德勤：2022年银行和资本市场并购展望.pdf

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1、2022 banking and capital markets M&A outlook Firing on all cylinders2021 banking and capital markets M&A outlook|Reset,reimagine,reengage22Brochure/report title goes here|Section title goes here ContentsIntroduction 32021 review;2022 outlook 4Banking 4Investment management and wealth management 7Fin

2、tech,payments,and exchanges 10Trends and drivers of 2022 M&A activity 14Reassessing and reinvigorating portfolios 14Megadeals create inventory concerns for potential merger partners 16As fintech goes mainstream,alliances move into the spotlight 16Evolving accounting,regulatory,and tax influences on

3、M&A activity 16Tax policy developments 18Keeping the M&A growth engine humming 192022 banking and capital markets M&A outlook|Firing on all cylinders3IntroductionThis is not to say that 2022 will be without headwinds:B&CM respondents to our recent M&A survey cite a number of traditional challenges t

4、o future dealmaking.Among these are access to capital(40%),asset valuations(38%),translating strategic needs to M&A strategy(34%),a competitive deal market(22%),and lack of available acquisition targets(20%).1 Adding to the mix is late-2021 regulatory activity that may complicate and/or stall midsiz

5、e and large bank mergers.Also,the current deal deluge is pushing in-house staff,financial advisers,law firms,and regulators to keep pace,potentially extending transaction approval timelines.Nevertheless,there are compelling reasons for B&CM organizations that have been sitting on the sidelines to re

6、engage in M&A in 2022.These include positive macroeconomic conditions,an abundance of investment capital,continuing consolidation in fintech and at the community and midsize bank levels,and accelerating digital transformation across the financial services industry.These factors should keep the B&CM

7、M&A growth engine humming.62%of B&CM respondents to Deloittes 2022 M&A Survey state their M&A strategy is focused on increasing their competitive positioning.Banking and Capital Markets(B&CM)mergers and acquisitions(M&A)activity is firing on all cylinders.Each of the industrys major sectorsbanking,i

8、nvestment management(IM)and wealth management(WM),and financial technology(fintech,payments,and exchanges)rebounded from a very tough 2020 to post impressive increases in deal volume and value in 2021a trend that we expect to continue.The COVID-19 pandemic accelerated the B&CM sectors transition fro

9、m in-person,brick-and-mortar customer interactions to online platforms.It also stalled 2020 dealmaking,creating pent-up demand among strategic and financial buyers with strong balance sheets and abundant cash reserves.Throughout 2021,B&CM organizations demonstrated that they are eager to buy,sell,in

10、vest,and/or partner to rightsize their portfolios;add scale and digital capabilities;expand markets;and increase their competitive positioningall of which presage a robust 2022:Banks are reassessing their portfolioswhich geographies they want to be in,which capabilities they need to acquire,and whic

11、h assets they want to carve out.Numerous banks in the$10 billion to$100 billion sweet spot are looking for a partner to add scale,products,and services.Longtime,one-stop-shop financial services firms are divesting to focus on core capabilities and markets.Players in the crowded financial technology

12、spaceboth fintechs and traditional financial institutionsare pursuing“tech and talent”deals to expand their customer base,enter new markets,or shore up their business and operating models.Payments,retail,and B&CM are converging as the transition from in-person to digital customer engagement accelera

13、tes.The consolidation wave is still gaining steam as new players emerge to challenge industry stalwarts and new markets offer unprecedented growth opportunities.2022 banking and capital markets M&A outlook|Firing on all cylinders4Banking 2021 reviewAfter a tough 2020,banking M&A rebounded with 210 a

14、nnounced transactions as of December 31,an 89%increase from the prior years 111 dealsand an average deal value of$693 million,a healthy rise from 2020s average$546 million(figure 1).2021 also had the largest number of transactions over$500 million in enterprise value(23)since the financial crisis,go

15、ing back to 1998(24).The total 2021 disclosed deal value of$77.6 billion(figure 1)exceeded 2019s next-highest total deal value of$54.8 billion,which included the BB&T and SunTrust Banks merger2 that created Truist Financial Corporation.2021 was a banner year for megadeals as banks sought scale,capab

16、ilities,business lines,and markets to compete against larger 2021 review;2022 outlookrivals.The five largest announced deals all topped the$5 billion mark:Bank of Montreals(BMO)acquisition of Bank of the West for$16.3 billion;3 US Bancorps acquisition of Union Bank from MUFG for nearly$8 billion;the

17、 M&T acquisition of Peoples United for$7.6 billion4(M&Ts first bank acquisition in six years5);Webster Financials$5.2 billion acquisition of Sterling Bancorp;and Umpqua Holdings$5.1 billion purchase of Columbia Banking System in a reverse merger transaction.6 While 2021 deal activity spiked across t

