European banks have spent the last few years quietly getting rich. Now Goldman Sachs is making the case that all that accumulated wealth is about to reshape the continent’s banking landscape through a sustained wave of mergers and acquisitions.
In a report dated June 9, Goldman Sachs laid out what amounts to a simple thesis: European banks are more profitable than they’ve been in a decade, they’re generating capital faster than they can deploy it, and the most logical next move is consolidation. The rationale for M&A, the bank argues, is only getting stronger.
The numbers behind the merger push
Return on equity across the sector has nearly doubled over the last decade, fueled by elevated interest rates and aggressive cost-cutting programs.
Since 2022, top European banks have returned over $300B to shareholders through dividends and buybacks. Goldman Sachs projects that European banks will generate more than $500B in excess capital within the next three years.
