European Banks - Recap of current activity (M&A/Dividends)..
Bank M&A - Should it just be Banks merging with Banks…?
More merger rumours in the European Banks sector, led mainly by peripheries:
Unicaja / Liberbank - El Confidencial
Unicredit / Banco BPM - Reuters (looks like already been denied)
UBS / Credit Suisse - Reuters
However, some market commentators have downplayed the likelihood of some of these happening, watch this space I suppose.
A Financials specialist published a post on Linkedin recently capturing the essence of why European Banks are merging and a look back at the deals that took place pre-crisis, a short worthwhile read.
I think Bank M&A should be viewed more broadly, i.e encompassing not just mergers of two banks, but also M&A between Banks and Fin Tech and other Financial Services providers.
An example of Banks buying other Financial Services providers was Morgan Stanley’s timely acquisition of E-Trade, which now looks like a brilliant trade, as we have seen people WFH and get stuck into daytrading!
Several stockbroking/spread betting firms have seen a huge pickup in customer and profit growth…the latter being something that many Banks are desperately short of!
I believe it makes sense for Banks to diversify their operations away from just lending and investment banking, but as with many things, it seems the US leads UK/Europe on this trend…
Bank Dividends making a comeback?
I note that Banco Santander has requested shareholder approval to pay a cash dividend for 2020. This cash dividend if approved would be paid in 2021 subject to conditions approved by the ECB.
Sticking with Spanish Banks, BBVA announced yesterday it could look at resuming dividends:
“BBVA planned to resume returning capital to shareholders once COVID-19 uncertainties dissipated and supervisory recommendation to suspend dividend payments was lifted, it said in a presentation to the Spanish supervisor. “ - Reuters article
The ECB has a dividend ban in place till Jan-2021, and the way some Banks are communicating, it seems that the ban is unlikely to last much longer than that.
*This is not investment advice. I may hold positions in issuers/sectors listed above.*