Financial Institutions Group
Financial Institutions Group
Financial Institutions GroupM&A Industry Insights
Winter 2024

Executive Summary
Executive Summary
Executive Summary
Executive Summary
Executive Summary

North America was the most active
region, with ~1,580 financial institution
transactions observed in the last 12
months (LTM).
As financial institutions are becoming
more adept at coping withmacroeconomic uncertainty, the outlook
and sentiment for financial services M&A
is expected to improve in 2024.
Stocks of European financial firms havedeveloped in line with STOXX Europe
600, while U.S. financials have struggled
to keep up with the performance of the
S&P 500, which was heavily skewed by
the performance of the “Magnificent 7.”
The number of announced financial
institution transactions declined by 24%
in 2023 compared to 2022.
2

Executive Summary
Overview

In this edition of the FIG update from Kroll, we evaluate current market trends, prevailing investor sentiment andvaluation developments in the featured subsectors.
Our top insights are detailed below:• The North American region has seen the largest number of financial institution transactions in the LTM, while
Europe witnessed the highest multiples paid for its transactions.

• The M&A market appears to be stabilizing as deal activity shows signs of picking up. The financial services
industry presents dealmakers with numerous opportunities to carry out their strategic objectives through
M&A.
• The global financial institutions market is expected to grow from USD 12.5 trillion in 2021 to USD 21.9 trillion
by 2030, at a compound annual growth rate of 6%. The banking sector and the insurance sector are expected
to be valued at USD 11.7 trillion and USD 10.2 trillion, respectively, by 2030.
Despite strong economic headwinds, the financial industry is regaining confidence regarding business
opportunities for the first half of 2024. Read more in our report, and contact Kroll to learn how we help ourclients stay ahead.

3

Economic Environment
Key Market Indicators
Monthly Interest Rate (%) Development per Central Bank

Unemployment Rate (%) by Highlighted Region

6,0
14,0

5,0

12,0

4,0

10,0

3,0

8,0

2,0

6,0

1,0

4,0

0,0

2,0

-1,0

0,0

Australia

Canada

1
ECB

Japan

Switzerland

UK

USA1

Australia

CanadaGermanyJapan

Switzerland

UK

USA

Volatility Index

Foreign Currency Exchange Rate2

60,0

2,0

160

1,8

140

1,6

120

50,0

1,4

40,0

100

1,2

30,0

80

1,0

60

0,8

20,0
10,0
0,0

Close Price

0,6

40

0,4

20

0,2

-

USD/AUD

USD/CAD

USD/EUR

USD/CHF

USD/GBP

USD/JPY

Sources: Central bank websites, government websites, Capital IQ
1 Considered fixed rate tender for ECB and Federal Fund Rate for USA 2USD/JPY plotted on secondary axis

4

Stock Market Overview
In Europe, financial institutions have outperformed the broader stock market. In the U.S., the performance was below the
S&P 500, which was heavily skewed by the performance of the “Magnificent 7.”*
Europe: STOXX 600

U.S.: S&P 500

210%

210%

190%

190%

170%

170%

150%

150%

130%

130%

110%

110%

90%

90%

70%

70%

50%
Jan-18

Jul-18Jan-19Jul-19Jan-20Jul-20STOXX 600 Europe

Jan-21

Jul-21

Jan-22

Jul-22

Jan-23STOXX 600 Europe Financials

Jul-23Jan-2450%
Jan-18

Jul-18Jan-19Jul-19Jan-20

S&P 500

Jul-20Jan-21

Jul-21

Jan-22

Jul-22

Jan-23

Jul-23Jan-24

S&P 500 Financials* Apple, Nvidia, Alphabet, Meta, Amazon, Tesla, Microsoft
Source: Capital IQ as of January 24, 2024

5

Financial Institutions Market Overview
Financial Institutions Represent a USD 22 Trillion Revenue1 Market Globally
Market Size

Commentary+6% CAGR$21.9 trillion$10,2T$12.5 trillion

Insurance

Banking▪ This expected market growth factors in the widespread digitization efforts
of banks and other financial institutions, as well as steep increases incommercial lending activities in the market.

