After a rise in financial sector M&A last year, with a raft of wealth managers in the mix, more such activity is likely during 2025, so it is argued.

Merger and acquisition activity rose in value and number for the UK and Europe's financial services sector last year, with wealth management proving an important driver. Levels should continue rising in 2025, a corporate lawyer says.

And the trend comes after what, in 2023, had been the year of “shotgun marriage” unions at Credit Suisse, UBS and Silicon Valley Bank.

New figures, based on the UK financial services sector and compiled by EY, showed a 26 per cent year-on-year increase in deal volumes, reaching the highest annual level since 2012. Wealth and asset management firms were responsible for the most activity with growth in both the number and value of transactions.

“The data indicates a remarkable pick-up in M&A activity,” Ed Foulkes, a partner at UK law firm Clarke Willmott, said. “That wealth and asset management firms led the charge is no surprise, and this is reflective of the transactions market generally in that period." 

"I’d anticipate the number of deals, as well as the value of transactions, to continue to rise into 2025. Whilst the wider economic outlook remains uncertain, we believe that the sector has proven resilient and that firms will want to maintain their growth plans,” he continued. 

Within the wealth and asset management sector, EY's data showed that the number of deals increased from 107 in 2023 to 122 in 2024, with total publicly disclosed deal value rising from £2.1 billion ($2.6 billion) in 2023 to £9.3 billion in 2024.

The UK, like other developed nations, is seeing firms wrestle with rising compliance costs and client demands, along with the pressure to invest into modern technology such as AI and deliver mass-customisation. At the same time, older advisors are seeking ways to exit the business, consolidate and achieve economies of scale. And all this is taking place against a background in the UK, and rest of Europe, of modest economic growth.

A look at deals inked in the past two or three months shows that European M&A has been busy. Right at the start of 2025, for example, Liechtensteinische Landesbank wrapped up its acquisition of an Austrian bank, and Switzerland's Vontobel completed its IHAG Privatbank deal. In December 2024, Utmost put the finishing touches on its purchase of Lombard International Assurance. BlackRock has bought private markets and alternative investment research firm Preqin; Evelyn Partners in the UK spun off its professional services arm. Close Brothers has offloaded its asset management business, and BNP Paribas in September agreed to buy HSBC's private banking business in Germany. A glance at this publication's M&A archives shows these deals are a fragment of the total.

Duty
Within the UK, one factor generating movement could be the Consumer Duty regulatory framework introduced by the Financial Conduct Authority – taking effect at end-July 2023 – which increases obligations on firms, and hence costs, Foulkes said.

As with the Retail Distribution Review (RDR) reforms of 2013, which outlawed trail commissions, the Duty has been a force behind industry consolidation and corporate restructuring. The Duty is designed to prompt firms to focus on delivering better and more transparent outcomes for clients.

“The introduction and enforcement of Consumer Duty regulations has been a key driver for deals involving smaller targets,” Foulkes said. 

“There is still fierce competition for high-quality assets although there is also a recognition that some buyers had overpaid for the best businesses in the past. We have also seen increased consolidation amongst former consolidators,” Foulkes said.

Staying on the front foot
Foulkes also points out that the uptick reflects not only increased confidence in the market but also a strategic move for companies to stay competitive. “There is still fierce competition for high-quality assets although there is also a recognition that some buyers had overpaid for the best businesses in the past. We have also seen increased consolidation amongst former consolidators,” he said. 

Europe
For European financial institutions, EY said that M&A deals picked up in 2024. Deal numbers rose 22 per cent year-on-year. European banks, insurers and asset managers publicly disclosed 784 deals across the region in 2024 – the highest annual volume since 2015 – compared with 643 deals in 2023.

The total disclosed deal value also rose from €36.3 billion ($38.1 billion) in 2023 to €52.0 billion in 2024 – with 10 deals above €1 billion in value last year.

The number of European wealth and asset management deals rose from 207 deals in 2023 to 238 in 2024, and the total publicly disclosed deal value more than tripled from €6.1 billion in 2023 to €20 billion in 2024.

Some deal speculation rumbles on, for example a possible move by UniCredit to bid for Germany’s Commerzbank. As reported by various media outlets on Friday, Commerzbank reiterated that it will not meet with UniCredit for formal talks until it receives a specific proposal from the Italian bank.