The U.S. banking industry has largely sat out the impressive surge in mergers and acquisitions activity of the last few years. Total deal volume hit a record US$2.3 trillion in 2015 — up 64 percent over 2014. But banks accounted for just 3 percent of the total value, despite the fact that they account for 9.3 percent of total market capitalization. That’s about to change: We believe the pace of M&A in U.S. banking will accelerate sharply in 2016.
The market structure of U.S. banking is obsolete, and the industry’s profitability has been weak for nearly a decade. Regulatory and competitive pressures are making it hard for most banks to grow revenues and profits.