$5,7T$11,7T

$6,8T

2021

▪ Future growth will also be fueled by rising urbanization, increased demand
for alternative investments, high-net-worth individual wealth, demand forblockchain technology to reduce fraudulent transactions, homeownershipand mortgages, and rising investments.

2030

Market by Segment

2%
2%

2% 1%

▪ However, data localization and growing interest rates are two factors that
may limit the expansion of the financial services market in the future.

4%
29%

9%

▪ The global financial industry consists of the following segments: diversifiedbanks, regional banks, fintechs, capital markets, financial services, property
and casualty insurance, life and health insurance, reinsurance, consumer
finance, and others.*

12%

16%

Diversified BanksP&C Insurance
Consumer Finance

Life & Health Insurance
Regional Banks
Others*▪ The global financial institutions market is expected to grow in revenue, from
USD 12.5 trillion in 2021 to USD 21.9 trillion by 2030, at a compound
annual growth rate (CAGR) of 6%. The banking sector and the insurance
sector are expected to be valued at USD 11.7 trillion and USD 10.2 trillion,
respectively, by 2030.

22%

Capital Markets
Reinsurance

Financial Services
Fintechs

Sources: Boston Consulting Group, Capital IQ, Growth Market Reports, Research and Markets
1 Revenue definition depends on the industry (e.g., banking: net interest income, insurance: net premium earned)* Others include Insurance Brokers and REITs

6

Deal Activity
Global Hot Spots for Financial Institutions Deal Activity
M&A Heat Map by Region and Deal Count (Jan ’23-Jan ’24)

Commentary▪ North America saw the highest financial services deal count, at ~1,580 in
the LTM, with U.S. being the most active geography, with ~1,400 inbounddeals.
▪ European and APAC dealmakers have been more reserved regarding
financial industry deal activities, which may be the result of current levels ofvolatility in the global market environment.

▪ European transactions presented the highest average price-to-book value(P/B) multiples at 2.4x, followed by North America (2.2x) and APAC (2.1x)
in the LTM.
▪ The global M&A activities in the realm of financial institutions predominantly
consisted of asset and wealth management, as well as banking and capital
markets transactions.

Avg. Multiples (P/B) by Highlighted Region
RegionQ1-2023

Q2-2023

Q3-2023

Q4-2023

Q1-20241

North America

2.38x

2.57x

2.69x

0.92x

0.55x

Europe

1.85x

2.06x

4.13x

3.28x

0.56x

Asia Pacific

1.41x

2.12x

2.39x

2.25x

0.93x

▪ M&A is and will remain a key factor in the transformation of the financial
industry, as incumbents search for strategic alliances and merger
opportunities to advance their digital capabilities, fend off competition from
more agile and digitized platforms and fintech firms, and cope withmounting regulatory pressure.
▪ M&A in the financial institutions market is likely to exhibit an uptick in
activity in the coming months due to potential stability in rates, the need toconsolidate businesses to tackle competition and the significant capital
private equity firms have held for deal activities.

Sources: Capital IQ, Deloitte, PwC, KPMG
1 Until January 24, 2024

7

Capital Markets

P&C

Reinsurance

Financial Services

Brokers

Life and HealthDiversified Banks

Consumer FinanceRegional Banks

Banks

REITs

Fintechs

Ecosystem

Kroll FIG-Tracked Universe
Financial services
Insurance8

M&A Market Overview

M&A Market Overview
Global M&A Activity in the Financial Institutions Sector(in EUR billion)
657,0

700,0

1.047

600,0

871
500,0

941

957
841

834

1300

894

825

808

1100

777

710
400,0

300,7

295,0

317,8

316,3

900

593

700

300,0

200,0

500

155,8

194,9

177,2

217,5

218,7

200,3

300

135,9
31

100,0

100

35,4
0,0

-100

2012

2013

2014

2015

2016

2017

2018

Deal Value
Notable transactions in 2023 include Liaoning AssetManagement’s acquisition of Shengjing Bank (€22.9bn), VinFast Auto’s acquisition of Black Spade (€21.2bn) and Aon’s acquisition of NFP Corp. (€12.4 bn).

