Natixis CIB's 3rd Annual FIG Conference: Resilience, Regulation, and the Next Wave of Consolidation

Over two panels, a fireside chat and a keynote speech, the hot topics facing players in the FIG space were discussed, debated, and examined in depth.

Below, we take a look into some of the key themes that emerged.

Despite an economic backdrop of slowing global growth, persistent geopolitical tensions and uneven momentum, European banks are stronger and more resilient than they have been in decades. Capital positions are robust, liquidity is ample, and credit quality has held up far better than feared through the rate-hiking cycle. Yet markets are skeptical. Valuations for many European banks trail global peers, with investors pricing in potential risks tied to slowing growth, political fragmentation, and complacency. A recurring theme was the gap between fundamentals and perception. Banks may be healthier than ever, but capital markets continue to demand proof that resilience will translate into sustainable returns.

For much of the past decade, Europe’s banking sector has been defined by regulation, restructuring and retrenchment. Today, that narrative is beginning to evolve. Domestic consolidation has picked up, helping mid-sized players scale and compete more effectively in an environment where cost pressures and regulatory burdens remain intense. Building societies, challenger banks, and regional institutions are increasingly being folded into larger groups, creating leaner and more diversified competitors.

The more complex question is whether Europe will see meaningful cross-border consolidation. Policymakers often talk of “European champions,” but political sensitivities remain. Protecting local jobs, safeguarding small and medium-sized enterprises, and maintaining trust in national champions continue to act as brakes on ambitious pan-European mergers. Until regulatory harmonization and domestic political resistance ease, cross-border deals are likely to remain the exception rather than the rule.

All said, M&A activity is unmistakably back. Rising strategic confidence, coupled with deep pools of private equity capital, is fueling transactions across the financial ecosystem. The rationale has shifted from survival to growth: diversification, access to new distribution channels, and alignment with secular trends in wealth, insurance, and asset management.

In banking, domestic deals dominate the landscape, but in insurance and asset management, the picture is more international. Recent transactions highlight how global groups are expanding footprints across Europe, particularly in non-life insurance, asset management, and specialty lines. This “quiet concentration” is creating national champions in several markets, while also attracting fresh capital from international players looking for scale and long-term stability.

Private equity has emerged as one of the most active forces in European financial services. Well-established players have used their track records to secure regulatory trust, enabling them to unlock complex transactions. In wealth management, PE funds have been particularly aggressive, acquiring mid-sized firms and betting on the continued growth of advisory and private banking services.

Asset management is undergoing structural change too. Traditional asset managers face unrelenting margin pressure and scalability challenges, driving a wave of consolidation. At the same time, private credit and alternative strategies are accelerating, with asset managers teaming up with insurers to expand product offerings and match long-term liabilities with new sources of yield.

Insurance remains a mixed picture. Non-life consolidation is advancing rapidly, with significant acquisitions reshaping national markets. Life insurance, by contrast, is less of a priority for banks seeking diversification, though regulatory debates - such as the Danish Compromise - continue to influence strategic thinking.

The long-standing debate: should ‘traditional’ banks acquire high-growth digital platforms, or build their own capabilities in-house?

The challenge comes down to valuations. Some digital banks and payment firms command market caps that rival or exceed century-old incumbents, despite limited track records and unproven profitability - reflecting investor enthusiasm for new distribution models. For traditional institutions, the question is whether to pay for distribution platforms at those multiples or to continue incubating fintech capabilities internally.

So far, most incumbents continue to opt for the latter. Many are investing heavily in digital distribution and cybersecurity, developing ecosystems that mirror those of fintech challengers without paying the premiums. The valuation gap may close over time, but for now, incumbents appear content to watch and build rather than bid.

From an investor perspective, the conversation has shifted from survival to optimization. Banks are returning equity capital via dividends and buybacks, as well as seeking to grow. To support this, they are issuing across the capital structure - AT1s, Tier 2, and senior debt - with strong demand from both institutional asset managers and faster money like hedge funds. Strong capital, prudent lending policies and clearer resolution frameworks have helped investors regain confidence, particularly in the wake of 2023’s market shocks.

Still, questions remain. How volatile are AT1s in times of stress? Are equity valuations adequately reflecting the fundamental improvements in the sector? And will rising geopolitical risks—from energy security to trade fragmentation—spill over into bank balance sheets in ways not yet priced in?

Beyond capital instruments, the regulatory agenda looms large. The EU’s banking package, Basel IV implementation, and debates over ESG integration are shaping how institutions allocate capital and manage risk. The conversation around central bank digital currencies and the role of artificial intelligence in financial services adds another layer of complexity. For investors, these are not abstract topics—they directly affect business models, capital requirements, and long-term profitability.