Banking M&A Digest #14

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

by Aivars Jurcans

Buying, Selling, Merging

The shareholders of Nigeria’s Access Bank have approved the USD 235 million acquisition of Diamond Bank. The combined bank will operate under the Access Bank brand from April 1 and will have 29 million customers. 

Source: Reuters

Julius Baer, a Swiss private bank, has acquired additional 30% in NSC Asesores, a Mexican wealth manager, increasing its stake to 70%. NSC Asesores is said to manage assets of USD 3.5 billion.

Source: Reuters

Carlyle Group, a private equity firm, has acquired a 9.23% stake in SBI Life Insurance, a JV between State Bank of India and BNP Paribas Cardif (a BNP Paribas unit), from BNP Paribas. The deal value is estimated to be USD 653 million. BNP Paribas will retain 12.8% of shares in the insurer after the transaction. 

Source: Reuters

Deal Ideas In Process

Advent, a buyout fund, has made a bid for Cerved, a Milan-based Italian credit data provider, and is said to have been granted limited access to company’s books. It is expected that a potential deal would value Cerved at about EUR 1.8 billion.

Source: Reuters

Bain Capital’s Credit Special Situations Europe fund has raised EUR 1.25 billion for purchase of bank secured debt, NPLs and real estate assets. In 2018 Bain is said to have bought 9 bank loan portfolios with a gross book value of more than EUR 4 billion.

Source: Bloomberg

PT Bank Mandiri, Indonesia’s state owned lender, is said to be exploring an acquisition of PT Bank Permata, its rival backed by Standard Chartered (owner of 44.6%). The market value of Permata is around USD 2.2 billion. 

Source: Bloomberg

Chubb, a Switzerland-based insurance company and a minority shareholder in Huatai Insurance Group since 2005, has received permit from Chinese regulator to take its stake above 50%. Huatai is a diversified insurer and asset manager with 11 million customers.

Source: Financial Times

Nexi, an Italian payments group, is said to be preparing for an IPO in spring 2019 that is expected to value the company at more than EUR 5 billion. Nexi’s 2018 revenues amounted to EUR 942 million, and EBITDA – to EUR 419 million.

Source: Financial Times

Mitsubishi UFJ Financial Group, a Japanese bank, is said to be close to finalising an acquisition of the entire aviation finance portfolio of DZ Bank, a German lender, in a EUR 5.6 billion transaction (a slight premium over the face value of EUR 5.3 billion in drawn loans). 

Source: Financial Times, Reuters

Qatar Investment Authority, a sovereign wealth fund, is said to be seeking a stake of at least 5% in Deutsche Bank. Der Spiegel has reported that QIA could either buy the shares on the open market of from HNA, the Chinese company which has a 6.3% holding in Deutsche.

Source: Reuters

Entirely German Story

The uber-bank to be created by a potential merger of Deutsche Bank and Commerzbank would be the 2nd largest eurozone lender (behind BNP Paribas) with EUR 2 trillion of assets, EUR 845 billion of deposits, 2,500 branches and 141,000 employees. It is estimated that the merger could generate EUR 2 billion in synergies within 5 years but that they would be offset by EUR 4 billion in integration costs and EUR 1 billion in lost revenue due to client overlap.

Source: Financial Times

Thanks, But No Deal

Aon first admitted being in “early stages of consideration” to make an all-stock bid for Willis Towers Watson, another insurance brokerage, to issue a statement only a day later saying that it had scrapped these plans. Willis Towers has a market value of around USD 24 billion, while Aon’s market value is close to USD 41 billion. Aon’s forward price-to-earnings multiple is approaching 20x times, while Willis Towers Watson’s is said to be in the low teens.

Source: Financial Times, Reuters, Bloomberg

Valued by Markets

Direct Line, an insurer, has reported that its Solvency II ratio – a measure of capital available as a proportion of the minimum required – at the end of 2018 stood at 170%, up from 162% the year before. It is in the upper end of its target range of 140-180%.

Source: Financial Times

The FT Lex suggests that selling off Aviva’s (a UK insurance company) international operations could fetch as much as GBP 18 billion. This would allow Aviva to repay debt and to return the amounts equal to 3/4 of its market capitalisation to shareholders. Aviva has generated total returns to shareholders of 17% over 5 years, compared to 56% by Legal & General and 38% by Prudential. 

Source: Financial Times

Bank of Cyprus has reduced its NPL portfolio to EUR 4.8 billion, or 38% of total assets, at the end of 2018 (compared to EUR 15 billion, or 2/3 of loan portfolio, in 2014). Its common tier 1 equity stood at 12.1%, while its shares are still trading at 0.25x times book value.

Source: Financial Times

Allied Irish Bank, which is still 71% owned by the Irish government, has reduced its NPL portfolio from EUR 10.2 billion to EUR 6.1 billion in 2018. The NPLs now account for 9.6% of gross portfolio with a plan to be reduced to 5% by the end of 2019. 

Source: Financial Times

RSA, an insurer, reported the Solvency II ratio of 170%, or 10 percentage points above the top of target range.

Source: Financial Times

Planning, Investing, Moving

Mizuho Financial Group confirmed taking one-time restructuring costs of USD 6 billion to book impairment losses on fixed assets and to restructure its securities portfolio.

Source: Reuters, Financial Times

Phoenix, a life insurer, has increased its target of generated synergies from the 2018 acquisition of  Standard Life Aberdeen’s insurance business from GBP 720 million to GBP 1.2 billion.

Source: Financial Times

Closer to Home

With returns on equity of 9.3% Nordea is seen as underperforming in comparison with its peers, SEB and Swedbank, which have reported almost 16%.

Source: Financial Times 

Important Numbers

About 60% of Japanese companies are effectively debt free, according to Koji Fujiwara, CEO, Mizuho Bank.

Source: Financial Times

A Thought Worth Noting

“One thing is certain: flimsy or spurious risk calculations make a nonsense of the precise and intricate rules on bank capital that they support.”

Patrick Jenkins, Inside Business, Financial Times

See you again next week!

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Aivars Jurcans has more than 20 years of corporate finance and investment banking experience. His services are currently available through MURINUS ADVISERS (http://www.murinusadvisers.com).