Merger and Acquisition Trends for 2012 – Banking

Many thought 2011 would be a banner year for bank mergers and acquisitions. TARP obligations; SoX requirements; Dodd-Frank regulations; and other lingering governing compliance issues on the horizon – time was ripe for both frustrated operators to run for the exit and those with deep-pockets pick and choose from distressed targets with niche segments, both regional and product/customer focus, that would further expand the existing portfolio of services. But as we know, industry M&A activity fell well short of expectations in 2011. Or did it?

If you include deals that involve partial stakes (for specific assets or operational segments) in addition to whole-bank mergers, according to Dealogic’s year-end scorecard for 2011 which documented 234 total deals for aggregate value of $22.7BN. That compares very favorably to 176 deals valued at $12BN total in 2010.

So what’s in store for 2012? Such is a prediction few experts will hang their reputations on these days, given prevalent economic uncertainties and banks (every other institutions for that matter) vowing to approach growth and expansion opportunities with caution and conservatism. One thing for sure – with recent Fed Chairman’s comment re: the US economy not being out of the woods yet and every region of the world re-stating GDP growth downward, we can only hope for gradual recovery of M&A activities in the sector in 2012.

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About Richard Lee
Experienced finance and operations professional. Currently partner in five companies, adjunct professor of economics at Columbia College and executive contributor to a small business blog (www.SMBmatters.com); following corporate finance, M&A and management consulting tenures with Orbitz and Diamond Technology Partners; and six years of service with the United States Army.

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