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The pressure to grow and transform is putting M&A on the agenda of FS players.
The financial services sector is transforming as traditional players digitalise to compete with fintech and insurtech challengers. M&A remains crucial for growth and transformation, whether through acquisitions or divestitures of non-core assets. Despite ongoing economic and geopolitical challenges, expected interest rate cuts and the need for transformation suggest a dynamic M&A landscape in the medium term. And what about the situation in Switzerland? Find out more in this blog post.
At a global level, the financial services (FS) M&A market experienced slower than normal deal activity in the first half of 2024 and is expected to remain subdued for the rest of the year, primarily due to ongoing economic uncertainties and geopolitical tensions. With stock markets tumbling amid fears of an economic slowdown, we might see additional pressure on AuM and fees. Despite this short-term outlook, dealmakers should remain optimistic about medium-term prospects. FS companies face pressure to transform for relevance and profitability. Further, expected changes in the interest rate environment could lead to renewed M&A activity. As the market recovers, dealmakers are likely to favour smaller transactions over megadeals, reflecting the highly regulated nature of the sector and ongoing industry uncertainties. Additionally, deal processes are expected to become longer and more complex due to valuation gaps between buyers and sellers. Overall, we have identified four main M&A themes to watch in the second half of 2024.
Global M&A themes in financial services
Despite predictions at the beginning of the year of increased restructuring in the banking sector, including the divestment of non-core assets and non-performing loans (NPLs), the need for such actions has been less pressing than expected. Asset valuations have remained relatively stable, and banks are in a stronger capital position than in previous years. As a result, the urgency for deals to address non-performing loan portfolios is currently limited. However, persistent economic headwinds could still lead to an increase in distressed assets, especially in commercial real estate.
Investors are increasingly prioritising ESG (environmental, social, and governance) criteria in their decision-making. Geopolitical tensions have highlighted ESG risks in private investment portfolios, particularly for asset managers and insurers. This may lead to portfolio adjustments and a re-evaluation of investment strategies and risk assessment methods.
Digitalisation and AI remain key priorities for financial services companies to meet consumer expectations and counter disruption from fintechs and non-FS companies. In the second half of 2024, we expect to see increased M&A activity and strategic partnerships focused on leveraging data, addressing cybersecurity concerns, improving operational efficiency, and accelerating transaction processes.
Specialised FS investors with dedicated teams and growing fund volumes are focusing on areas such as insurance brokerage, platforms, fintech, insurtech, and regtech. While we expect this trend to drive M&A activity, higher capital costs and leverage constraints are putting pressure on returns. As a result, PE investors are likely to place greater emphasis on value creation in their investments.
Financial services deal volumes and values, 2019-H1'24*
Sources: LSEG and PwC analysis
* To enable meaningful comparisons with previous half-year periods, the data for the first half of 2024 (H1'24*) includes the first five months of the year, extrapolated to represent a full six-month period.
Global financial services M&A volumes decreased compared to previous periods (–14% vs. H2’23), in line with the market slowdown observed in 2023 and fewer deals materialising in H1’24. This decline was mainly driven by Asset & Wealth Management. However, the average deal value nearly doubled in H1’24, driven by deal values in the Americas and EMEA.
What are the M&A trends in the Swiss financial services industry?
While UBS is progressing with the legal and operational integration of Credit Suisse, M&A activity in the Swiss financial services market has been limited throughout 2023 and early 2024. However, there have been signs of recovery in the past few months, as we have observed four key M&A trends for Switzerland: (i) private banking deals are back, (ii) Zurich Insurance and Swiss Re are driving general insurance deal activity, (iii) foreign interest in the Swiss market remains high, and (iv) digitalisation continues to be a hot topic for Swiss financial services companies.
“Financial services players in Switzerland will continue to use M&A to expand their asset base and digital capabilities..”
