LONDON - Purchases by governments and state-backed firms made up a record proportion of global mergers and acquisitions (M&A) in February, underscoring how the financial crisis has sidelined private-sector buyers.

Thomson Reuters data released on Wednesday showed 62 percent of last month's M&A was government-backed, the highest proportion since at least 1980.

The deals accounted for $86 billion of the month's total $139 billion. However, in dollar terms it trailed October's $123 billion of state-backed deals, which were mostly bank rescues.

What's happening, more and more, not just in banking but a number of industries, is that the government is the source of capital, said Peter Hahn, an academic fellow at London's Cass Business school and a former Citigroup banker.

As in previous months, states extended their grip on the banking sector: Britain upped its stake in Royal Bank of Scotland (RBS.L) in a deal that may leave it owning 95 percent of the bank, while loss-making French banks Caisse d'Epargne and Banque Populaire sealed a merger in which they will be partly nationalised. [ID:nLQ259274] [ID:nLQ631982]

But state-backed companies also played a big role, with China's Chinalco agreeing a $19.5 billion deal to buy convertible bonds and asset stakes from Rio Tinto ; Australia's Oz Minerals Ltd agreeing to a $1.7 billion rescue bid from Minmetals, also of China; and Swedish power group Vattenfall buying Nuon of the Netherlands.

Where the state is playing a non-distressed role, it's an opportunistic time to buy -- asset prices are down, Hahn said.

Overall, global M&A in the first two months of the year totalled $294 billion, down 17 percent on the same period a year earlier. Citi was the busiest adviser, working on deals worth more than $136 billion.

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