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

Executive Summary
Executive Summary
Executive Summary
Executive Summary
Executive Summary

North America was the most active
region, with about 1,600 financial
institution transactions observed in thelast 12 months (LTM).

As financial institutions become more
adept at coping with macroeconomic
uncertainty, the outlook and sentiment for
financial services M&A are expected to
improve in 2024.
Stocks of European financial firms have
moved in line with STOXX Europe 600,
while U.S. financials have struggled tokeep up with the performance of the S&P
500, which was heavily influenced by theperformance of the mega-cap tech stocks.
The deal value recorded in the year todate (YTD) increased by 39% in 2024
compared to the same period last year.
2

Executive SummaryOverview

In this edition of the Financial Institutions Group (FIG) update from Kroll, we evaluate current market trends,
prevailing investor sentiment and valuation 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
APAC witnessed the highest multiples paid for its transactions.
• M&A deal activity expectations are likely to be high—driven by technological innovations, rising consumer
expectations and stabilizing macroeconomic and geopolitical volatility.
• The global financial institutions market is expected to grow in revenue, from USD 25.5 trillion in 2022 to USD
58.7 trillion by 2031, at a compound annual growth rate (CAGR) of 9.7%.
Despite strong economic headwinds, the financial industry is regaining confidence regarding business
opportunities, as central banks will be fine-tuning their monetary policy through 2024. Read more in our reportand contact Kroll to learn how we help our clients stay ahead.

3Economic Environment
Central Banks Beginning to Lower Fund Rates
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

Canada1ECBJapan

Switzerland

UKUSA1

Australia

CanadaGermanyJapan

Switzerland

UKUSA

Volatility IndexForeign Currency Exchange Rate2

60.0

2.0

180

1.8

160

1.6

140

1.4

120

1.2

100

1.080

50.0
40.0
30.0
20.0
10.00.0

Close Price

0.8

600.6

400.4

200.2

-

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 Funds Rate for USA; 2 USD/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, as the market remains heavily skewed to the mega-cap tech stocks.
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%

50%

STOXX 600 Europe

STOXX 600 Europe Financials

S&P 500

S&P 500 Financials

Source: Capital IQ as of May 31, 2024

5

Financial Institutions Market Overview
Financial Institutions Represent ~USD 60 trillion Revenue1 Market GloballyMarket Size

Commentary+9.7% CAGR▪

The global financial institutions market is expected to grow in revenue,
from USD 25.5 trillion in 2022 to USD 58.7 trillion by 2031, a CAGR of9.7%.

▪

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

▪

Future growth in the financial institution market will be fueled bystrategic partnerships, open banking and application programming
interface (API) integration, a rise in use of generative artificial intelligence(AI) technology and innovation in product offerings.

▪

The start of monetary policy easing may lessen the pressure on themargins of the financial services market in the future.

▪

The global financial industry consists of the following segments:
diversified banks, regional banks, fintechs, capital markets, financial
services, property and casualty (P&C) insurance, life and healthinsurance, reinsurance, consumer finance and others.*$58.7 trillion$25.5 trillion

2022

2031

Market by Segment
2%
3%

2% 1%

3%
9%

30%

13%

14%

Diversified BanksP&C Insurance
Consumer Finance

Life & Health Insurance
Regional BanksOthers*

23%

Capital MarketsReinsurance

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 (May ’23–May ’24)

▪ North America saw the highest financial services deal count, at ~1,600 in
the LTM, with the U.S. being the most active geography, with 1,422
inbound deals.

1,422▪ APAC transactions presented the highest average price-to-book value(P/B) multiples at 2.7x, followed by Europe (2.4x) and North America (1.9x)
in the LTM.
▪ Global M&A activities in the realm of financial institutions consisted ofbanking and capital markets, insurance, fintech, and asset and wealthmanagement transactions.

1▪ M&A is and will remain a key factor in the transformation of the financial
industry as expected interest rate cuts occur, sellers recalibrate their
expectations and buyers gain more confidence.

