Banking M&A Digest #29

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My weekly notes on banking and financial services - 

by Aivars Jurcans

Done! And Done

Slovenian Sovereign Holding, a body in charge of privatisations, has decided to sell Abanka, the country’s 3rd largest lender, to Nova KBM, the 2nd largest bank. NKBM is owned by the US investment fund Apollo.

Source: Reuters

Prosperity Bankshares, a Houston-based regional bank, has agreed to acquire LegacyTexas, its Plano-based peer, in a transaction valued at USD 2.1 billion. The deal would create the 2nd biggest bank in the state of Texas measured by deposits.

Source: Reuters

Deals on the Table

Deutsche Bank is said to be considering the creation of a so-called bad bank to hold assets valued up to EUR 50 billion after adjusting for risk. At the upper end it would account for as much as 14% of Deutsche’s balance sheet.

Source: Financial Times

Swiss Re believes that its UK subsidiary ReAssure is likely to be valued at GBP 3 to 3.5 billion in the forthcoming IPO in July.

Source: Bloomberg

Popolare di Bari, an Italian lender, has received a binding bid for its 73.6% stake in Cassa di Risparmio di Orvieto (CariOrvieto). The transaction is expected to strengthen the bank’s capital (its core capital ratio has fallen to 7.52% which is below the 8.83% as required by the Bank of Italy).

Source: Reuters

Thus Spoke the Markets

Idea Bank’s, a Polish lender, core tier one capital ratio stood at 1.9% at the end of Q1 2019. The bank intends to lay off up to 750 staff over the next 6 months to reduce up to USD 13 million a year in personnel costs.

Source: Financial Times

Saga, a UK insurance and travel company, is trading at a historic low of 4x times forward earnings, which is less than 1/2 of its insurance rivals’ multiple. Its net debt to ebitda ratio is forecast to reach 4.6x times in 2020. Analysts believe that the shares might be worth at least 50% more on a sum of the parts basis.

Source: Financial Times

Clydesdale and Yorkshire Bank (soon to be renamed into Virgin Money UK) plans to increase its return on tangible equity to above 12% by the 2022 financial year (from the current 10.4%) with a cost-to-income ratio in the “mid-40s” per cent (from 57%).

Source: Financial Times

The completed merger between Alawwal Bank and Saudi British Bank would allow Royal Bank of Scotland to shed GBP 4.7 billion of risk weighted assets and to boost its CET1 core capital ration by 60 bps.

Source: Reuters, Bloomberg

Where the Money Goes

Cheyne Capital, a London-based hedge fund, has raised a EUR 1 billion fund to buy debt of stressed middle-market companies from banks. The fund intends to hold between 25 and 30 positions, typically of EUR 10-50 million.

Source: Financial Times

Up-and-Comers

Emerging Capital Partners has taken a controlling stake in Inter Africa Transport Forex, a fintech servicing 13,000 African truck drivers across 10 countries. Established in 2007, the company specialises in online fuel orders, cash payouts, road tolls, border payments and parking.

Source: Bloomberg

On the Baltic Shores

Sampo, a Finnish financial conglomerate and the biggest single shareholder, is said to be reducing its stake in Nordea Bank, the largest lender in the region, from over 21% to below 20%. The transaction is considered as technical to ease its capital burden and to move to more lenient regulatory requirements.

Source: Bloomberg

Exciting Numbers

According to UK Finance, banks in London pay an aggregate tax rate of 51%, compared with 34% in New York and 44% in Frankfurt.

Source: Financial Times

A Thought Worth Noting

“[The IPOs are happening because] these companies now need to go public to satisfy their private equity backers, but none of them have ever needed the discipline to create a return or even have a real plan for how to achieve one.”

William de Gale, BlueBox Asset Management

 

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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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