The news: The volume and total value of global M&A deals in banking declined sharply for Q1, according to a KPMG report.
By the numbers: The report blamed the decline on the Omicron variant, surging inflation, expected interest rate hikes, and Russia’s invasion of Ukraine.
What’s next? Deals could bounce back as pent-up demand and confidence within the industry picks up. This is the view KPMG takes: It said strategic trends in banking were robust and would help M&A to grow. Three major trends may help drive an increase in deals:
The big takeaway: In spite of pent-up demand, a harder stance in the US by regulators will likely limit the speedy approval of the largest M&A deals and banks contemplating megadeals must prepare for greater scrutiny. Separately, we see record-high inflation, a looming energy crisis, and the war in Ukraine continuing to impact dealmakers’ confidence. These wider market factors will dictate whether M&A activity can rebound after its slow start in 2022.