Average Multiples (P/B) by Highlighted RegionRegion

North America

Commentary

Q2 2023

Q3 2023

Q4 2023

Q1 2024

Q2 20241

2.57x

2.69x

0.92x

1.19x

1.30x

Europe

2.06x

4.13x

3.28x

1.34x

0.78x

Asia Pacific

2.12x

2.39x

2.25x

2.34x

5.09x2

Sources: Capital IQ, Deloitte, PwC, KPMG
1 Until May 31, 2024; 2 Skewed by the acquisition of Union Mobile Pay E-Commerce by Tianjin Tongrong E-Commerce andQuesqu by Adventure Inc.

▪ In the banking industry, banks may capitalize on emerging stressedsituations to acquire valuable technology assets.
▪ The asset and wealth management segment is expected to expand into
private markets and other alternative investments as companies seek
digital capabilities to serve newly emerging client segments.
▪ In the insurance segment, deal-making activity will be focused onenhancing core insurance capabilities and partnerships for services that go
beyond the traditional insurance value chain.
▪ In the fintech segment, deal activity might increase as companies look to
expand in previously untapped markets due to a surge in global demand
for modern digital payment options.
7Capital Markets

P&CReinsurance

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 Financial Institutions Sector(in EUR billion)

657.0

700.0

1,047

600.0

871
500.0

941

957

894

841

834

1300

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

220

135.9

300

126.9

100.0

100

0.0-100

2012

2013

2014

2015

2016

20172018

Deal Value
Notable transactions include Capital One’s acquisitionof Discover Financial (€32.7 bn), Liaoning AssetManagement’s acquisition of Shengjing Bank (€22.9bn) and Guolian Securities’ acquisition of Minsheng
Securities (€15.8 bn).

2019

2020

2021

2022

2023

2024YTD

Deal Count

Dealmaking slowed in 2023 for financial institutions
amid macroeconomic concerns. The market iscautiously optimistic for 2024 on the back ofpotential rate cuts and the strategic need forcompanies to adapt and transform business models.

M&A activity in the space could rebound in 2024 ascompanies act on opportunities to purchase assets,such as fintech businesses, to build new capabilities.

Source: Capital IQ as of May 31, 2024
Note: Deals with undisclosed transaction values are excluded; includes deals with majority stake only

10

M&A Market Overview
Global Financing in Financial Institutions Sector
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%

26%Venture
SeedGrowth

2,370

113.9

112.7

Series A

1,833
9%

Series B
35%

89.9

6%
79.1

70.5

742

Series C
Series D and beyond

4%
3%

Debt
3%

PIPE3

39.9

2012

2013

2014

2015

2016

2017

2018

Capital Invested

2019

2020

2021

2022

2023

2024YTD

Deal Count

Source: Capital IQ as of May 31, 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
3 PIPE = Private investment in public equity

11M&A Market Overview
Top Active Financial Institution Investors during LTM
Financial Investors
Name# of Inv.

Strategic Investors

Selected Investments

121110Name# of Inv.

Selected Investments

4638

NAVRO(Paytrix)

Vehicle loans

31
Prime Auto loans

BNPL loans

826719617

Source: Capital IQ
Note: LTM to May 2024; includes only the investments made by the parent company

12

M&A Market Overview
DACH1 Financial Institutions Funding by Value and Number of Rounds
DACH Funding by Value (EUR million)

DACH Funding by Number of Rounds

4,511.271
61
3,545.0
49
43

41

38

2,335.63937

1,626.91,324.2
908.3

856.5

13

601.7
315.3

2016

2017

2018
Seed2019

2020
Debt

2021

2022
Growth2023

2024YTD

PIPE

2016
Series A

Series B2017

2018
Series C2019

2020

2021

2022

Series D and Above2023 2024YTD
VentureSource: Capital IQ as of May 31, 2024
Note: Funding rounds 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 orAustria
1 DACH = Germany (“Deutschland”), Austria, Switzerland

13M&A Market Overview
EU Financial Institution Transactions by Value and Number
EU Transactions by Value (EUR bn)

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

140

4.9

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 May 31, 2024

14

M&A Market Overview
Recent Transactions in the Financial Institutions Market (Selection)€32,797 mn Deal

€22,886 mn Deal

€15,840 mn Deal

€11,692 mn Deal

€11,646 mn Deal

€11.573 mn Deal

€11,408 mn Deal

€4,689 mn Deal

€3,196 mn Deal

€2,707 mn Deal

€2,557 mn Deal

€2,371 mn Deal

€2,300 mn Deal

€2,198 mn Deal

€1,550 mn Deal

€1,522 mn Deal

€1,500 mn Round€1,395 mn Deal

Liaoning AssetManagementCo., Ltd.

