EU Bank Mergers Hit Record Highs

Cross-border mergers among banks in the EU have surged to their highest level since the 2008 financial crisis. This uptick comes as bank profits and share prices increase, marking an end to a prolonged period of stagnation in trading activity.

In fact, multi-billion euro mergers pushed cross-border banking transactions in Europe to an impressive 17 billion euros last year, a substantial rise from just 3.4 billion euros the previous year, according to Dealogic data.

Policymakers have been advocating for enhanced integration within the EU’s fractured banking market, which is hindered by regulatory obstacles and political opposition. Meanwhile, the sector is increasingly losing market share to larger U.S. competitors.

While the progress on smoothing out the regulations for pan-European banking has been sluggish, there are indications that European banks are forging ahead with cross-border deals nonetheless.

Andrea Orcel, the CEO of UniCredit, has previously urged the creation of larger, more robust banks in Europe to compete with U.S. institutions. Last week, he remarked that “the competitive landscape is going to change dramatically,” pointing to advancements in technology and fintech.

Orcel expressed confidence that “the number of banks will decline” by 2030. He suggested that there will be clear winners and losers, with some banks likely to integrate, while others might go under.

Fernando de la Mora, co-head of financial services at Alvarez & Marsal, noted that the recent spike in EU banking activity stems from rising sector valuations, a stable macroeconomic environment, low default rates, and large-scale IT investments.

“With a stable macroeconomic environment, no credit risk issues and high levels of innovation, conditions for further consolidation remain very favorable,” he commented.

Among the notable deals of the past year was Banco Santander’s €7 billion sale of the majority of its Polish operations to Austria’s Erste Bank, which contributed to the highest levels of cross-border consolidation since a €19.5 billion deal struck in 2008.

Other significant mergers involved the €6.4 billion acquisition of Portugal’s Novo Banco by France’s BPCE and the €1.8 billion takeover of Germany’s OLB by France’s Credit Mutuel.

This rise in EU bank mergers is part of a wider global trend, with global banking mergers and acquisitions more than doubling last year to hit $190 billion, as reported by McKinsey & Co.

Despite this, the number of cross-border bank mergers in the EU remained relatively modest, totaling just 19 in the past year.

Andrew Stimpson, head of European banking research at KBW, indicated that there is a growing momentum for more deals in 2026 and beyond.

“Banks are currently trading well above their visible book value, and management needs to evaluate how to effectively utilize the significant capital available. Share buybacks make sense to some extent, but organic growth and M&A represent the true options,” he noted.

Haider Jumabouj, co-head of the financial institutions group at White & Case, highlighted that the top 20 banks in the EU have accumulated around $600 billion in excess capital over the past three years, and they are eager to put it to use in acquisitions. He pointed out, “This is not efficient. That’s why we’re seeing an uptick in both domestic and cross-border acquisitions.”

However, a senior executive at one of the EU’s largest financial institutions shared concerns about significant barriers that persist in achieving cross-border integration among the major players in the region.

This executive emphasized that acquisitions of large EU banks often face political backlash. For instance, German political leaders expressed concerns when Italy’s UniCredit acquired a significant stake in Commerzbank. “If we shut down 100 percent of our corporate centers and laid off 20,000 to 30,000 people… would the government accept that?” the executive questioned.

European banking leaders are voicing frustrations over how fragmented regulations are effectively locking up hundreds of billions of euros in capital and liquidity behind national boundaries. The ECB estimates that these national rules restrict €225 billion in bank capital and €250 billion in bank liquidity.

“We’re not going to buy another bank in another country in the EU unless liquidity is fully fungible in Europe,” the executive remarked, contrasting this with the ability of U.S. banks like JPMorgan to redeploy excess liquidity across states, a flexibility often absent in Europe.