Merger and Acquisition Trends in European Banking

A large part of the research undertaken to evaluate the effects produced by Merger and Acquisition (M&A) transactions has been analyzed primarily within the US banking and only a small number of studies have focused on European banks. As shown in Chapter 1, after a simple search on the Amazon website, we found just 15 pieces of work having “M&A,” “Europe” and “Bank” in the book description and 16 having “Merger and Acquisition”. Recently, Goddard et al., (2007, p. 1720) state “further research is needed in order to identify the types of consolidation activity that yield the highest diversification benefits, and to identify the implications of domestic and cross-border bank mergers for systemic risk.” The need for further research in European Banking is quite surprising since there has been a large number of M&A transactions in European banking from 2000 onwards. Recent years have seen the emergence of several large cross-border institutions within the EU: in 2005, the 14 largest cross-border banking groups accounted for almost one-third of total EU bank assets (see Papademos, 2005). In 2007, the largest ever financial services M&A occurred between the Royal Bank of Scotland — leading a consortium of banks — and ABN AMRO. Over the same year, the merger between Unicredit bank and Capitalia created the world’s fifth largest bank by market capitalization.