2019

2020

2021

2022

2023

2024YTD

Deal Count

Acquisitions by strategic buyers have been thefavored way of sale for financial institutions over the
past years.

Large corporations are seeking to strengthen
their position in the market and expand
offerings in the financial institution space.

Source: Capital IQ as of January 24, 2024
Note: Deals with undisclosed transaction values are excluded; includes deals with majority stake only

10

M&A Market Overview
Global Financing in the Financial Institutions sectors
Global Financing Activity (EUR bn)1

Financing by Round1,2(2018–2024YTD, based on capital invested)
3.372

165,9

1.681

1.628

1.812

1.969

166,9

166,1

158,4

159,8

2.021
122,7

135,9
2.134

13%

2.531
2.159

2.089

1%

25%

VentureSeed
Growth

2.370

113,9

112,7

Series A

1.833
9%
35%

6%

89,9
79,1

5%

70,5

Series B
Series C
Series D and beyond

3%

Debt
3%

PIPE

86

2,5
2012

2013

2014

2015

2016

2017

2018

Capital Invested

2019

2020

2021

2022

2023

2024YTD

Deal Count

Source: Capital IQ as of January 24, 2024
1 Deals with undisclosed transaction values are excluded
2 Seed includes accelerator, angel, bridge, crowdfunding, pre-seed, Pre-Series A and Pre-Series B

11

M&A Market Overview
Top Active Financial Institutions Investors During Last 12 Months
Financial Investor
Name# of Inv.

Strategic Investors

Selected Investments

Name# of Inv.

18

44

15

36

14

34

11

29

11

23
Prime Auto loans

10

Selected Investments

BNPL loans

18

Source: Capital IQ
Note: Last 12 months to January 2024; Includes only the investments done by the parent company

12

M&A Market Overview
DACH Financial Institutions Funding by Value and # of Rounds
DACH Funding by Value (EUR million)

DACH Funding by # of Rounds

71

4.468,060
3.444,8494240

2.331,6

36

36

34

1.514,8

1.316,7
850,8

846,5
601,7

1

8,0

2016

2017

2018
Seed

2019

2020
Debt

2021

2022
Growth2023 2024YTD
PIPE

2016
Series A

Series B

2017

2018
Series C

2019

2020

2021

2022

Series D and Above2023 2024YTD
VentureSource: Capital IQ as of January 24, 2024
Note: Funding round with undisclosed transaction values are excluded; seed includes accelerator, angel, bridge, crowdfunding, pre-seed, Pre-Series A and Pre-Series B; includes transactions for which the target is headquartered in Germany, Switzerland orAustria13

M&A Market Overview
EU Financial Institutions Transactions by Value and Number
EU Transactions by Value (EURbn)

EU Transactions by Number of Deals
52,9

565
531

44,1

42,3

491

479

40,4

452

37,6

407

33,4

395
364

26,7

15,2

15

0,7
2016

2017

2018

2019

2020

2021

2022

2023

2024YTD
Acquisition

2016
Buy-out

2017

2018

2019

2020

2021

2022

2023

2024YTD

IPO

Source: Capital IQ as of January 24, 2024

14

M&A Market Overview
Recent Transactions in the Financial Institutions Market (Selection)€22,886 mn Deal

€12,420 mn Deal

€11,692 mn Deal

€9,645 mn Deal

€6,383 mn Round€3,367 mn Deal

€3,034 mn Deal

€2,450 mn Deal

€2,409 mn Deal

€2,371 mn Deal

€2,300 mn Deal

€1,827 mn Deal

€1,742 mn Deal

€2,836 mn Deal

Liaoning AssetManagement
Co., Ltd.

