(FORTUNE Magazine) – American's hottest export to Europe these days may be investment bankers. Led by the Morgans--Morgan Stanley and J.P. Morgan--mergers and acquisitions shattered all previous records last year, posting a mountainous $219 billion worth of deals, up 45% from $138 billion in 1994. The previous record: $158 billion at the dawn of the European Union in 1990.

The frenzy cuts across industries, powered by recent EU initiatives that are dismantling barriers to cross-border takeovers. One casualty: the genteel ways of Continental management practice. Witness Credito Italiano's $2.4 billion purchase of rival Credito Romagnolo, Italy's first hostile takeover. With European bourses booming, shareholders are seeking heady returns on their investments, even if that means selling trusty old stocks--and firms--to the highest bidder. "What's going on is a combination of restructuring and greed," says Andrew Hilton, director of London's Centre for the Study of Financial Innovation, an economic think tank.

Britain, with its more liquid economy and tradition of share ownership, accounted for $114 billion, just over half of all last year's transactions, including the two biggest Euro deals ever: the $15.3 billion merger of Lloyds Bank and TSB Group, and pharmaceuticals giant Glaxo's $14.3 billion hostile takeover of rival Wellcome. Other European milestones included Pharmacia's $13 billion merger with Upjohn, and Hoechst's $7.1 billion acquisition of Marion Merrell Dow.

American bankers have exported their dealmaking blood lust, grabbing three of the top five slots for European M&A advisory work. "A large part of our deals are now domestic," says John Studzinski, head of the European mergers, acquisitions, and restructuring group for Morgan Stanley, which topped the league with 31 deals and 21% of the European market. "We've arrived as a major European financial adviser." Adds Klaus Diederichs, co-head of European M&A for J.P. Morgan: "Some of our competitors took their eyes off the ball. But competition will get tougher"--particularly when the deals get fewer and bigger, as expected.

That will take a while, because Europe's industries must face painful restructuring to compete with their U.S. and Japanese counterparts.

--Richard Evans