MERGERS & ACQUISITIONS
Shifting Sands: M&A in the Middle East 2021 kicked off with a wave of deal-making some of which have been in the making for some time as banks positions themselves for improved economic conditions post-pandemic amid vaccine optimism
T
he GCC banking sector has weathered several storms over recent years. From a plunge in oil prices in 2014 that forced governments to calibrate budgets and dip into state deposits to problem loans owing to the property and retail slump, GCC banks have been merging to remain profitable and maintain a competitive edge. A year into the COVID-19 pandemic crisis, 2021 kicked off with a wave of
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deal-making some of which have been in the making for some time as banks positions themselves for improved economic conditions post-pandemic amid vaccine optimism. S&P Global expects banks’ financial profiles to worsen across many jurisdictions until the economic recovery takes hold, but the rating agency said that “a widely available vaccine from mid-2021” and a strong economic rebound this year might turn the tide.
Banking and Finance news in the MEA market
It is also worth noting that growth in GCC banking assets is linked to regional GDP, which moves largely in tandem with oil prices. Gulf states are still reliant on oil which accounts for three-quarters of the six-nation bloc’s spending. Although oil prices are recovering, the instability associated with oil prices – which plunged into negative territory last April, production curbs, and tighter financial conditions pose a challenge for the region’s banking sector. “In today’s era of significant economic change, companies continue to look for partners that can leverage their abilities for cross-selling, accessing new markets and customers and other synergies to enhance financial performance and gain competitive advantage, boosting the combined market share,” said KPMG.
Deals on the cards “ Merger and acquisition (M&A) activity has always been a leading indicator
