The value of mergers and acquisitions in the UK financial services sector rose significantly in the first half of the year amid warnings of a “rapid depopulation” of the UK equity market.
Some 135 transactions were disclosed by UK banks, insurers and asset managers in the first half of this year, a 25 per cent increase year on year, according to EY’s latest M&A analysis.
The surge in deals has been caused by a combination of short-term factors such as low valuations for UK companies making them more appealing as well as AI capital investment needs forcing firms to bulk up.
Investors’ increasing appetite for dealmaking reflects the uncertain environment businesses are now operating in, said Damian Hourquebie, EY UK’s financial services strategy and transactions leader, with chief executives focusing on securing new revenue streams.
Longer-term trends such as the UK’s commitment to open markets have also contributed to the lively market for M&A — prompting warnings that the resulting shrinking of the listed market is ultimately bad for the UK.
“To say that the UK has a problem in retaining its companies and listing new ones would be a massive understatement,” said Charles Hall, head of research at Peel Hunt.
The UK’s deal count and volume outpaced the wider global figures — which saw financial services deals nudge up 3 per cent year on year. The total value dropped from $191bn in the first half of 2025 compared with $135bn this year.
One of the biggest areas of UK financial services M&A in the first half of the year was in the UK insurance market, with deal numbers rising from 40 to 55 year on year, with the value of those deals soaring from £1.6bn to £8.4bn. Some of the biggest deals in insurance include Athora Group’s acquisition of Pension Insurance Corporation, and Brookfield Wealth Solutions’ purchase of Just Group.
Asset and wealth management deals also rose in the first six months of 2026, rising from 47 to 61 year on year, with deal value soaring from £0.2bn to £22.7bn. Most notably NatWest bought wealth manager Evelyn Partners earlier this year.
Though the value of UK companies has risen in recent years, they are still seen as attractively valued, increasing the likelihood of M&A and making listings less likely, Hall said.
The current forward price-to-earnings ratio for the FTSE 100 is 13.1, compared with the S&P 500’s 20.8, according to data from AJ Bell, which blamed slower earnings, less growth, heightened exposure to cyclical sectors and fewer tech companies for the UK’s lacklustre figures.
The combination of this and the steady outflows from UK equities in recent years — UK equity funds have seen annual net outflows each year since 2015, according to data from Calastone — has acted to depress valuations.
The downward pressure this has on initial public offerings has led the UK government to attempt to kick-start the London listings market, pushing pension funds to increase investment in UK companies and overhauling the rules for London-listed companies. “However, these [changes] should have limited impact on the UK equity market,” said Hall.
But the relatively high valuations in US markets continue to encourage UK companies to IPO or move their listings overseas, with UK-based start-up Revolut’s founder Nik Storonsky saying listing in the UK does not make sense for the company due to low liquidity and stamp duty being charged on some transactions.
Others with dual listings have decided to delist from the UK stock market, with the Bank of Ireland also blaming low trading volumes for its decision to leave the London Stock Exchange.
Since the start of 2023, the UK has lost the listings of seven large companies totalling £120bn of market cap, according to Peel Hunt, with eight UK-based companies listing overseas in that time, with a market cap of £330bn.
Though the wars in Ukraine and the Middle East slowed the deals market for a while, participants have grown more comfortable with the wider geopolitical uncertainty, which is proving to be less of a hindrance to deals, according to Deutsche Numis’s latest UK M&A outlook.
“As 2025 progressed, many buyers and sellers accepted that this environment may be the new norm for the foreseeable future, and proceeded to execute inorganic strategies to create shareholder value,” it said.
The increasing need for AI investment has also spurred companies on to increased dealmaking, as does the UK’s lacklustre economic growth. “You continue to have an economy whose performance is relatively muted and where GDP forecasts have been downgraded, so that creates a necessity for companies to find growth,” said Anthony Parsons, executive chair of investment banking and capital markets at Deutsche Bank.
Finally, a rise in successful deals will spur more on, Hall said. “Greater probability of deal completion encourages bid interest. M&A takes time and has high costs, which means that greater certainty encourages engagement.”