€3,531 mn Deal

€3,339 mn Deal

Portfolio of ~2k cml
multi-family Real estateloans of€1.954 mn Deal

€1,861 mn Deal

€1,809 mn Deal

€1,742 mn Deal

Lendingand others

Source: Capital IQ, Mergermarket

15

Global Public Trading Analysis
Subsector Summary

Global Public Trading Analysis
Subsector Focus: BanksMultiples of P/B

Multiples of P/BMedian: 0.95x
1.0x
0.9x

Multiples of EV/Revenue

Median: 1.2x
1.0x

0.9x

1.3x

1.4x

5.7x
5.2x
1.0x

Diversified Banks
2021

2022

2023

Median: 5.2x

1.0x

4.3x

Regional Banks
2024E

2021

2021

2022

2022

2023

2023

5.2x

Fintechs
2024E

2024E

Median

2021

2022

2023

2024E

Source: Refinitiv, Capital IQ as of May 31, 2024

17

Global Public Trading Analysis
Subsector Focus: Financial Services
Multiples of EV/Revenue
Median: 2.2x

Multiples of P/E

Multiples of EV/Revenue

Median: 12.3x

Median: 3.4x

3.7xMultiples of EV/EBITDAMedian: 20.4x
27.5x

16.3x
13.2x
11.4x

2.2x

2.1x
1.7x

Financial Services

3.5x 3.5x

3.3x
2.8x

21.0x

19.8x
18.8x

8.5x

Consumer Finance2021

Capital Markets
2022

2023

2024E

REITs

MedianSource: Refinitiv, Capital IQ as of May 31, 2024
Note: EV = Enterprise Value; P/E = Price Earnings Ratio; EBITDA = Earnings before interest, taxes, depreciation & amortization

18Global Public Trading AnalysisSubsector Focus: Insurance
Multiples of EV/EBITDA

Multiples of P/GWP

Multiples of P/GWPMedian: 1.1x

Median: 1.2x

Median: 16.8x

Median: 9.0x
17.7x

1.2x

1.2x 1.2x

1.1x 1.1x

18.1x 18.5x

Multiples of P/E

1.1x 1.1x

1.0x
15.4x
13.7x

9.7x
8.2x

Brokers

Property & Casualty

Life & Health
2021

2022

2023

2024E

7.8x

Reinsurance

MedianSource: Refinitiv, Capital IQ as of May 31, 2024
Note: P/GWP = Price to Gross Written Premiums Ratio

19

For more information, please contact:
Financial Institutions Group Sector Specialists:

Global Financial Advisory Leadership:

Jonathan Jacobs, New YorkDavid Liu, Hong KongDavid Blowers, CFA, Chicago

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

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

Co-President of Financial Advisory+1 312 697 4996
david.blowers@kroll.com

Rebecca Nelson, ASA, CFA, Chicago

Joanna Bartecki, Frankfurt

Michael H. Dolan, Esq., CFA, New YorkManaging Director,
Valuation Advisory Services+1 312 697 4731
rebecca.nelson@kroll.com

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

Co-President of Financial Advisory+ 1 212 871 5995
michael.dolan@kroll.com

Alexander Kessler, LL.M., Frankfurt

Jan Hortebusch, CFA, CAIA, Frankfurt

Andreas Stoecklin, Frankfurt

Senior Vice President, Financial Advisory+49 151 7060 9210
alexander.kessler@kroll.com

Vice President, Financial Advisory+49 151 2351 3230
jan.hortebusch@kroll.com

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

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