Banking M&A Digest #9

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Lonely Businessman Alone in the Beach

About anyone and anything anywhere related to banking and making money with money - 

by Aivars Jurcans

Buying, Selling, Merging

London Stock Exchange will acquire 4.92% of shares in Euroclear, a securities settlement house, for EUR 278.5 million.


Abu Dhabi Commercial Bank has agreed to merge with Union National Bank and Al Hilal Bank to create the 5th biggest bank in the Gulf region with assets of USD 114 billion. The transaction is expected to close in H1 2019.


Deal Ideas In Process

Nexi, the Italian electronic payments services provider for credit card operator CartaSi, is said to be preparing for an IPO that could potentially value the company at EUR 7 billion. Nexi is owned by Bain Capital, Advent International and Clessidra.


Banca Monte dei Paschi di Siena, an Italian bank which received state aid in 2017 and is still 68% government owned, is said to be preparing for sale of its prime real estate assets with the estimated value of EUR 600 million. This transaction is part of the capital-boosting plan which was agreed upon with the government and European Central Bank before the bailout.


Bank Hapoalim, an Israeli bank, is said to be working with Citi on preparation of an IPO for Isracard, its credit card business, which could value the company at USD 1 billion. Under Israeli banking reform, Hapoalim and Bank Leumi Le-Israel have to sell their credit card businesses by 2020.


The government of Brasil may sell all the subsidiaries of Caixa Economica Federal and 16 subsidiaries of Banco do Brasil (including its asset manager, BB DTVM) over the next 4 years.


Private equity groups Cerberus and Centerbridge have submitted a joint bid proposing to each acquire 24.9% of shares in NordLB, a German bank. The offer is said to be contingent on current shareholders taking care of past liabilities and the state of Lower Saxony injecting additional funds into capital. 

The bidders intend to reduce the bank’s balance sheet from EUR 155 billion to around EUR 80 billion and to achieve a common equity tier 1 ratio of more than 14% (compared to the current 11.8%).


Mastercard has made an offer to acquire Earthport, a UK cross-border payment specialist, in a transaction valued at GBP 233 million. This bid is said to include a 10% premium over the offer made by Visa last month and is said to raise the prospect of a bidding war.


Kuwait Finance House is said to be considering offering a 35% premium over the market price of shares to buy Ahli United Bank from Bahrain in a share swap deal valued at about USD 8 billion. The merger would create the 6th largest bank in the Gulf region with assets of USD 92 billion. 


Thanks, But No Deal

Covea, a French mutual insurance company, has dropped its plans to make a bid for Scor, a Paris-based reinsurer, because of hostile tactics against it and the “lack of discussion with Scor”. The Covea’s friendly transaction offer made in August 2018 is said to value Scor at EUR 8.2 billion. Covea has confirmed that it would respect the standstill agreement and will not increase its current stake of 8% in Scor above 10% before April 2019.


Banco Santander has withdrawn from bidding for some parts of the Royal Bank of Scotland SME business citing concerns related to Brexit as the reason.


Valued by Markets

Banco Santander, the eurozone’s largest bank by market cap, has increased its core capital ratio (CET1) to 11.3%, which is above the bank’s own target of 11%. Some analysts consider this as still too low (its peers typically have 13-14%) and estimate that the bank might need extra capital in the amount of EUR 7 billion. 

The non-performing loan ratio has decreased from 3.9% to 3.7%.


In expectation of Deutsche Bank’s annual results announcement on February 1, the analysts brace for poor Q4 figures and a return on tangible equity of less than 1%.


Planning, Investing, Moving

The UK High Court has ruled that Barclays is allowed to transfer EUR 190 billion in assets (including ownership of its branches in Frankfurt, Paris and Milan) to its Irish subsidiary because of what the court called “continuing uncertainty over  … a ‘no deal’ Brexit”. The asset transfer is likely to affect 5,000 clients.


The average cost of fitting a new Metro Bank’s, a UK bank, branch amounts to GBP 3.5 million, which is said to be 7x times more than what the competitors spend



Fintechs raised USD 39.57 billion from investors globally in 2018, a 120% increase over the previous year. This was largely due to 52 mega-rounds of investments larger than USD 100 million each.


Nutmeg, a UK online wealth management company, has raised GBP 45 million from investors including Goldman Sachs and Convoy. The company has become the 8th largest wealth manager in UK but has yet to turn a profit.


Important Numbers

Since its inception the hedge fund industry has made USD 1.1 trillion, of which USD 500.3 billion were made by the top 20 funds, which collectively manage only 17.9% of the assets.


The world has more than 40 million millionaires.


UniCredit’s balance sheet today is still 1/2 the size of Italian GDP.


Thoughts Worth Noting

“Global banks are international in life, but national in death.”

Mervyn King, former governor, Bank of England

“If you’re in insurance or investment banking or banking, one dollar in two dollars of everything you do is still US derived.”

John Neal, CEO, Lloyd’s of London

“Vineyards are a long term investment but we can bring our own wine to roadshows and it is a good way to attract new clients.”

Patrick Riviere, CEO, La Francaise

See you again next week!

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