Next year will be the slowest for corporate takeovers and mergers since 2004, investment bankers say.

Barclays Capital and Nomura bankers predict the value of deals may decline 30% in 2009 to about $2 trillion (£1.3 billion) around the world as banks refuse to lend to companies doing deals, and potential buyers find themselves cash-strapped due to the recession.

The only major triggering factor for deals will be sales demanded by creditors and transactions brokered by governments attempting to restructure crippled industries, as has happened in the UK banking sector this year. Royal Bank of Scotland, now effectively nationalised, may shed its insurance operations and a stake in Bank of China to improve its balance sheet.

Takeovers so far this year are down 36% on a year earlier, meaning banks' advisory and other fees on transactions are down 34% to $63 billion, according to Bloomberg.

"These are the worst conditions for many years, as bad or worse than the early 1990s, perhaps as bad as the mid-1970s," said Philip Keevil, senior partner at Compass Advisers. "There will be a flood of strategic deals in the new year out of necessity, including government-forced mergers among banks and insurance companies."

The UK has been one of the busiest countries for such deals, with the Lloyds TSB-HBOS merger and the acquisitions of Alliance & Leicester, Bradford & Bingley and others. US banking deals have been even more frenetic, but other countries like Russia, Italy and France could be next in line for major government-encouraged deals.