Banking M&A Digest #27

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My weekly notes on banking and financial services - 

by Aivars Jurcans

Done! And Done

LHV Pank, an Estonian bank, has agreed to acquire the Danske Bank’s Estonian private loan portfolio amounting to EUR 470 million. The transaction price is expected to be around EUR 410 million.

Source: LHV Group

GIC, the Singapore sovereign wealth fund, has built a 3% stake in Julius Baer, a Swiss private bank. The bank has started a USD 100 million cost-cutting program to trim its workforce by 2% and to pare back its presence in non-core markets.

Source: Financial Times, Bloomberg

Piraeus Bank, the biggest Greek lender, has agreed with Swedish Intrum to create a new debt collection JV (80% owned by Intrum and 20% by Piraeus) to work on the bank’s EUR 27 billion (almost 1/2 of its loan book) bad debt portfolio which will remain on the bank’s balance sheet. A similarly structured entity will take over EUR 1 billion of bank’s real estate assets. Intrum will pay EUR 296 million in cash with the remaining EUR 32 million due after 2022.

Source: Financial Times

Allianz has agreed to buy out the 51% of shares in LV General Insurance it didn’t already own from Liverpool Victoria Friendly Society in a transaction valued at up to GBP 578 million.

Source: Financial Times

Allianz has agreed to acquire the general insurance (property and casualty insurance) business from Legal & General for GBP 242 million.

Source: Financial Times

Deals on the Table

TCS, the owner of Tinkoff (a Russian online retail bank), is said to be planning to raise USD 300 million on the London exchange to support scaling up its new credit business lines.

Source: Financial Times

Bank of Kigali, Rwanda’s biggest lender by assets, is said to be in talks to acquire Sonarwa, a local insurance company which offers aviation fire, automative and marine insurance.

Source: Reuters

Thanks, But No Deal

BPER Banca, an Italian bank, is said not to be interested in rescue of Carige, a bank under special administration, because “conditions are not in place to consider a tie-up”.

Source: Reuters

Non-Standard Finance has abandoned its fight to take over Provident Financial, another UK subprime lender, because of “significant shareholder resistance”.

Source: Financial Times

Thus Spoke the Markets

Mizuho Financial Group’s, a Japanese bank, return on equity in the last financial year was the lowest in a decade at 1.2%.

Source: Financial Times

HSBC’s adjusted “jaws ratio” – which measures income versus cost growth – for 2018 came in at minus 1.2%.

Source: Financial Times

Where the Money Goes

HSBC has launched its PayMe e-wallet targeting Hong Kong startups and small businesses. It allows users to transfer small amounts of money and is expected to strengthen HSBC’s competitive position against Ant Financial and Tencent.

Source: Financial Times

Mizuho is planning to allocate “several billion dollars” over the next 5 years to invest in fintech in Asia.

Source: Financial Times

Banco Santander and eBay have agreed a lending partnership where Asto, a fintech app owned by Santander, will start offering loans to more than 200,000 SMEs that sell their products on eBay in the UK later this year.

Source: Financial Times

Up-and-Comers

About 1/3 of Monzo’s, a UK neobank, 2 million customers live in London and less than 5% are over 60.

Source: Financial Times

On the Baltic Shores

East Capital, a USD 3.5 billion emerging and frontier markets asset manager, has hired Anders Borg, Sweden’s former finance minister (2006-2014), as an adviser.

Source: Financial Times

Financial Lingo

“Strong payment authentication” – rules under the PSD2 (Second Payment Services Directive) designed to reduce fraud and requiring an extra level of verification for most online payments above EUR 30 (set to enter into force in September).

Source: Financial Times

Exciting Numbers

Between 2000 and 2018 the number of private equity backed companies in the US rose from less than 2000 to nearly 8000, while the number of publicly listed companies over the same period fell from 7000 to about 4000. Meanwhile, the aggregate value of PE back companies is USD 5 trillion, compared with USD 30 trillion value of US public companies.

Source: Financial Times

According to European Central Bank’s forecast, the Eurozone banks return on equity will drop form 6.2% in 2018 to 5.5% this year.

Source: Financial Times

A Thought Worth Noting

“The correlation between investment success and thought leadership is imperfect. You need the first to achieve the second.”

Financial Times Lex

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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.

Photo by Daria Shevtsova on Unsplash

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