The Middle East recorded a substantial increase in banking mergers and acquisitions(M&A) deals, rising from USD1.5bn in 2011 to nearly USD7bn in 2012, according to professional services firm PricewaterhouseCoopers (PwC).

Banking deals have consistently accounted for the majority of financial services M&A globally over the past decade. While the total number and value of global banking M&A transactions have declined steadily over the past few years, the Middle East stood out as an exception in 2012.

“The six banking M&A deals that took place in the Middle East in 2012 included multiple landmark overseas investments by Gulf based banks, notably in Egypt, as certain European players confirmed their retrenchment from emerging and non-core markets,” says Hani Ashkar, Middle East Deals Leader at PwC. “While the increase in the value of deals in the Middle East was, in part, attributable to broader restructuring efforts in the region, it also points to confidence on the part of certain Middle Eastern banks to invest beyond their domestic markets.”

The increase resulted from six major transactions: Qatar’s QNB acquiring 77.17 per cent in National Societe Generale Bank – Egypt; QNB’s acquisition of a 49 per cent stake in the Libyan Bank of Commerce & Development; National Bank of Kuwait acquiring a controlling interest (from 47.29 per cent to 58.34 per cent) in Kuwait-listed Boubyan Bank; HSBC Bank Middle East’s acquisition of the UAE business of Lloyds Banking Group; Oman International Bank merging its business with the Oman-based operations of HSBC Bank Middle East; and Emirates NBD’s acquisition of BNP Paribas Egypt.

Regional banks are increasingly showing interest in nearby growth markets such as Turkey, European private banking assets and around the growing role of Islamic banking in Central Asia and the Far East, PwC said in a report. It noted that the market changes in the Middle East have also created some opportunities for more liquid institutions.