The chief financial officer of Citizens Financial, who recently bought HSBC United States retail banking enterprise, predicted that there will be more opportunities for mergers and acquisitions while smaller banks struggle to keep up in the race for financial technology.
Bruce Van Saun’s comments highlight one of the main drivers of the recent banking transaction in the United States, which is set to grow in 2021.
M&A Banking has totaled about $ 31 billion so far this year, already eclipsing business activity for the whole of 2020, according to S&P Global Market Intelligence.
“I think we see some opportunities just because smaller banks are stressed with the move to digital business models and all the technological capex that is needed,” Van Saun told the Financial Times.
The demand for digital banking services accelerated during the Covid-19 pandemic, highlighting the need for banks to support technology spending.
“There seems to be a lot of pent-up demand for M&A banking, in part because the banking space has become more competitive, which has made it more difficult for banks to generate adequate revenue growth,” said Ken Usdin, analyst of Jefferies.
“In terms of vendors, one group will be banks that have underinvested and that would need to embark on a multi-year plan to recoup the technology spending,” he added.
The citizens of Rhode Island were spun off from the British RBS in 2015. RBS bought the bank in 1988, close to the start of a global expansion that ended in huge losses and a bailout from the UK government.
Van Saun last month agreed to acquire HSBC’s banking companies in London on the east coast of the United States, a network with about $ 9 billion in deposits that strengthens the presence of Citizens in the New Metro area York.
Now the U.S.’s 19th-largest bank by assets, according to S&P, Citizens is not “actively seeking” further bank acquisitions, Van Saun said, but has left the door open for more business.
“What I find often is once you’ve printed a deal in this space, then you start to see it coming in,” he said.
“We have earned the rights to do more business just by being thoughtful and ensuring that they are low risk of execution and that they have good financial metrics, and they have a strategic sense.”
Van Saun also said Citizens is working with Fidelity, its clearing company, to allow wealth management clients to store cryptocurrencies, a capability it aims to roll out later this year.
It is a further sign of the gradual embrace of banks ’cryptocurrencies, despite doubts about their viability as a currency to rival the dollar.
“We see it (crypto) more as an investment asset as opposed to something that could become a low-cost payment opportunity,” Van Saun said.