Banking M&A Digest #34 (25.7.2019)

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My weekly notes on banking and financial services - 

by Aivars Jurcans

Done! And Done

Hana Bank, a South Korean lender, has agreed to buy a 15% stake in the Joint Stock Commercial Bank for Investment and Development of Vietnam for USD 850 million.

BIDV (which has a market capitalisation of USD 5.26 billion) will issue new shares for the transaction.

Source: Reuters

Assicurazioni Generali, an Italian insurer, has agreed to acquire Seguradoras Unidas a.k.a. Tranquilidade from Apollo Global Management for EUR 510 million. Tranquilidade is the 2nd largest non-life insurer in Portugal with a 15.5% market share.

Source: Reuters

Deals on the Table

General Electric is said to be in talks to sell PK AirFinance, an aircraft-financing unit of its aircraft-leasing business GECAS, which could be valued at around USD 4 billion. Starwood Capital Group and Apollo Global Management are said to have submitted their offers.

Source: Reuters

Metro Bank, a UK lender, is said to be in talks to sell a portfolio of loans to strengthen its finances. No details were provided but allegedly this could be a transaction to offload a GBP 500 million mortgage portfolio back to Cerberus Capital Management.

Source: Reuters

Apollo Global Management, a buyout firm, is said to have approached Coface, a credit insurance company partly owned by Natixis (a French bank), with an acquisition offer. Coface provides credit insurance, debt collection, factoring and market research services. Natixis (which has a stake of around 41.7%) has stated that “there is currently no discussion underway”.

Source: Reuters

Thus Spoke the Markets

Metro Bank’s core equity tier one ratio stood at 15.8% at the end of Q2, which is materially higher than its regulatory minimum.

Source: Financial Times

Julius Baer’s cost-to-income ratio increased to 71% in Q2, up from 70.6% at the end of 2018. The bank has adjusted its previous target of 64% to 68% to a medium term commitment of bringing the ratio below 68%.

Source: Financial Times

Morgan Stanley has reported return on equity of 11.2% in Q2, compared with 10% at Citigroup and 16% at JPMorgan.

Source: WSJ

Where the Money Goes

Prudential and FWD Group are said to be competing to become an exclusive insurance-distribution partner of Bank for Foreign Trade of Vietnam, the nation’s biggest lender by market value. Vietcombank is said to be expecting to receive an initial payment of about USD 400 million with the rest to be based on the performance of the business.

Source: Bloomberg

Strategic Cuts

Deutsche Bank’s restructuring costs are expected to amount to a total of about EUR 7.4 billion through 2022.

Source: WSJ


Atom Bank, a UK mobile-focused challenger lender, has raised GBP 50 million at GBP 530 million valuation. Atom’s lending has grown to GBP 2.4 billion and deposits to GBP 1.8 billion in the past year.

Source: Financial Times

Coinbase, a cryptocurrency outfit, and Robinhood Markets, an online brokerage, are currently valued at USD 8 billion and USD 5.6 billion respectively

Source: WSJ

N26, a German online bank, has raised USD 170 million from existing investors, putting the value of USD 3.5 billion on the company.

Source: Financial Times, WSJ

Financial Lingo

“Macro-criticality” – in IMF jargon, the term is used to describe topics that can bring broader overall economic results.

Source: Financial Times

Exciting Numbers

The cost of capital for European banks has increased to around 10%.

Source: Financial Times

European-focused direct lending funds raised USD 11.1 billion in H1 2019 (compared with USD 8.5 billion a year ago), and, according to Prequin, have dry powder of USD 47.6 billion available.

Source: Financial Times

According to Bain & Company, multiples for companies being bought in the US and Europe are close to 11.0x times earnings before interest, tax, depreciation and amortisation (ebitda),

Source: Financial Times

A Thought Worth Noting

“I am not in a position, and I don’t think any other CEO of any bank would be in a position, to say that everything looks dandy today.”

Anders Karlsson, interim CEO, Swedbank


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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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