Following a slow 2023, M&A activity in the UK’s financial services industry picked up in 2024, with a 26% year-on-year increase in the number of deals, according to EY’s latest financial services M&A analysis.

The figures show that UK banks, insurers and asset managers publicly disclosed 380 M&A deals in 2024, the highest annual volume since 2012, compared to 272 deals in 2023.  

EY said that the total disclosed deal value also rose from £12.5 billion in 2023 to £20.2 billion in 2024.

The number of UK banking deals increased from fifty-three in 2023 to seventy in 2024, although the total publicly disclosed deal value here fell slightly from £6.7 billion in 2023 to £6.3 billion last year.

Meanwhile, UK insurance deals rose from 112 to 188 in 2024, with total deal value rising to £4.6 billion in 2024, while wealth and asset management deals increased to 122, with deals netting £9.3 billion. 

EY’s analysis also found that the number of non-UK firms acquiring UK targets rose from 54 in to 74, however the total disclosed value decreased from £6.7 billion in 2023 to £3.9 billion in 2024. 

As for UK firms acquiring overseas targets, this rose from 65 deals in 2023 to 97 last year, with the overall value remaining flat at £1.7 billion. 

“UK financial services M&A activity reached its highest annual volume in more than a decade in 2024, as material signs of economic recovery lifted market confidence, valuations rose, and inbound deals increased,” said Damian Hourquebie, UK financial services strategy and transactions leader at EY.

“While there are real signs for optimism, a sense of macroeconomic uncertainty and geopolitical tensions further abroad could create headwinds as we look to the year ahead.

“However, if the UK’s economic outlook continues to gradually improve as expected, we anticipate the focus on M&A activity will continue throughout 2025 as confidence grows and firms accelerate plans to transform.”

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Although M&A activity might have picked up, quarterly figures published by the CBI this week found that optimism in the UK FS sector has fallen at the fastest pace since September 2022, with firms bracing for falling profits, job cuts, and increased non-performing loans.

Despite that negative forecasting, recent research from Johnston Carmichael suggests that financial service firms are continuing to eye M&A, with nine in ten firms considering it as part of their growth strategies, and only 4% reportedly not looking to pursue M&A activity.  

The UK Government is also making moves in the FS sector, with new chancellor Rachel Reeves announcing a package of reforms in November aiming to drive innovation in financial services and ‘rebalance the system’ which she said holds back growth by trying to eliminate risk.