Positive financial conditions within the sector are revitalizing deal activity.
Cross-border mergers and acquisitions among European banks reached a value of 17 billion euros in 2025, the highest level since the 2008 financial crisis.
This marks a significant increase from the 3.4 billion euros recorded in 2024, according to data from Dealogic, as reported by the Financial Times.
The renewed activity is driven by a combination of rising profits, higher share prices, and a more favorable economic climate, effectively ending a prolonged period of caution in the sector.
Top deals in 2025
• Erste Bank (Austria) acquired the Polish operations of Santander for 7 billion euros.
• BPCE (France) took over Novo Banco (Portugal) for 6.4 billion euros.
• Crédit Mutuel (France) acquired OLB (Germany) for 1.8 billion euros.
Drivers behind the merger wave
The recent surge in cross-border bank mergers within the EU is primarily fueled by improved financial conditions in the sector. Banks are benefiting from higher valuations, a stable macroeconomic environment, and low default rates, which are boosting confidence in larger transactions.
Additionally, the need to invest in large-scale IT projects plays a critical role. The rise of fintech and digitalization is pushing banks to pursue scale and consolidation to remain competitive.
Another key factor is the excess capital that European banks have accumulated in recent years. With banks currently trading above book value, executives are seeking ways to deploy this capital effectively. While share buybacks remain an option, organic growth and M&A are gaining appeal as future strategies.
Persistent challenges
Despite the positive developments, significant obstacles remain for further cross-border consolidation in the EU. One of the biggest challenges is political resistance. Large-scale takeovers often face opposition from national governments, which fear losing control over strategic sectors.
Additionally, regulatory fragmentation plays a crucial role. National rules and restrictions trap 225 billion euros in capital and 250 billion euros in liquidity behind borders, according to ECB estimates.
A senior bank executive highlighted this issue: "As long as liquidity cannot flow freely across Europe, I will not acquire a bank in another EU country." This underscores how structural barriers continue to hinder ambitions for a truly integrated European banking market.
Social and economic considerations also come into play. Closing headquarters or cutting thousands of jobs in mergers is politically difficult to justify, even if it would be economically more efficient.
Future Outlook
Nevertheless, analysts expect the merger trend to continue in 2026 and beyond. Andrea Orcel, CEO of UniCredit, predicts a "dramatic change" in the European banking landscape, with fewer but larger and stronger banks remaining by 2030.
The question remains whether the EU can remove regulatory and political barriers, allowing banks to truly grow into global players. For now, the sector remains caught between ambition and reality.
