Financial Services (FS)

Bank & Non-Bank Lenders

Deals Activity: Low

Restructuring Activity: High

Lenders will face increased pressure to support customers fairly through economic volatility while retaining balance sheet strength.

Deals activity in Bank & Non-Bank Lenders

  1. 1. The sector averaged about four deals per quarter in recent years, though this is principally at the smaller end of the market.
  2. 2. An increase in borrowing costs is likely to create some operational volatility, though may also make lenders more profitable over the longer-term.

Restructuring activity in Bank & Non-Bank Lenders

Bank & Non-Bank Lenders

With the economic backdrop set to remain challenging over the months ahead, the way banks respond will be a critical factor in how the UK recovers.

The era of ultra-low interest rates appears to be over – at least for the time being. Pressure on banking margins, which have taken a significant hit during a decade of extremely low central bank interest rates, should ease as a result.

Set against an expected rise in rates, however, is the likely increase in bad debts. Deteriorating economic conditions are putting more companies in financial distress and tightening the squeeze on household budgets. How banks manage potential non-payment of loans and (further) covenant breaches will be critical, with regulators and the press monitoring closely.

Looking beyond the post-pandemic landscape, the sector faces a number of ongoing challenges:

IT upgrades

Particularly across the established clearing banks, IT infrastructure needs continued investment to meet the demands of online consumers, the threat from cyberattacks and regulatory requirements.

Regulatory requirements

The regulatory environment continues to evolve, especially following the UK’s exit from the European Union. Banks, especially those operating across borders, will need to continue working proactively to meet regulatory deadlines.

Managing costs

Keeping a lid on costs will remain a core priority for the sector, especially as smaller challenger banks target more profitable customers at established competitors.

Find Your Expert

Nick Smith and Jason Lawrence lead our approach to Bank & Non-Bank Lenders nationally, supported by a wider specialist senior team that includes Mike Pink and Stefan Masheder.

Our senior team

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Our specialist FS team helps Financial Institutions successfully navigate periods of stress and distress by working with them to scale the challenge, explore their options and then design, communicate and execute optimum solutions which are focused on rebuilding capital, performance and shareholder returns.

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