18、he country,M&A for banking largely has remained a regional story.The West demonstrated its highest level of regional activity in several years,accounting for more than 11%of activity and,when considering banks over$1 billion in 0501001502002503007002016$165$156$186$380254241253256111210#of transacti

19、onsAverage value($M)20172018201920202021TotalsAverage value$546$6930200100300400600500Figure 1.Banking M&A metricsNote:Average deal size is based on disclosed deal value:33%,33%,37%,43%,54%,and 47%of reported deals did not disclose deal values for FY16,FY17,FY18,FY19,FY20,and FY2,respectively.Source

20、:SNL Financial and S&P Global Market IntelligenceTop five 2020 banking transactions by deal valueTargetBuyerAnnouncement dateValue($M)Price/TBVRegionBank of the WestBank of MontrealDecember 20,2021$16,300 172%West MUFG Union Bank,National AssociationUS BancorpSeptember 21,2021$7,971 128%West Peoples

21、 United Financial,Inc.M&T Bank CorporationFebruary 22,2021$7,599 168%Northeast Sterling BancorpWebster Financial CorporationApril 19,2021$5,225 193%Mid-Atlantic Columbia Banking System,Inc.Umpqua Holdings CorporationOctober 12,2021$5,147 NA West 551811326Mid-AtlanticMidwestNortheastSoutheastSouthwes

22、tWest2016241337532911311519483213751122011221416810258926571511182017201820192020255182132624358252021430%40%20%60%80%100%Figure 2.Banking M&A volume and P/TBV by regionBanking M&A by target regionBanking with$1B assets by regionBanking deal P/TBV by regionAverage P/TBV170%190%130%110%150%90%EastWes

23、tMidwestAllAvg.qrtly market P/TBV2016137%165%173%158%136%20172018201920202021156%Note:Average deal size is based on disclosed deal values:33%,33%,37%,43%,54%and 47%of reported deals did not disclose deal values for FY16,FY17,FY18,FY19,FY20,and FY21,respectively.Source:SNL Financial and S&P Global Ma

24、rket Intelligenceassets,had disproportionate deals of size.As a result,the Westfollowed by the Southwesthas the lowest number of total banks with assets over$1 billion,which potentially portends a slowdown of deal volume in those areas given available inventory.On the flip side,the Midwest and Mid-A

25、tlantic have the highest number of banks over that asset threshold.Given that the Midwest annually has had the highest deal volume over the past several years,it would appear that this market still remains fairly fragmented.Additionally,despite having a relatively large numbers of banks over$1 billi

26、on,the Mid-Atlantic region for the past several years has lagged in deal volume as a percentage of banks of size(more than$1 billion),potentially indicating opportunities for dealmaking in the coming months and years in this region.As of December 31,the regions combined recorded price/tangible book

27、value(P/TBV)of 156%was an increase of 14%year over year from the 136%recorded in 2020(figure 2).Since 2017,P/TBV multiples have stabilized in a much tighter band than the prior five years as value becomes clearer.Price-to-earnings has been a more volatile measure,given the impact of accounting chang

28、es on GAAP earnings during this period(e.g.,CECL,leasing,revenue recognition).Market P/TBV has remained fairly stable for the industry since 2018,increasing moderately in 2019 and returning to 2018 levels in 2020 despite the impact of the pandemic.Stable stock valuations help dealmaking as base line

29、s become clearer and less market timing of deals occurs.For the sixth consecutive year,the vast majority of 2021 banking M&A transactions occurred at the small-bank level,with most acquisition targets holding$500 million or less in assets(figure 3).However,deal volume also increased in the larger as

30、set classes:$500 million to$1 billion,$1 billion to$10 billion,and more than$10 billion.7 2022 banking and capital markets M&A outlook|Firing on all cylinders#of transactions020025015010050201620172018201920204183619541240914202112401292332293118823422194422816191$10B assets25Figure 3.Banking transa

31、ctions by asset sizeSource:SNL Financial and S&P Global Market IntelligenceWhat we expect to see in 2022Capabilities plays and restructuring for digital transformation.Overall competitiveness and positioning in B&CM spiked in 2021,with both defensive and offensive M&A tactics on the rise.According t

32、o Deloitte 2021 M&A Survey respondents,a top-priority B&CM defensive tactic for the year was acquiring capabilities,while top offensive tactics included capitalizing on disruptive opportunities and accelerating digital transformation.Since the pandemic began,banks have led financial services and oth

33、er industries in instances of restructuring.Survey results show that 72%of banks undertook restructuring initiatives since the pandemic began,and almost all of B&CM intends to at least consider it in the near termwhich could be a trigger for subsequent M&A.Respondents primary reason for B&CM restruc

