The volume of M&A transactions among European financial companies hit its lowest quarterly level in two years in the three months to Sept. 30, S&P Global Market Intelligence data shows.

Only 209 deals were struck in the third quarter, the lowest level since the third quarter of 2020, when there were 208 deals. Additionally, quarterly volumes have been declining since the final quarter of 2021.

Central banks across Europe have been tightening monetary policy in response to rapidly rising inflation. Higher rates mean increased costs of borrowing, making it difficult for companies to find financing for dealmaking.

The eurozone economy is also projected to enter a slowdown toward the end of 2022, with S&P Global Ratings saying in a report that the five straight quarters of solid GDP growth as of the second quarter of 2022 will reverse to subdued or even lower activity in the two or three succeeding quarters.

Across the globe, the third quarter was also the quietest for large-scale M&A since 2012, Market Intelligence previously reported.

In Europe, French insurer AXA SA's sale of a portfolio of deferred annuities and endowments of the former DBV-Winterthur Life business to Athora Deutschland GmbH for €660 million was the biggest deal by value in the quarter. This was followed by CNP Assurances SA's purchase of Italian bank UniCredit SpA's stake in CNP Vita Assicura SpA, which was valued at €500 million.

Saudi Arabia-based Kingdom Holding Co. also bought a stake in U.K. asset manager M&G PLC for €264 million.

September deals

Dealmaking did increase slightly in September from August, but the total of 65 deals recorded during the month was well below the 92 registered in September 2021. This was the second lowest monthly deal volume figure so far in 2022.

The biggest deal in September was Nextstage Evergreen's takeover of NextStage SCA for some €223.3 million. In Germany, Oldenburgische Landesbank AG bought peer Degussa Bank AG in a €220 million deal.