In Bank Director’s most recent update on the bank merger and acquisition (M&A) market, the publication noted that bank M&A deals in 2016 have been lackluster. Though deals in 2015 were also slow to start, by the end of the year there was a significant increase compared to the average for the rest of the year. Unfortunately, this did not create momentum into 2016, and the number of deals in the third quarter of 2016 has tapered off even further.
According to the article, oil prices and declining long-term interest rates have played an important role in bank M&A this year. In addition, the price for the average bank M&A deal has been low, which may also have contributed to the low number of M&A deals in the industry.
Bank Director was not optimistic that there would be a surge in the number of deals for the fourth quarter of 2016, as was the case last year. This is in part due to the likelihood of the Federal Reserve raising interest rates. Some on its Board of Governors are not in favor of increasing the rate, and the last time the Fed did raise rates, it was by a mere quarter of a percent (0.25%). It may be that 2017 will not have any better of an outlook, as an interest rate hike would be modest.
Read the full article on BankDirector.com, including detailed analysis of the bank M&A landscape.