The level of British banking deals - a bellweather for the UK economy - has plummeted by two thirds over the last year, knocked by turmoil in the eurozone.
According to research published by accountants PricewaterhouseCoopers today, a series of mergers and acquisitions in the UK banking sector broke down due to financial instability in Europe.
The value of mergers and acquisitions completed in the UK banking sector in the first quarter of 2012 fell 63pc to €3bn (£2.4bn) compared to €8bn in the same three month period last year.
Nick Page, PwC partner, said: “There is Government and regulatory pressure on the banks to achieve greater capital requirements which should lead to them deleveraging but wider Eurozone uncertainty has dampened activity levels.”
The eurozone crisis has created anxiety over what assets are really worth, making buyers fearful of over-extending. But this unexpected drop has also been compounded by problems closer to home as UK banks fear criticism if they don’t sell their assets at a high enough price.
A stalemate has developed in the UK as the Government pressures financial institutions to improve their balance sheets. But banks will only sell at the right price, scared of facing criticism from shareholders and politicians.
Successful UK deals that completed at the beginning of this year include the Royal Bank of Scotland sale of its brokerage Hoare Govett to American investment bank Jefferies.
While banking deals were scarce, sales in the insurance sector were up 67pc on quarter one of 2011, totalling a value of €13bn.
European banking M&A has dropped this year, falling 68pc to €1.9bn in the first quarter of 2012 from €5.9bn in the first quarter of 2011.
However, this year’s January to March figures were distorted by the €5.8bn Royal Bank of Scotland sale of RBS Aviation Capital to Sumitomo Mitsui.
Without this deal, the quarterly numbers would have come in at €3.9bn - the worst performing three-month period for nine years.
Volumes nose-dived 87pc from highs of €14.8bn in the third quarter of 2010 as countries that traditionally made a lot of cross-border investment in the European banking market, such as France and Germany, have reigned their banks in from over-extending ensuring that they prioritise serving domestic markets.
Mr Page explained that Ireland is an accelerated version of this as the Government forces the banks to shrink their diverse, overseas investments.
telegraph.co.uk
According to research published by accountants PricewaterhouseCoopers today, a series of mergers and acquisitions in the UK banking sector broke down due to financial instability in Europe.
The value of mergers and acquisitions completed in the UK banking sector in the first quarter of 2012 fell 63pc to €3bn (£2.4bn) compared to €8bn in the same three month period last year.
Nick Page, PwC partner, said: “There is Government and regulatory pressure on the banks to achieve greater capital requirements which should lead to them deleveraging but wider Eurozone uncertainty has dampened activity levels.”
The eurozone crisis has created anxiety over what assets are really worth, making buyers fearful of over-extending. But this unexpected drop has also been compounded by problems closer to home as UK banks fear criticism if they don’t sell their assets at a high enough price.
A stalemate has developed in the UK as the Government pressures financial institutions to improve their balance sheets. But banks will only sell at the right price, scared of facing criticism from shareholders and politicians.
Successful UK deals that completed at the beginning of this year include the Royal Bank of Scotland sale of its brokerage Hoare Govett to American investment bank Jefferies.
While banking deals were scarce, sales in the insurance sector were up 67pc on quarter one of 2011, totalling a value of €13bn.
European banking M&A has dropped this year, falling 68pc to €1.9bn in the first quarter of 2012 from €5.9bn in the first quarter of 2011.
However, this year’s January to March figures were distorted by the €5.8bn Royal Bank of Scotland sale of RBS Aviation Capital to Sumitomo Mitsui.
Without this deal, the quarterly numbers would have come in at €3.9bn - the worst performing three-month period for nine years.
Volumes nose-dived 87pc from highs of €14.8bn in the third quarter of 2010 as countries that traditionally made a lot of cross-border investment in the European banking market, such as France and Germany, have reigned their banks in from over-extending ensuring that they prioritise serving domestic markets.
Mr Page explained that Ireland is an accelerated version of this as the Government forces the banks to shrink their diverse, overseas investments.
telegraph.co.uk
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