European banking sector set to usher in a wave of mergers and acquisitions? Morgan Stanley: may boost bank stock valuations
JP Morgan analysts say that the acquisition of Deutsche Bank may trigger more mergers and acquisitions in the European banking industry, thereby boosting the stock valuations of banks seen as acquisition targets
Yesterday, it was reported that Italy's YuXin Bank currently holds a 9% stake in Germany's Commercial Bank and plans to acquire the German bank.
Following the announcement, the stock price of the German Commercial Bank surged by 17%. The current price per share is $15.
YuXin Bank stated that it will seek to further increase its stake in the German Commercial Bank to "maintain flexibility," but any such move will depend on whether the investment meets its "financial requirements."
After the merger of the two banks, the largest bank in Germany will be created, surpassing Deutsche Bank.
Acquisition of German Bank Boosts Bank Valuation
Analysts at JP Morgan stated that the acquisition of the German Commercial Bank may trigger more mergers in the European banking industry, thereby boosting the stock valuation of banks seen as acquisition targets.
"Historically, momentum in the banking sector has been triggered by announced transactions," analyst Kian Abouhossei said. "We expect to see more news about European bank mergers in the future, which could be favorable for the valuation of banks historically seen as targets."
He also listed some banks that could be potential acquisition targets, such as Italy's Banco BPM SpA and Banca Monte dei Paschi di Siena SpA, France's Societe Generale SA, Portugal's Banco Comercial Portugues SA, and the UK's Standard Chartered Bank.
He analyzed that the transaction for the German Commercial Bank could be around €17.6 per share, representing a premium of about 20% over Wednesday's closing price