Goldman Sachs overtakes JPMorgan as top bank M&A adviser
Goldman Sachs has unseated rival JPMorgan Chase to become the lead adviser in the financial services sector, according to new research.
The U.S. investment bank climbed four places in the league tables compiled by GlobalData, which tracks M&A, private equity, venture capital and asset transaction activity around the world. It advised on 48 deals worth $188.8 billion, up from 36 deals worth $58.3 billion.
Goldman GS, +0.75% was involved in five out of six of the megadeals struck last year, including advising SunTrust on its $28 billion all-stock merger with BB&T in February to create the nation’s sixth-largest retail bank Truist Financial TFC, -0.39% with more than $440 billion in assets.
Morgan Stanley MS, +0.29% and JPMorgan JPM, -1.00% came in second and third positions, advising on deals worth $143.8 billion and $112.3 billion, respectively, according to GlobalData.
There were six deals in the sector with a value of more than $10 billion last year, and 70 deals with a value of more than $1 billion, boosting total deal value by 10% compared with the same period a year earlier.
Analysts and bankers are predicting more banking mergers among U.S. midsize regional banks this year, as they look to streamline their operations and cut costs to better compete with their larger national rivals.
McKinsey said in a research note in November, that while consolidation has already reduced the number of U.S. banks from roughly 15,000 in 1985 to about 5,000 today, many industry executives and experts expect the consolidation trend to continue.
“Our research shows that more than 60 U.S. banks with assets of $10 billion to $25 billion might be attractive acquisition targets for well-positioned regional banks—for example, regional banks with a high cost-income ratio and a low loans-to-deposits ratio, among other factors,” the consulting firm noted.
An easing of regulatory conditions and the U.S. tax overhaul under President Trump have also helped spur deal making in the industry. Strict capital and liquidity rules imposed on lenders with more than $50 billion in assets following the financial crisis in 2008 had made it unattractive for midsize bank to add more assets through acquisitions. However, that threshold has now been increased to $250 billion.
Source: Market Watch