34、turing has not been cost-cutting;rather,it has been for digital transformation purposes.This aligns with the strengths of digital that B&CM has capitalized on over the past two years.In addition to addressing changing consumer preferences in how to conduct business,B&CM organizations are considering

35、 how digital transformation can support the M&A process itself.Pre-and post-close transaction planning and execution over the next year is projected to be substantially more virtual in B&CM,including integration.Relative to the rest of financial services or other industries,banking has found it easi

36、er to execute integration virtually.Continued development of suitable merger partners at the regional level.One of the biggest headwinds in the banking M&A market at the regional level tends to be the dearth of suitable “in-market”merger partners to drive sufficient synergies to justify the purchase

37、 price premium.Over the past eight quarters,13 banks with more than$10 billion in assets have been sold and removed from the candidate pool.8 However,on the plus side,the corresponding period has seen an uptick in the number of total banks with more than$10 billion in assets.9 Continuation of this t

38、rend will drive future deal volume.Additionally,as large regional banks push the$100 billion asset threshold,they will be motivated to find relevant acquisitions to provide them the necessary scale to tackle the increased supervisory,governance and controls,capital planning and stressing,liquidity,a

39、nd overall reporting requirements.Stalled loan growth,soaring deposits complicate net interest margin improvements and mergers.Loan growth in the industry over the past eight quarters has been just 5.8%.Probing a bit deeper,consumer lending is up 2.4%during this period,real estate lending has grown

40、4.9%,and C&I lending is up only 1.2%.10 The primary source of loan growth in the banking industry during this period has been lending to non-depository financial institutions.When you layer on the fact that during that same period domestic deposits have grown more than 35%,its not surprising that ca

41、sh holdings at banks have also risen more than 12%,held-to-maturity securities are up more than 82%,and available-for-sales securities are also up more than 39%.11 The downward shift in net interest margins from 2019 to 2021 makes it challenging for banks to achieve the types of returns their stakeh

42、olders expect and to determine what is included in planning documents to regulators.Margins at this level put pressure on management teams and boards and heighten the likelihood of leveraging an M&A partnership to improve the financial future of the enterprise.Franchises with a differentiated lendin

43、g pipeline and product offering clearly have a valuation advantage in a market hungry for loan origination,especially with a glut of deposit dollars flooding the market.62022 banking and capital markets M&A outlook|Firing on all cylinders7Investment management and wealth management2021 reviewThe IM

44、and WM space saw more M&A activity in 2021 than it has in several years,with a trend of strategically targeted acquisitions for value creation versus straightforward mergers.IM and WM deal volume,as of December 31,increased 50%YoY316 deals versus 210 in 2020.Volume again skewed heavily to asset mana

45、gement(AM)and WM(280)versus broker-dealer transactions(36).Compared with 2020s megadeals,which included Morgan Stanleys acquisition of E-Trade and Eaton Vance and Franklin Templetons acquisition of Legg Mason,few of 2021s announced IM/WM transactions would be described as transformative;many were sm

46、aller,accretive acquisitions by firms seeking greater scale in current markets or expanding into areas offering higher returns.This focus is reflected in 2021 average deal value,which fell from 2020s record-setting high of$1.08 billion to a more modest$536 million(figure 4).Top 2021 IM/WM transactio

47、ns by deal valueTargetBuyerAnnouncement dateValue($M)AUM($M)Oak Hill Advisors,L.P.T.Rowe Price Group,Inc.October 28,2021$4,218$52,814 Wells Fargo Asset ManagementInvestor groupFebruary 23,2021$2,100$603,000 Exeter Property Group,LLCEQT AB(publ)January 26,2021$1,956$5,640 Lexington Partners L.P.Frank

48、lin Resources,Inc.November 1,2021$1,750 NA Oak Street Real Estate Capital,LLCBlue Owl Capital Inc.October 18,2021$1,600 NA Figure 4.IM/WM M&A metricsIM and securities M&A metricsIM and securities M&A volume02003003501002016201720182019202020216676595338172192162181144#of transactions35280Note:Averag

49、e deal size is based on disclosed deal values:77%,85%,79%,80%,84%,and 90%of reported deals did not disclose deal values for FY16,FY17,FY18,FY19,FY20,and FY21,respectively.Sources:SNL Financial and S&P Global Market Intelligence2022 banking and capital markets M&A outlook|Firing on all cylinders8Of t

50、he years largest announced IM/WM transactions,only two exceeded$2 billion:Asset Management(AM)firm T.Rowe Price acquired fund manager Oak Hill Advisors in a$4.2 billion deal,expanding into the alternative investments market,12 and private equity(PE)firms GTCR and Reverence Capital acquired Wells Far