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Which banks will surf Europe’s M&A wave?

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As European bank consolidation finally gets under way, Euromoney looks at the financial firepower of the region’s top 20 players. Which banks are now best-placed to do the acquiring and which are at risk of being swallowed up? Mid-tier banks in southern Europe look especially vulnerable.

From the depths of a crisis, the long-awaited wave of European bank M&A seems to have finally emerged.

Intesa Sanpaolo’s €5 billion deal for Italian rival UBI Banca, announced in February, is Europe’s biggest bank acquisition in a decade. CaixaBank’s merger with Bankia, which is almost as large, came only a few months later. Other deals are in the works.

It is better late than never.

For years M&A advisers and some bank chief executives have insisted that Europe’s banks need to reduce capacity and competition to improve their dire profitability. What’s different in 2020 is that shareholders – and the industry’s most important financial supervisor – now recognize the need for solutions that are radical enough to get the sector out of the rut in which it finds itself.

It is difficult to see how many banks in Europe will be able to cover their cost of equity on a standalone basis
José Meseguer, Citi
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Weaker firms must look to mergers to shore up their broken business models. Covid-19 and the policy response to it have given stronger banks the opportunity, even the obligation, to look at acquisitions.

The

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EMEA editor
Dominic O’Neill is EMEA editor. He joined Euromoney in 2007 to cover emerging markets, focusing on central and eastern Europe, Middle East and Africa, and later on Latin America. Based in London, he has covered developed market banking since 2015.