Big-ticket banking takeovers will not return for another two years at least, as global financial groups continue to feel the pressure after the downturn, a report says.
Mergers and acquisitions in the banking sector will be dominated by second-tier consolidation, accountancy group KPMG said, as regulation "chokes off" large Westernbanks' abilities to target larger deals.
The report, Bruised But Not Broken, found that global banking merger and acquisition activity will be locally focused as regulatory trends such as Basel III - and the weakness in the financial markets - play out over the next five years.
Stuart Robertson, of KPMG, said: "At the moment M&A appears to be used mainly by banks buying on their geographic doorstep."
Between 2005 and last year, 73 per cent of banking transactions have been local and a further 19 per cent regional. Only 8 per cent have been across continents.
"Activity over the next few years is likely to be dominated by second-tier consolidation in countries such as China, the US, Germany and Spain, giving rise to mainly home market transactions," he said.
The average size of a banking deal has fallen dramatically from before the credit crunch. The annual value from the peak in 2007 of US$243 million ($275 million) has fallen to US$87 million last year.
But regulation will also encourage some asset disposals, according to KPMG.
