Last year was a challenging year for mergers and acquisitions between financial services firms, according to PricewaterhouseCooper's latest M&A insights report.

Deal value was up from $50.9 billion in 2010 to $72.1 billion in 2011.But the volume of announced deal activity was down 10% compared with 2010.

The asset management space was the only sector to experience an increase in the number of announced deals, with 99 in 2011 compared with 86 in 2010.

The wealth management subsector drove a large part of this increase with19 deals in 2010 and 33 in 2011.

The largest asset management deal last year was Lehman Brother's sale of its 40% stake in Neuberger Berman Group LLC to its employees for $1.5 billion, according to the report.

The second biggest deal involved the acquisition by Canadian Imperial bank of Commerce of a 41% stake in American Century Investments for $848 million.

So far in 2012, Fifth Third Bancorp has been the center of two announced deals. This month, the third-largest manager of U.S. money market funds parted ways with about $5 billion of money market funds that it placed with Federated Investors and sold off 16 stock and bond mutual funds to Cincinnati-based Touchstone Advisors, a unit of Western & Southern Financial Group.

So what's going to drive activity in 2012?

Kevin Kabat, president and CEO of Fifth Third Bancorp, said his firm decided to sell of its mutual fund assets to allow it "to focus on the areas where we have a strategic advantage."

This seems to jive with PwC's report, which said that asset management firms "will continue to evaluate their businesses by assessing the key markets and products in which they want to participate," leading to "restructuring of the businesses and the sale of nonperforming or non-scale businesses and funds."

The PwC authors are optimistic that the "U.S. economy continues to show positive signs of recovery and the volatility that resulted in many broken deals in the second half of 2011 appears to have left its place to robust market gains, which are all positive factors that impact asset management M&A."

However, they also suggested that the uncertainty surrounding deal activity in 2011 will continue in 2012.

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