Bank Branch Sales not as Popular Anymore

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In the past, buying a bank may have been attractive. However, it is not so anymore, especially if the buyer is not interested in investing huge amounts. Following the financial crisis, the number of deals involving bank branches has gone down for two consecutive years. 

Considering the stats of this year, there have been only 89 such deals in the period between January and mid November. Compared to last year, this number has decreased by 25% and in 2012, it declined by 23% compared to 2011.

There are a lot of banks that do not regard physical branches as important anymore because the banking sector has seen a lot of automation and technology advancement in recent times. Transactions can easily be made on your mobile or tablet, and the significance of physical branches has decreased. Consequently, deals involving banking branches have also reduced. In the entire country, bank branches have gone down by more than 3% compared to the number that was noted in 2009.

Development is probably not the sole reason behind this trend. Another accounting factor is lower interest rates, which has now been contributing to the picture for quite some time. Because of this a bank branch is simply not regarded as valuable any more; nor are the customer deposits that are associated with it. Should the interest rates rise, the trend can be reversed but that has yet to be seen.

Though this trend has been observed in many parts of the country, there are still some regions that do not follow it. In all these areas, branches are actually considered important because not enough of them are there considering the population.

Considering the past few months, there have been many branch deals that involved blocks of a number of locations. These sort of deals that involve five or greater branches have actually increased by 50% from last year. The year before that, these deals rose by as much as 67%. However, when you consider single branches, the number of deals has indeed gone down by 33% and 36% in the last two years.

The industry experts believe that if bigger deals could somehow overcome the problem of low interest rates and open up a new market, bank branch sales might appear interesting again.

Source: www.wsj.com

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