Private banking M&A is back
Most Swiss private banks benefited from higher interest rates in 2023 to offset stagnant commission income, historically the core revenue driver for these institutions. This impact will diminish in 2024, especially as the SNB has already cut interest rates twice this year, and private banks will need to refocus on their core wealth management services. However, private banks will be challenged to improve their commission income as traditional services become increasingly commoditised with the emergence of new (tech) players. Differentiation will therefore be key to sustainable success. Many banks are struggling to generate net new money, with competitive pressures on commission margins. Combined with lower interest income and relatively constant or even rising cost bases, this is likely to put further pressure on many banks’ results and increase the importance of M&A activity.
Amid these challenges and after a calm 2023, we observe that M&A endeavours have increased in the first half of 2024. Private banks facing revenue and profit challenges, as well as successful players, are reviewing their strategies, including potential M&A solutions. Some institutions are re-evaluating their portfolio composition, considering divestments or assessing strategic acquisitions to drive inorganic growth and achieve synergies.
We believe that the M&A slowdown in the private banking sector is coming to an end, with more activity expected over the next 18 months. Although smaller private banks (with AuM below CHF 5bn) will be most prone to M&A activity, we think that large players will also engage in inorganic growth activities.
In July, Liechtensteinische Landesbank (LLB) acquired the Austrian subsidiary of ZKB (Zürcher Kantonalbank Österreich AG), to consolidate its presence in Austria. Two additional deals were announced in early August: UBP acquired the Swiss and UK subsidiaries of Société Générale to strengthen its Swiss footprint and accelerate its international development. Other deals are underway or rumoured, confirming the renewed interest in M&A activity in the Swiss private banking sector.
| Acquirer | Target | Signing date | Acquirer geography |
| Union Bancaire Privée (UBP) SA | Société Générale Private Banking (Suisse) SA and SG Kleinwort Hambros (UK) |
August 2024 | Switzerland |
| Liechtensteinische Landesbank AG | Zürcher Kantonalbank Österreich AG | July 2024 | Liechtenstein |
For further insights and our outlook on the Swiss private banking market, please refer to our latest market update for the financial year 2023.
Zurich and Swiss Re drive large general insurance deal activity
Despite persistent global economic challenges carried over from previous years, the insurance M&A landscape has begun to show encouraging signs of recovery in the first half of 2024, particularly in the US and European markets, where deal activity has steadily gained momentum.
M&A activity in Switzerland remained resilient throughout the past six months with five inbound and four outbound deals announced. Among the Swiss participants, Zurich Insurance Group (Zurich) continues to stand out with its recent engagement in several high-profile transactions. In June 2024, Zurich successfully completed the acquisition of its 70% stake in Kotak Mahindra General Insurance (KGI) from Kotak Mahindra Bank for a total consideration of USD 670mn. The transaction, initially announced in September 2023, represents the largest foreign investment in India’s general insurance market and has positioned Zurich as the first foreign insurer to enter India since the foreign direct investment (FDI) limit was raised to 74% (previously 49%) in 2021. With this acquisition, Zurich has strategically placed itself at the forefront of the Indian insurance market, a market with significant growth potential and strategic importance. In June, Zurich also announced an agreement to acquire AIG’s global personal travel insurance and assistance business (AIG Travel) for USD 600mn. The business will be combined with the Zurich-owned travel insurance provider Cover-More Group (Cover-More). The acquisition provides Zurich with a new worldwide retail client base and establishes the company as a leading global travel insurance provider.
The first half of 2024 saw a higher volume of divestment activity, with notable divestments in Europe by major Swiss insurance companies. In February 2024, Baloise Group announced the optimisation of the life insurance portfolio of its Belgian business unit through a reinsurance transaction with RGA International, a subsidiary of Reinsurance Group of America, for a consideration of EUR 72mn. Later in April 2024, Swiss Re completed the sale of its Genoa-based marine book to DUAL Italia SpA, a subsidiary of the Howden Group (Howden). Swiss Re will continue to offer capacity to guarantee a smooth transition. Zurich made headlines again in June 2024 when it announced the completion of the sale of its Ireland-based managing general agent (MGA) Wrightway Underwriting, which provides motor and liability coverage across Ireland, to Pen Underwriting, a unit of Arthur J. Gallagher & Co.In most recent news, Swiss Re has announced plans to divest its iptiQ business in an effort to realign and refocus on its core activities. IptiQ is a digital B2B2C insurance business that enables partner companies to provide life and non-life insurance products under their own brands.