€2,776 mn Deal

€1,663 mn Deal
In-force individuallife insurance
business of
Security Life of Denver
Insurance Company, asubsidiary of€1,395 mn Deal

€1,382 mn Round€1,380 mn Deal
Personal
and smallcommercial
business of€1,252 mn Deal

€1,220 mn Deal

€1,215 mn Round€1,098 mn Deal

€1,012 mn Deal

Defati Investments,
Infinity Partners,
Kopvoorn B.V, andMoss Investments

Source: Capiq, Merger Market

15

Global Public Trading Analysis
Sub-Sector Summary

Global Public Trading Analysis
Sub-Sector Focus: BanksMultiples of P/B

Multiples of P/BMedian: 0.9x
0,9x

0,9x

Multiples of EV/Revenue

Median: 1.2x

0,9x

1,3x

8,2x

1,4x

Median: 5.8x

1,1x
5,8x

5,7x

1,0x

0,7x

4,3x

Diversified Banks
2020

2021

2022

Regional Banks
2023E

2020
2020

2021
2021

2022
2022

Fintechs
2023E Median
2023E

2020

2021

2022

2023E

Source: Refinitiv, Capital IQ as of January 24, 2024

17

Global Public Trading Analysis
Sub-Sector Focus: Financial Services
Multiples of EV/Revenue
Median: 1.9x

Multiples of P/E

Multiples of EV/Revenue

Median: 14.0x
3,1x

16,7x

Median: 3.2x

Multiples of EV/EBITDAMedian: 21.9x

16,6x
22,7x

2,1x
1,7x

3,2x

11,4x

3,4x

3,3x

24,1x

21,1x
20,7x

2,8x

1,7x

8,5x

Financial Services

Consumer Finance
2020

Capital Markets
2021

2022

2023E

REITs

MedianSource: Refinitiv, Capital IQ as of January 24, 2024

18

Global Public Trading Analysis
Sub-Sector Focus: Insurance
Multiples of EV/EBITDA

Multiples of P/GWP

Multiples of P/GWPMedian: 1.1x

Median: 1.0x

Median: 16.8x
17,6x

1,2x

18,5x
16,0x

15,1x

1,1x

1,1x 1,1x

1,1xMultiples of P/EMedian: 12.7x
17,4x

15,4x

1,0x 1,0x

1,0x

9,8x

Brokers

Life & Health2020

Property & Casualty
2021

2022

2023E

10,0x

Reinsurance

MedianSource: Refinitiv, Capital IQ as of January 24, 2024

19

For more information, please contact:
Financial Institutions Group (FIG) sector specialists:

Global Corporate Finance leadership:

Alexander Weiterer, CFA, MunichDavid Liu, Hong Kong

Bob Bartell, CFA, Chicago

Managing Director,
M&A and Transaction Advisory Services+49 (0) 89 388 884 005
alexander.weiterer@kroll.com

Managing Director, APAC
+852 2884 7707
david.liu@kroll.com

President of Corporate Finance+1 773 255 7675
bob.bartell@kroll.com

Jonathan Jacobs, New York

Joanna Bartecki, Frankfurt

Andreas Stoecklin, Frankfurt

Managing Director,
Valuation Advisory Services+1 212 871 8013
jonathan.jacobs@kroll.com

Director,
M&A and Transaction Advisory Services+49 (0) 69 247 526 732
joanna.bartecki@kroll.com

Head of EMEA Corporate Finance,
M&A+ 49 (0) 69 719 184 0
andreas.stoecklin@kroll.com

Rebecca Nelson, ASA, CFA, Chicago
Managing Director,
Valuation Advisory Services+1 312 697 4731
rebecca.nelson@kroll.com
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