich Insurance is merging with BAT Financial Services. I may forget a couple of others here <g>.
I personally see not too much good in all these financial services mergers from a private customer point of view, and maybe even corporate customers. But of course, the cost savings are enormous and post-merger earnings will benefit greatly.
The UBS/SBC merger will create quite many unemployed in Switzerland and internationally. Apart from that, the consolidation is understandable in that continental Eurpoe in general is completely overbanked. I don't know about the U.K. But on the continent, you walk out your home and have at least three bank branches in walking vicinity, normally. It's like in Manhattan, but on a continental scale.
Off course the trend is toward the money centers getting bigger and the regional and local branches getting more and more obsolete. Servicing the customer can be done electronically, etc., etc. So definitely the trend is here for consolidation and positioning for the common market and currency in 1999.
The question of course is, who is next? Speculation has it that Deutsche Bank is on the lookout for a merger also. I would not be surprosed if they decided to stay alone. They are big enough, IMO. Commerzbank has been rumored to be a target off and on for years. But until now, nobody was really pursuing a bid. Maybe there is a problem with Commerzbank that I don't know off. In general, they have a good pan-German network, so a foreign bank might get interested.
In Switzerland I do not see any more consolidation in banking: There will be 2 big banks the new UBS (United Bank) and CS. In insurance Swiss Re is already working closely with UBS. Swiss Life may seek an alliance still, but I have no concrete clues.
I see further possibilities for consolidation in France. There are still many banks there where the state has it's hnad in. Many are quite unprofitable compared to other first-class European banks like Deutsche or ING and BBV. So I guess if I wanted to play financial services consolidation in Europe, I'd start to look in France.
Hope this helps,
Thomas |
