Banking M&A Digest #31 (4.7.2019)

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My weekly notes on banking and financial services - 

by Aivars Jurcans

Done! And Done

FWD Group, a Hong Kong based insurance company, has agreed to acquired the life insurance business from Siam Commercial Bank, a Thailand’s lender, for USD 3 billion. The transaction gives SCB the right to distribute FWD’s insurance products to its customers in Thailand for 15 years.

Source: Financial Times

Cembra Money Bank, a Swiss lender, has agreed to acquire Cashgate for USD 282 million. The transaction will increase Cembra’s personal loans, auto leases and loans portfolio by around CHF 1.4 billion, to CHF 6.2 billion. 

Source: Reuters

FWD Group has agreed to buy MetLife’s business in Hong Kong. The terms of the transaction were not disclosed but the agreed price is said to be less than USD 400 million.

Source: Financial Times

LGT, a private bank and asset manager (owned by Liechtenstein’s princely family), has agreed to acquire “a majority stake” in Validus Wealth (formerly known as WGC Wealth), an Indian servicer of high net worth private clients. 

Source: Reuters

Deals on the Table

Assicurazioni Generali is said to be the frontrunner to acquire Tranquilidade, the 2nd largest non-life insurer in Portugal, from Apollo Global Management. A deal is expected to value Tranquilidade at almost EUR 600 million. Allianz SE, Grupo Catalan Occidente SA and Ageas are being suggested as parties having submitted final offers as well. 

Source: Bloomberg

Axis Bank, India’s 3rd largest private sector lender, is said to be considering raising at least USD 1.3 billion through a share sale to institutional investors. 

Source: Bloomberg

Thanks, But No Deal

Deutsche Bank is said to have held talks with Citi, BNP Paribas and “some other parties” regarding the possible sale of parts of its equities business. No agreements have been reached.

Source: Reuters

Thus Spoke the Markets

Deutsche Bank is said to be planning (as part of restructuring process) to reduce its common equity tier one ratio from its current minimum target of 13% to 12.5% of risk-weighted assets. A one percentage point reduction of the ratio unlocks EUR 3.5 billion in capital.

Source: Financial Times

ReAssure, the UK’s 6th largest life insurer (owned by Swiss Re), expects the IPO price range to value it at between GBP 2.8 billion and GBP 3.3 billion. The company intends to pay a divided of GBP 265 million a year, which – at the mid point of price range – would give a dividend yield of 8.7%

Source: Financial Times

Strategic Cuts

Abu Dhabi Commercial Bank, having completed a 3-way merger with Union National Bank and Al Hilal Bank, is said to be planning reducing its workforce by cutting 2,000 jobs    (of 8,500 people employed by the 3 banks prior to the merger). This move is expected to generate USD 167 million in cost savings annually.

Source: Bloomberg

Deutsche Bank is said to be considering reducing its workforce by 15,000 to 20,000. This is an equivalent of roughly 1/2 of all investment banking jobs at Deutsche and about a 1/5 of its total workforce of c.91,000.

Source: Financial Times

Where the Money Goes

Invesco, an asset manager, has made an additional USD 300 million investment in Grab, Southeast Asia’s biggest ride hailing company, bringing Invesco’s total investment to USD 703 million. 

Source: Reuters

JPMorgan is said to be discussing purchasing a stake in 10x Future Technologies, a banking technology start up. Founded in 2016,10x develops technology that allows banks to retrieve customer data more quickly.

Source: Financial Times

Up-and-Comers

Zopa, a UK peer-to-peer lender, is said to be planning to raise GBP 200 million from private equity and sovereign wealth funds to satisfy regulatory requirements for receiving a UK banking license.

Source: Bloombergs

Monzo’s, a UK digital bank, “per-user contribution margin” (annual cost or profit from servicing each customer) has reached GBP 2 by the end of February 2019, from negative minus GBP 30 a year earlier.

Source: Financial Times

On the Baltic Shores

According to UBS, Nordea’s cost-to-income ratio of 56% is above the average across the region of 49%, but still below the European level of around 60%. 

Source: Financial Times

Exciting Numbers

According to a Bundesbank survey, an average German carries EUR 107 in cash, compared to the average Frenchman’s EUR 32 and Brit’s GBP 22.

Source: Financial Times

Private equity dealmaking has accounted for 13% of global acquisition activity so far in 2019, the highest level since 2013.

Source: Financial Times

Less than 1/10th of China’s population of 1.4 billion have life insurance.

Source: Financial Times

A Thought Worth Noting

“I’m not known to be a person that lets go, especially when I think that the right thing to do is to not let go.”

Andrea Orcel, former CEO, UBS

P.S. Andrea Orcel is about to launch a EUR 100 million lawsuit against Santander after it withdrew the offer to make him CEO earlier this year.

 

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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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