(Bloomberg) — The wave of bank acquisitions washing over Southern Europe has reached Portugal. On Friday, Lone Star agreed to sell its 75% stake in the country’s fourth-largest lender, Novo Banco SA, to the French banking group BPCE SA in what would be the biggest euro area cross-border takeover in the sector in a decade. Dealmaking in the region kicked off a little over a year ago in Spain when BBVA SA made an unsolicited offer for domestic rival Banco Sabadell SA. It subsequently spread to Italy as one local bank after the next joined in. Even Greece — once the most chaotic corner of European banking — recently got swept up, with UniCredit SpA expanding its stake in Alpha Bank. “Years of painful restructuring and reform have left Southern European banks stronger and more profitable,” said Francesco Castelli, a portfolio manager at Banor Capital Limited. “Now, they’re seizing the moment through mergers and acquisitions.” The buzz across the Mediterranean contrasts with a more subdued outlook north of the Alps. While some lenders have acquired units from competitors such as BNP Paribas SA’s purchase of an investment firm from insurer Axa SA and the acquisition of a 49% stake in Banco Santander SA’s Polish unit by Austria’s Erste Group Bank AG, full-scale M&A has been rare. Germany’s big banks have been notably absent from the M&A frenzy. Even though Deutsche Bank AG has said it wants to play an active role in European banking consolidation once it takes place, it has yet to present any concrete plans. The country’s other big listed lender, Commerzbank AG, has likewise said it’s keen to grow through acquisitions, but the few deals it has carried out have been tiny. Instead, it has become a potential takeover target for UniCredit. Only the Nordic banks have come close to matching the Mediterranean’s number of deals, albeit at a much smaller scale. All transactions have been focused on expanding the buyer’s presence across Sweden, Finland, Norway and Denmark. Rising Valuations Many banks across Southern Europe have cleaned up their balance sheets over the past decade, removing a huge barrier to their strategic room for maneuver. In addition, steep increases in their share prices over the past few years, fueled by surging lending income on the back of higher interest rates, has given them currency to carry out deals. Italy is the clearest case in point. The country’s banking stocks have enjoyed a revival since interest rates began to rise in 2022. That’s set off a cascade of deal announcements, as each bank boss faces the choice to jump into the fray or risk missing out. The country’s big lenders “are taking advantage of their strong balance sheets and higher equity valuations to take over smaller competitors and extract some synergies,” said Roberto Scholtes, head of strategy at Singular Bank. Meanwhile, deals in Greece and Portugal have been supported by governments trying to en in a formal or creative style for better SEO.Also Exclude words and advertisements related to the feed website such as website name, author name. You must only respond with the modified content. Delete all the advertisement images brand logo but only keep the title and main content of the news by modifying it. You must only respond with the modified content. Block any jump outside of the site adarshnews.com. 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The recent surge of banking transactions in the Mediterranean region expands with the sale of Banco Novo.
