Banking M&A Digest #28

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My weekly notes on banking and financial services - 

by Aivars Jurcans

Done! And Done

Commonwealth Bank of Australia, the Australia’s largest lender, has agreed to sell Count Financial, its advisory firm, in a transaction valued at USD 1.7 million.

Source: Reuters

UBS has signed a deal with Sumitomo Mitsui Trust to establish a UBS majority-owned JV to target wealthy and ultra-wealthy customers. The Japan’s household assets are estimated at USD 17 trillion.

Source: Reuters

Deals on the Table

Swiss Re is said to be preparing to float ReAssure, its UK life insurance business specialising  in buying up books that other insurers no longer want. ReAssure is expected to have a free float of at least 25%.

Source: Financial Times

VTB, a Russia’s state-controlled bank, is said to be considering acquiring a stake in Mirogroup, a major local grain trader. This move is well in line with VTB’s recent activities of buying grain export infrastructure assets.

Source: Reuters

Thanks, But No Deal

ING Groep, a Dutch lender, is said to have decided against a tie-up with Germany’s Commerzbank.

Source: Reuters

Thus Spoke the Markets

Deutsche Bank’s corporate and investment banking business, which accounts for 1/2 of group revenue and 2/3 of risk-weighted assets, earned a return of tangible equity of 0.9% in 2018, compared with its cost of capital of around 10%.

Source: Financial Times

Credit Agricole will aim at a target return on tangible equity above 11% in 2022. It also wants to see its cost-to-income ratio across all the business lines to fall below 60%.

Source: Financial Times

Where the Money Goes

ABN AMRO through its Digital Impact Fund has taken a stake in ThetaRay, an Israeli provider of big data analytics to combat financial cybercrime and operational failures.

Source: Reuters

Goldman Sachs will team up Marcus, its consumer bank in the UK, with Saga which specialises in products and services for the over-50s. Goldman has attracted 250,000 thousand savings customers in the UK over the last 10 months.

Source: Financial Times

Up-and-Comers

Ant Financial Services, a Chinese fintech and an affiliate of Alibaba Group, has formed a JV with the Shanghai unit of The Vanguard Group, a US asset manager.

Source: Reuters

On the Baltic Shores

EQT, a Swedish private equity firm with EUR 40 billion of assets under management, is said to be considering an IPO this fall, “at the right time ahead of a looming bear market next year”, according to Christian Sinding, its CEO.

Source: Financial Times

Exciting Numbers

According to AIG, for deals of USD 500 million – USD 1 billion claims were made on 26% of M&A (warranty and indemnity) cover insurance policies.

Source: Financial Times

Goldman Sachs estimates that for every USD 10 billion of wholesale funding it can replace with deposits, it saves USD 100 million a year in annual funding costs.

Source: Financial Times

According to Pitchbook, average leverage for private equity buyout has exceeded 6x times every year since 2013. Between 2010 and 2013 leverage was about 4.5x times.

Source: Financial Times

A Thought Worth Noting

“The restructuring costs at investment banks are usually 100% to 150% of the targeted cost savings.”

Stuart Graham, analyst, Autonomous

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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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