The UK financial services industry saw 121 M&A deals in the first half of 2021.
This is more than double the number (57) announced during the same period in 2020, according to EY research.
While the total deal value in H1 2021 fell year-on-year to £13bn from £32bn ($44.3bn, €37.6bn) between January and June 2020, EY said that “this is due to a single big insurance transaction in 2020”.
The number of non-UK firms acquiring UK financial services businesses was up 146% to 32 in H1 2021 from 13 in the same period last year.
The total value of those deals rose to £6.8bn from £1.2bn in H1 2020.
As for UK firms acquiring overseas companies, this increased to 29 in H1 2021 from 22 a year earlier, with deal value increasing to £2.4bn from £2.1bn.
In the UK wealth and asset management industry, the number of deals climbed 265% to 62 in H1 2021 from 17 a year before.
The total deal value also saw a strong increase to £6.1bn from £500m.
The number of insurance deals rose to 33 in 2021 from 18 in H1 2020, but the total deal value fell to £3.9bn from £29.1bn.
EY expects M&A activity “to continue to improve in the second half of 2021 as the economic recovery accelerates”.
Drive further activity
Tom Groom, UK financial services strategy and transactions leader at EY, said: “UK financial services M&A activity is on the rise again, following a subdued 2020 in the wake of the covid pandemic.
“The covid pandemic has challenged business and operating models and financial resilience. While we are not fully out of the woods yet, in the UK we are looking to economic recovery underpinned by vaccine progress.
“Financial services firms have been addressing the numerous challenges they have faced over the past 18 months, and in some cases M&A has been – and will continue to be – the answer.
“As a result, the number of M&A deals in financial services has been rising this year, and we expect this trend to continue throughout the rest of 2021. It is important to note that downside risks to the recovery remain, particularly as government support tapers away and stimulus programmes reach the point of repayment, but these challenges will likely drive further M&A activity in the market.”