Consolidation drives Asia-Pacific bank M&A in 2014

The financial sector made up the largest portion of mergers and acquisitions involving Asia Pacific companies, according to year-end figures for 2014 published by Thomson Reuters. The US$142 billion in deal value was a 120 per cent increase on the 2013 year and accounted for almost 18 per cent of the region's M&A activity.

The rise in M&A provided a bonanza for investment bankers. Thomson Reuters Freeman Consulting estimated advisory fees from completed deals in Asia Pacific reached US$2.0 billion as the year drew to a close, a 24 per cent rise on the same period in 2013.
 
Goldman Sachs led the pack for fees earned for completed Asia Pacific M&A advisory work, raking in almost US$180 million (a 66 per cent improvement on 2013), well clear of traditional rivals Morgan Stanley (US$137.5 million, up 26 per cent), Macquarie Group US$121 million, up 25 per cent), UBS (US$102 million, up 7 per cent) and Citi (US$99 million, up eight per cent).

Another business intelligence provider, SNL Financial, analysed M&A within a more defined pool: the Asia-Pacific banking sector. SNL concluded that volume reached US$16.8 billion in 2014, compared to disclosed deal value of US$21.8 billion in 2013. Regional M&A deal activity in 2014 was skewed towards domestic transactions, four of which involved South Korean banks, making the country the most active in terms of domestic consolidation.

While South Korea topped the tables on deal numbers, over the last five years China has been the most active Asian country in terms of deal volume, according to SNL Financial.

The country saw 25 bank transactions worth more than US$39 billion between 2010 and 2014, accounting for more than 24 per cent of the deal volume in the Asia-Pacific region.

Also in 2014 came the announcement of a proposed three-way merger between CIMB Group Holdings, RHB Capital and Malaysia Building Society - a deal that would have created Malaysia's largest banking group by assets. However, the deal was terminated earlier this month after the companies failed to agree on terms.

Hong Kong saw the highest disclosed deal value in 2014 at US$6 billion, largely due to Singapore-based Oversea-Chinese Banking Corporation's acquisition of Hong Kong-based OCBC Wing Hang Bank for US$5 billion in July 2014.