Global banking sector M&A activity has slowed in recent years with the lowest number of deals in the past five years coming in 2022, lower than the pandemic-hit 2020.

The number of M&A deals in the global banking sector dropped 19.6% year over year to 505 in 2022, according to an S&P Global Market Intelligence analysis that included whole bank deals, asset sales and minority investments.

Widespread decline in deals

All regions in the analysis saw a year-over-year decline in the number of bank M&A deals in 2022 except for the Middle East and Africa region, which posted a 20.0% increase during the year.

North America, which accounts for the highest number of bank M&A, had a 24.6% decline in the number of deals in 2022 to 304. U.S. banks stayed on the sidelines as heightened regulatory scrutiny and delayed closing timelines became major obstacles in M&A activities during the year.

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Bank M&A deals in Europe dropped 16.3% year over year to 103 in 2022. M&A deals have been on a decline in Europe since 2019 when the region recorded 224 deals.

Latin America and the Caribbean saw the steepest decline among the regions as the number of banking M&A deals dipped 31.3% year over year to 11 in 2022. The region has historically had the fewest number of deals.

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Largest deals in different regions

Institutions from Canada have led the way in terms of the largest North American bank deals in 2022, with involvement in three out of the five largest banking sector deals in the region.

Toronto-Dominion Bank's pending acquisition of Memphis, Tenn.-based First Horizon Corp. in an all-cash transaction valued at $13.67 billion was the largest bank M&A deal of 2022. It is the fifth-largest U.S. bank M&A transaction in the last 15 years.

Jersey City, N.J.-based Provident Financial Services Inc.'s acquiring in-state peer Oak Ridge-based Lakeland Bancorp Inc. in a deal worth roughly $1.3 billion was the largest deal where both target and buyer were based in the U.S.

Russia, despite being in a conflict with Ukraine, marked the largest banking sector M&A deal in Europe in 2022. In December 2022, the Central Bank of the Russian Federation completed the sale of PJSC Bank Otkritie Financial Corp. to state-owned VTB Bank PJSC in a deal worth $4.91 billion.

The Russian central bank took over the ownership of Otkritie Financial following the bank's bailout in 2017. Otkritie Financial and VTB Bank operate under international sanctions.

In Asia, Citigroup Inc.'s selling its consumer business in India to Axis Bank Ltd. was the largest deal in 2022, with a total value of about $1.6 billion. This was the eighth sale in the Asia-Pacific region and was part of a strategic refresh announced by Citi in 2021.

The transaction comprises the sale of Citibank India's consumer banking businesses, which include credit cards, retail banking, wealth management and consumer loans. The transaction also includes the sale of the consumer business of Citi's nonbanking financial company, Citicorp Finance (India) Ltd.

Public Investment Fund of Saudi Arabia's acquiring a 23.97% stake in Capital Bank of Jordan for $185 million, as part of a subscription agreement, was the largest deal of 2022 in the Middle East and Africa region.

In Latin America, Bank of Nova Scotia's acquiring a 16.8% stake in its Chilean entity, Scotiabank Chile SA, from Grupo Said was the largest deal during 2022. The transaction was valued at $950 million.