The year 2015 may be shaping up to be one of the most active for mergers and acquisitions (M&As) since 2007. And the trend has been no different in the financial sector.
In fact, in November alone we witnessed the largest completed bank merger and acquisition deal of the year, worth $5 billion. We also saw the largest pending merger deal in Germany’s banking sector in more than 15 years. There was also one of the largest cash management buyouts in history as the world’s largest asset manager, BlackRock, purchased Bank of America’s $87 billion money-market fund business.
And there were plenty of other megadeals that ensued. Let’s run through some of November’s largest bank and financial firm M&A deals.
2015’s Largest Completed M&A Deal (So Far) and Other Big Bank Consolidations
November saw the year’s largest completed bank M&A deal to date, as the Royal Bank of Canada (RBC) — Canada’s largest bank by assets — finished the final paperwork to acquire City National Corporation early this month at a price tag of around $5 billion.
The acquisition adds $33.5 billion in assets and expanded RBC’s retail banking into the US for the first time (though it already had some of its wealth management business in the US). Planning to make City National Corporation its American retail banking franchise, RBC intends to keep the City National name on the acquired branches and promote product and service cross-selling between City National and RBC.
Across the Atlantic, DZ Bank agreed to buy WGZ Bank in the largest German banking sector deal in more than 15 years. With the acquisition slated for completion in August 2016, the newly merged DZ Bank would control total assets of nearly €500 billion ($535 billion), making it Germany’s third-largest financial institution and lender behind larger rivals Deutsche Bank and Commerzbank, and ahead of development bank KfW.
Expanding its middle-market commercial banking business further in Chicago, MB Financial (which boasts some $14.6 billion in assets) agreed to buy American Chartered Bancorp — along with its 15 American Chartered Bank branches in the Chicago area, $2.8 billion in assets, and $2.2 billion in deposits — in a deal valued at $449 million.
The $16.6 billion F.N.B. Corporation received regulatory approval to acquire Metro Bancorp and its $3 billion in assets and more than 30 Metro Bank branches in south-central Pennsylvania. Scheduled for completion in January 2016, the $474 million all-stock deal will effectively merge Metro Bank into F.N.B.’s First National Bank of Pennsylvania subsidiary.
Equifax and Houlihan Lokey Continue Global Expansion
Investment bank Houlihan Lokey acquired Leonardo & Co.’s investment banking operations in Germany, the Netherlands, and Spain, expanding Houlihan’s reach across continental Europe. It also became a minority partner in a joint venture with the management team of Leonardo’s investment banking operations in Italy. Thanks to the recent deal, Houlihan Lokey now boasts 150 financial professionals in seven offices across Europe. With more than 85% of its revenue coming from the US in fiscal 2015 (ended March), the firm continues to look for more growth abroad to diversify.
With the goal of boosting its market position in Australia, credit bureau Equifax agreed to buy Sydney-based rival Veda Group Limited — the leading provider of consumer and commercial credit reporting in Australia and New Zealand — in a deal worth $1.8 billion. Equifax currently generates 75% of its revenue from the US, while less than 5% of its sales come from the “Land Down Under,” suggesting that there’s some growth potential for the company in the region.
BlackRock and Tullett Prebon Boost Market Share
BlackRock acquired Bank of America’s $87 billion money-market fund business, boosting its global cash-management business’ assets under management by 30% to $372 billion. The deal comes as Bank of America and other large banks face regulatory pressure to simplify their businesses in the years following the global financial crisis.
London-based interdealer broker Tullett Prebon agreed to buy ICAP’s global interdealer broking business to boost its market share to 48% from today’s 20%. The $1.66 billion deal would also add expertise, cost synergies of £60 million, and larger economies of scale, vital in the interdealer broking business as trading volumes (and profits) have declined in recent years.
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Christian Hudspeth is a company analyst for Dun & Bradstreet, researching and reporting on more than 1,000 banks and financial firms for Hoover’s database subscribers. Before joining Dun & Bradstreet, Christian was a managing editor, senior financial writer and analyst for a financial publishing company. His financial articles have been featured on MSN Money, Business Insider, Nasdaq.com, and several other well-known online publications. Before he was an editor, Christian worked in the commercial banking industry for seven years.