Deutsche Bank: European banking sector will shift to M&A and other external growth by 2026

Golden Ten Data reported on January 2 that the STOXX Europe 600 Banks Index surged by more than 60% in 2025. Benjamin Goy, Head of European Financial Research at Deutsche Bank, stated: "European banks are well-capitalized, with most, if not all, in a significant state of capital surplus." The core issue currently facing bank management is how to handle this excess capital. Stock buybacks and dividend distributions are common methods, with relatively low execution risk. However, Goy expects the focus in 2026 to shift toward external growth, especially merger and acquisition activities. "This is exactly what the industry has been lacking over the past decade. Management confidence is returning, investor support is increasing, and announced deals usually enhance earnings per share, which also explains why the share prices of acquirers often rise accordingly. We expect such activities to further increase."