Measuring Merger Odds for European Banks

The consolidation of the European banking industry is accelerating. So far, most consolidation has been domestic, and many more domestic opportunities still exist. But the merger between Banco Santander Central Hispano and Abbey National back in November 2004 represented the beginning of a new phase. These two banks got a jump on cross-border consolidation, trying to get big before someone bigger gets them. But did they make the best deal? Should Santander and Abbey National have paired with each other, or were there missed opportunities with other companies? What determines merger success and what should European banks look for in a merger partner?

The goal of mergers and acquisitions should always be clear: Create value through meaningful growth. To determine how to best accomplish this goal, A.T. Kearney undertook a study of merger strategies, seeking a stable framework for analyzing conceivable deals. How much value can a given merger generate? Should you seek to expand in a geographic region or business segment? Which specific deals offer the greatest potential to create value?

In this article, the authors explain their findings and discuss the odds for merger success in the European banking industry.

By A.T. Kearney consultants Thierry Pascault (Paris), Kirsten Bremke (Frankfurt) and Boris Piwinger (Vienna).