Coronavirus takes toll on bank M&A
Bank consolidation was chugging along until the coronavirus outbreak took hold.
Despite growing concerns about an economic slowdown, banks announced 257 deals in 2019, making it one of the busiest years for M&A since the financial crisis. The new year also showed promise, with 17 merger agreements reached in January.
Growing concerns about COVID-19 began to cut into activity the next month; deals have been few and far between ever since.
The number of deals announced in 2020, through June 28, fell 70% from a year earlier, with 40 transactions, according to data from Keefe, Bruyette & Woods and S&P Global Market Intelligence. Four of those deals have since been terminated.
“As in most areas of life, change has come with a vengeance to the bank M&A environment,” Christopher Olsen, a partner at the investment bank Olsen Palmer, wrote in a note to clients.
Industry experts, by and large, expect sluggish M&A to be the norm as long as the pandemic outbreak has everyone distracted on day-to-day operations.
The global pandemic is influencing more than just the pace of merger activity.
Banks participating in large deals have added coronavirus as a risk factor that could determine when — or if — they complete mergers. Some shareholder votes have been delayed, or moved to virtual formats.
Here’s a look at how coronavirus is altering M&A planning and what to expect over the rest of this year.