Financial M&A Increases as Banks and Insurers Seek Scale
Last year saw a wave of mergers and acquisitions among banks, insurers, and asset managers in the UK financial services industry, hitting a 12-year high in deal volume. According to data from EY, there was a 26% year-on-year increase in the number of deals, with a total of 380 deals worth £20.2bn, up from £12.5bn the year before.
After a slowdown in 2023, financial firms rebounded with a focus on scale ahead of anticipated interest rate changes. Consolidation in the sector was driven by lower rates, prompting big deals like Nationwide’s £3.9bn acquisition of Virgin Money and Barclays’ purchase of Tesco’s banking arm for £600m.
Insurance dealmaking also surged in 2024, highlighted by Aviva’s late December acquisition of Direct Line for £3.7bn. The sector saw an increase in deals from 112 to 188, with the total disclosed deal value rising from £3.7bn to £4.6bn, according to EY.
Looking ahead, EY expects M&A activity to continue throughout 2025, driven by an improving economic outlook. However, potential macroeconomic uncertainty and geopolitical tensions could pose challenges in the year ahead. Insurance firms are likely to see M&A as a strategy for growth and scale in the coming months, according to Richard Battersby, EY’s head of insurance strategy and transactions.
