2023 kicked off with much discussion about when we might witness another big round of consolidation in the banking sector. The arguments supporting potential M&A activity were generally well-founded.
For example, the larger global outfits would continue their focus of realigning their business towards their core business structures.
Go deeper with GlobalData
Citi is a perfect example, executing its strategy of exiting consumer banking across 14 markets in Asia, Europe, the Middle East and Mexico as part of its strategic refresh. It has now closed sales in a number of these markets including Australia, Bahrain, India, Malaysia, the Philippines, Taiwan, Thailand and Vietnam.
US Bank failures
The failure in October 2020 of Almena State Bank in October 2020 kicked off a 30-month period in which no US bank failed. The collapse of Silicon Valley Bank on 10 March 2023 was no ordinary bank failure. This was a high profile, $212bn tech lender and its collapse represented the most high-profile US bank failure since the 2008 crisis.
SVB grew rapidly in the days of low interest rates, attracting billions in deposits from tech VCs. SVB had to try and get some kind of return on its deposits and so invested in long-term US treasury bonds. That worked fine until interest rates rose sharply. Depositors were demanding higher rates of interest. SVB sold some of its bonds at a loss and tech investors were spooked by a lot of excitement on social media. Cue an old-fashioned bank run. Within two days, SVB was out of the game.
Signature Bank then failed on 12 March with First Republic failing in May.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataPacWest agrees deal with Banc of California
PacWest came under enormous pressure. On 3 May, its share price tumbled by 35%. It kicked off a series of asset sales to private investment firms to shore up its finances. It was not enough and by July PacWest agreed an all-stock deal to merge with Banc of California.
To help fund the deal, the lenders agreed to sell $400m of new shares to private equity firms Warburg Pincus and Centerbridge Partners. The PacWest/Banc of California deal was valued at $1.04bn and the biggest of the year in the US.
A notable mention goes to the $528m Eastern Bank deal to acquire Cambridge Bancorp in September. The deal creates a $27bn combined lender with a strong presence in Boston. The third biggest US bank deal of the year was the Atlantic Union deal to acquire American National Bank, in a deal worth $448m.
UBS acquires Credit Suisse
In March, UBS agreed a controversial deal with acquire Credit Suisse, to create a global wealth manager with $5trn of invested assets across the combined group. It extended UBS market share in its Swiss domestic market but this was no ordinary deal. This was an emergency rescue. Discussions were initiated jointly by the Swiss Federal Department of Finance, FINMA and the Swiss National Bank.
Fintech failures
According to KPMG, overall global funding activity for fintechs — including venture capital (VC), private equity, and mergers & acquisitions (M&A) fell to $17.9bn in Q2 2023, from $34.5bn in Q1 2023. Funding had peaked at over $102bn in Q1 2022. Also, global M&A activity dropped to $2.8bn in Q2 2023 from $21.2bn in Q1 2023. Tech Nation, the UK startup that helped bring thousands of talented tech workers to the UK, announced in Q1 that it would wind down after the UK government pulled funding. A number of buy-now-pay later monolines have failed during 2023 with BizPay and ZestMoney the latest to collapse.
Sustainable investment app Clim8 closed down after failing to secure funding to keep the business going.
Launched in 2021, the Clim8 Invest app helped Brits invest in publicly listed companies and funds focused on tackling the climate crisis.
Cardeo was a notable fintech to close due to failure to attract financial backing.
Founded in 2020, Cardeo’s mobile app afforded customers, via open banking, a complete overview of their credit cards.