We can see from this year’s market activity that Swiss players appear to be focusing their strategy on strengthening their core businesses rather than investing in technology solutions. This is reflected in the lower public valuations of insurtechs as well as the global decline in deal activity in this space.
Continuing foreign interest in the Swiss market
As seen in 2023, the Swiss insurance M&A market continues to be dominated by foreign PE-backed consolidators. A notable example is UK-based Howden, which recorded four transactions involving Swiss targets in the first half of 2024. In April, Howden, through its subsidiary Howden Schweiz AG, completed the acquisitions of BSC Broker Service Center GmbH, a broker pooling provider, and fmCh Versicherungen AG, a niche broker specialising in insurance and pension solutions for medical professionals in Switzerland. In March, Howden had already demonstrated its interest in the Swiss market by acquiring Swibro AG and Vorsorge Partner AG, two established insurance brokers based in St. Gallen. This latest series of transactions makes a total of 13 acquisitions of Swiss companies by Howden in the past two and a half years and underlines Howden’s dynamic growth strategy in Switzerland.
The major transactions in the Swiss insurance market in the first half of 2024 are outlined below:
| Acquirer | Target | Signing date | Acquirer geography |
Zurich Insurance Group Ltd |
American International Group Inc |
June 2024 |
Switzerland |
Chubb |
Catalyst Aviation Insurance |
June 2024 |
Switzerland |
AXA Life Europe DAC |
New Reinsurance Co Ltd |
May 2024 |
Ireland |
Howden Schweiz AG |
BSC Broker Service Center GmbH |
April 2024 |
Switzerland |
BlueOrchard Capital Sarl (Investor lead) |
Pula |
April 2024 |
Switzerland |
Howden Group Holdings Ltd |
fmCh Versicherungen AG |
March 2024 |
United Kingdom |
Howden Group Holdings Ltd |
Vorsorge Partner AG |
March 2024 |
United Kingdom |
Howden Group Holdings Ltd |
Swibro AG |
February 2024 |
United Kingdom |
Zurich Insurance Group Ltd |
Kotak Mahindra General Insurance Co Ltd |
November 2023 |
Switzerland |
Digitalisation continues to be a hot topic for Swiss financial services companies
Given the strong performance of Swiss retail banks in 2023, boosted by rising interest rates, we can expect further investments around digitalisation and the development of new products and services. We forecast an overall focus on organic growth activities – traditionally the way Swiss retail banks operate – and some inorganic initiatives, mainly related to accelerating their digital capabilities.
The trend observed in the first half of 2024 of strengthening tech capabilities and increasing attempts to develop convenient digital banking offerings for both retail and corporate clients is still valid for the second half of 2024. Digital banking initiatives by traditional retail banks as well as digital banks continue to intensify, and we expect a slight shift in focus from targeting retail customers to also include Swiss small and medium-sized businesses. The main deal observed was the acquisition of Swiss Bankers by Hypothekarbank Lenzburg to strengthen the bank’s Banking-as-a-Service and embedded finance capabilities.
| Acquirer | Target | Signing date | Acquirer geography |
| Hypothekarbank Lenzburg AG | Swiss Bankers Prepaid Services AG | August 2024 | Switzerland |
With regard to the Swiss fintech market, the current higher interest rate environment and the ease of funding also present challenges for investments in this space. Investor caution has risen further, with an interest in more in-depth due diligence as they look for stronger value propositions.
M&A industry trends in Switzerland
Learn about the key trends driving M&A activity in Switzerland
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