A flurry of unsettling events in the financial services sector has slowed deal activity in the U.S. financial services industry, a report says.
For the first six months of 2008, there were 375 financial services deals, a 29 percent decline in deal volume from the same period last year and a 26 percent drop from the second half of 2007, according to PricewaterhouseCoopers' US Financial Services M&A Insights report.
The report found that there were 1,033 financial services deals in 2007, a slight up-tick over the 2006 level of 993 transactions in spite of the credit crunch in late 2007. As the sub-prime mortgage situation continued to unfold in 2008, the impact was not limited to banking.
Private equity firms and sovereign funds remained a source of capital for banks strapped for cash. Sovereign funds poured $23.5 billion into US financial services companies in 2007, and three funds injected a total of $10.9 billion into Citigroup and Merrill Lynch during the first six months of 2008.
Foreign interest in the US financial services industry stayed relatively strong, aided by favorable currency exchange rates. During the first half of 2008, there were 37 deals involving foreign acquirers, only three transactions less than the total for the corresponding period in 2007.
Although private equity deal activity in the first half of 2008 was down by 41 percent from the corresponding period in 2007, private equity interest in the banking sector increased from four deals in 2007 to seven in 2008. These investors infused a total of $5.1 billion into US banks, providing the capital banks needed to shore up their balance sheet.
M&A Insights is a series of industry reports and insights examining the recent trends that affect M&A. For a copy of the 2007 US Financial Services M&A Insights or other industry insights reports, visit www.pwc.com/ustransactionservices.
WWJ e-newsletters sign up WWJ Newsradio 950 e-newsletters bring automotive, business, technology, entertainment, and home news and information to your desktop. Interested in a complimentary subscription? Please register as a new reader by clicking here.
ADVERTISEMENT
Sponsored Links:
WWJ Newsradio 950 is Detroit's only all-news radio station and is the leader in Detroit radio news. Listen online to WWJ-AM 950 for live, local Detroit news, up-to-the-minute Detroit traffic, Detroit sports, Detroit business and Detroit community information. WWJ Newsradio 950 is an award winning radio station and you can listen online and podcast on demand Detroit news, Detroit Construction Alerts, Detroit School Closings, Winter Survival Guide and learn more about our Business Breakfasts. www.wwj.com.
