European Banks Eye Mergers Amid Globalization and Changing Landscape

Strategic Insights -

As Deutsche Bank A.G. announced its $10.1 billion acquisition of the Bankers Trust Corporation, speculation about potential mergers in the European banking industry has reached a fever pitch. Traders and analysts are predicting that this deal will spark a wave of consolidation, with several European banks expected to search for partners in asset management and investment banking. In Europe, commercial banks have been slow to move into these areas, and analysts expect more European banks to look for partners to better serve their clients, which are increasingly going global.

Key Takeaways:

  • Deutsche Bank's acquisition of Bankers Trust is expected to force a range of strategic rethinking in Europe, with analysts predicting more European banks will search for partners in asset management and investment banking.
  • Commercial banks in Europe have been slow to move into asset management and investment banking, unlike their American counterparts.
  • Cultural conflicts, varying tax and accounting rules make intra-Europe mergers challenging, and many European concerns are looking to the US market to expand their businesses.
  • Analysts predict the trend will be towards global advisers who can serve multinational corporations.
  • Several US banks and brokerage houses have been considered acquisition targets, including J. P. Morgan, Lehman Brothers, and Donaldson, Lufkin & Jenrette.
  • Some European banks, such as ABN-Amro and Dresdner Bank A.G., are rumored to be in talks with other banks, fueling speculation about potential mergers.
  • The key to successful mergers is combining asset management, commercial banking, and corporate advising under one roof, according to analysts.

Statistics:

  • Deutsche Bank's $10.1 billion acquisition of Bankers Trust is one of the largest in the industry.
  • Shares in Dresdner Bank A.G. rose 7.2% to a 12-week high due to speculation about a possible acquisition.
  • J. P. Morgan has been considered an acquisition target for Deutsche Bank, but has been an active adviser to merger candidates itself.

Sources:

  • The New York Times, "Deutsche Bank Buys Bankers Trust for $10.1 Billion; Expansion Aims to Reduce Dependence on Europe; The Deal: A $10.1 Billion Bet on America"
  • Bloomberg, "JPMorgan Said to Be Deutsche Bank's Target in U.S. Expansion"
  • The Wall Street Journal, "European Banks Eye U.S. Options as Mergers Loom"
  • The Financial Times, "JPMorgan shares rise on speculation of Deutsche bid"