Banking and insurance to drive financial M&As after 2025 frenzy
Deals in the financial services sector are expected to be “robust” in the year to come, following a burst of activity from the banking and insurance sector in 2025.
UK banks, insurers and asset managers publicly disclosed 337 deals last year. Whilst this dipped down from the record high of 378 in 2024, the value of transactions surged 93 per cent as industry giants sought to beef up their market share.
Aviva’s whopping £3.7bn acquisition of peer Direct Line paved the way for the formation of Britain’s biggest home and motor insurer after its approval from the competition’s watchdog.
The deal also pushed Aviva’s gross written premium – the total revenue an insurer generates from policies sold in a period before deducting expenses – north of £10bn, a first for a UK-focused insurer.
Insurance deals tumbled to 145 from 186 the year prior but surged to near £20bn in total value, quadrupling from £4.6bn in 2024. This was driven by seven transactions soaring above the £1bn mark.
Damian Hourquebie, EY UK financial services strategy and transactions leader, said: “Despite a challenging UK market, pro-growth investment appetite was strong last year, with total deal value nearly doubling since 2024, and renewed focus on larger strategic transactions, particularly in the banking and insurance sectors.”
Banking consolidation rumbles on
In the banking sector, Santander made waves after beating its UK rivals to snap up TSB for a deal which is expected to top £2.9bn when closed.
The takeover will add TSB’s five million customers, £34bn in mortgages and £35bn in deposits to Santander’s portfolio as well as its 218 branches, though has led to fears the name may disappear from the high street amid its new owner branch network cull.
This marked one of the biggest banking deals in the last decade, coming just underneath Nationwide’s blockbuster takeover of Virgin Money for £2.9bn.
The waves in the sector have also hit Europe where TSB’s former owner Banco Sabadell was circled by rival BBVA for a hostile takeover.
Hourquebie said banking consolidation would “continue steadily” over the next year as firms seek to “modernise legacy systems and enhance tech-enabled offerings”.
Banks have quickly bulked up their tech offering amid greater pressures from the rise of digital rivals Monzo and Revolut.
In October, Barclays snapped up personal loans fintech Best Egg in a bid to grab a slice of the US consumer finance market and leverage its tech.
The former boss of Barclays Antony Jenkins previously told City PM that takeovers shouldn’t be at the forefront of the big bank chief’s game plan.
“I wouldn’t be looking to make any acquisitions at all,” Jenkins said.
“What I’d be looking to do is dramatically modernise my operations and technology, get off all of these 30-year-old systems, and get onto some modern technology that would allow me to compete very effectively.”