Business Insight


MERGERS AND ACQUISITIONS IN EUROPEAN FINANCIAL SERVICES
Best practice, future forecasts and strategies for success

欧洲金融服务机构并购报告：最佳实践，趋势预测及成功策略

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Table of Contents
Mergers and Acquisitions in European Financial
Services
Best practice, future forecasts and strategies for
success
Executive Summary 8
Analysis of M&A in Europe 8
Statistical overview of M&A 9
M&A best-practice case studies 10
Conclusions and recommendations 11
Chapter 1 Introduction 14
Introduction 14
Report structure 14
Analysis of M&A in Europe 14
Statistical overview of M&A 15
M&A case studies 15
Conclusions and future outlook 15
Definitions 15
Chapter 2 Analysis of M&A in Europe 18
Summary 18
Introduction 19
Mergers and acquisitions in the financial sector 19
Stock market performance – an important element of the M&A activity 19
Lessons learned from 2002 and the subsequent struggling financial sector 22
Main characteristic of European M&A in financial services 24
Primary motives and rationale for M&A 24
Improve efficiency and profitability 24
TLFeBOOK
iv
Expand product offering and client base 25
Expand into other geographical locations 25
Maximise shareholder value 25
Major motives and possible rationalisations for the four types of
M&A 27
Reasons for M&A failure - the case of overconfidence and lack of expertise 28
Achieving successful M&A – get to know your business 30
The risk involved in M&A 31
Strategies, opportunities and threats in today’s M&A and the role of the
United States 33
The main issues surrounding M&A: searching for new customers in
overcrowded markets 35
Chapter 3 Statistical Overview of M&A 40
Summary 40
Introduction 40
European statistical overview 41
Number of M&A in Europe 41
An overview of 2003 to 2004 - recent developments 46
Market overview: Germany 47
The controversial German Sparkassen debate 49
Market overview: Spain 51
Top 10 Spanish banks by total assets 54
Market overview: United Kingdom 54
Top 10 UK by total assets 55
Market overview: France 55
Top 10 French banks by total assets 56
Market overview: Italy 56
Top 10 Italian banks by total assets 57
Conclusions 57
Chapter 4 M&A Best-Practice Case Studies 60
Summary 60
Introduction 60
M&A within banking industry and domestic 62
Credit Lyonnais and Credit Agricole, 2003 62
SWOT analysis 64
Halifax and Bank of Scotland, 2001 64
Strategies behind HBOS’ success 66
SWOT analysis 67
RBS and National Westminster Bank, 2000 68
TLFeBOOK
v
Why did Royal Bank of Scotland decide to maintain the NatWest
brand? 69
Main financial ratios for RBS and NatWest 70
SWOT analysis 71
Other interesting M&A deals 72
Banco Santander and Banco Central Hispanoamericano, 1999 72
BNP and Paribas, 1999 72
Banking industry and cross-border mergers and acquisitions 73
Banco Santander and Abbey, 2004 to 2005 73
Benefits of the merger 74
Primary financial ratios for Abbey and Banco Santander 76
SWOT analysis 76
Egg and Zebank, 2002 77
Other deals 79
Hypovereinsbank and Bank Austria, 2000 79
SWOT analysis 79
Nordea Group, 2000 80
SWOT analysis 81
Deutsche Bank and Bankers Trust, 1998 81
Cross-industry domestic M&A 82
Allianz and Dresdner Bank, 2001 82
Financial ratios for Dresdner Bank and Allianz 84
SWOT analysis 85
Other deals 85
Citibank and Travellers Group, 1998 85
Credit Suisse and Winterthur, 1997 86
Cross-industry and cross-border M&A 86
Fortis – a complex merger and acquisition history 86
Dresdner Bank and Kleinwort Benson, 1995 87
Chapter 5 Conclusions, Future Outlook and
Actionable Recommendations 90
Summary 90
Introduction 91
Conclusions and implications 91
Knowing the industry the company is operating in 92
Consolidation does not always mean success and profitability 92
Will we witness a new wave of M&A, both domestic and cross-border? 92
Who wants M&A? 94
Who will merge and acquire in the near future? 95
Room for potential M&A in Europe 96
Potential strategic alliances in Europe 97
Recommendations 97
Get to know the target market and the industry – local knowledge is the key 98
Estimate the costs of acquisition and strategic risks as accurately as possible 99
TLFeBOOK
vi
Exploit the potential of the business 100
Brand awareness 100
Define the strategic goals 101
Chapter 6 Appendix 104
Index 104
List of Figures
Figure 1.1: FTSE 100 and NASDAQ index compared with M&A activity, 1997-2003 9
Figure 2.2: Stock market indices in major stock markets in Europe, 2000-2004 19
Figure 2.3: Equity performance in selected world markets, 2003 20
Figure 2.4: Relative sizes of world stock markets, December 31, 2003 21
Figure 2.5: FTSE 100 and NASDAQ index compared with M&A activity, 1997-2003 22
Figure 2.6: Major motives and possible rationalisations for the four types of M&A 27
Figure 2.7: M&A: evolving financial services 34
Figure 5.8: Potential strategic alliances in Europe 97
List of Tables
Table 2.1: Leading U.S. bank M&A deals 33
Table 3.2: Mergers and acquisitions in the financial sector, 1990-2001 42
Table 3.3: Number of total bank M&A, domestic and international 43
Table 3.4: Number of total bank M&A, domestic and international 44
Table 3.5: Number of credit institutions 45
Table 3.6: Share of the five largest credit institutions in total assets 45
Table 3.7: Top 10 German banks by total assets, 2003 51
Table 3.8: Top 10 Spanish banks by total assets, 2003, in mln Euro 54
Table 3.9: Top 10 UK by total assets, 2003 55
Table 3.10: Top 10 French banks by total assets, 2003 56
Table 3.11: Top 10 Italian banks by total assets, 2003, in mln Euro 57
Table 4.12: Major financial ratios for Credit Lyonnais and Credit Agricole 63
Table 4.13: Financial ratios for HBOS, Halifax and Bank of Scotland 66
Table 4.14: Main financial ratios for RBS and NatWest 70
Table 4.15: Primary financial ratios for Abbey and Banco Santander 76
Table 4.16: Financial ratios for Dresdner Bank and Allianz 84