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My weekly notes on banking and financial services - by Aivars Jurcans
Done! And Done
Industrial and Commercial Bank fo China, the country’s biggest lender, has agreed to invest through one of its subsidiaries up to USD 436 million in Bank of Jinzhou, a Hong Kong listed lender, taking a stake of about 10.82%.
Source: Financial Times
Schroders, a fund group, has agreed to acquire a majority stake in BlueOrchard Finance, a Zurich-based commercial manager of debt investments in developing world, in a deal that values the specialist boutique at more than GBP 100 million. BlueOrchard has USD 3.5 billion under management.
Source: Financial Times, Reuters
Deals on the Table
Sun Life Financial, a Canadian insurer, is said to be willing to spend USD 500 million to USD 1 billion on firms with more than USD 10 billion in managed assets in mid-market lending, mezzanine financing or other areas of the private credit space, either in North America or in Europe.
Source: Bloomberg
Lloyds Banking Group is said to be in exclusive talks to acquire a GBP 3.7 billion mortgage book from Tesco, a supermarket giant.
Source: Reuters
Thanks, But No Deal
Swiss Re has abandoned any attempt to float its UK life insurance business until 2020 after weak demand forced it to pull a proposed GBP 3 billion IPO a few weeks ago.
Source: Financial Times
Thus Spoke the Markets
BNP Paribas, a French bank, common equity tier 1 ratio was at 11.9% at the end of Q2 2019, an increase of 20 bps over the Q1 and 10 bps ahead of expectations. Its return on tangible equity remains flat at 11%.
Source: Financial Times
Credit Suisse has made a return on tangible equity of 9.7% in Q2 2019, up from 6.9% last year, on track to meet its 2019 target of 10% to 11%.
Source: Financial Times
Banco Bilbao Vizcaya Argentaria, a Spanish lender, fully loaded core equity tier 1 ratio was 11.52% at the end of H1 2019, up 17 bps since March.
Source: Financial Times
GAM, a Swiss fund manager, shares trade at an enterprise value of 27x times its (depressed) full-year ebitda, which is far above peers.
Source: Financial Times
Deutsche Boerse is trading at 20x times forward earnings, a 10th higher than its 5-year average, compared to the London Stock Exchange on 33x times, or 50% above average.
Source: Financial Times
Citigroup’s return on tangible common equity has risen from under 8% to nearly 12% since 2012.
Source: Financial Times
Metrics to Watch
CYBG, a Glasgow-based lender which operates the Clydesdale and Yorkshire Bank brands and bought Virgin Money in 2018, said its net interest margin during H1 2019 was 3 bps lower than the previous year at 168 bps.
Source: Financial Times
DBS, Singapore’s biggest bank, reported a rise in net interest margin by 6 bps to 1.91% as a result of “higher interest rates in Hong Kong and Singapore”.
Source: Financial Times
Where the Money Goes
Sberbank, Russia’s state owned lender, and Mail.ru, an internet firm, have agreed to invest up to USD 1 billion in a new joint platform for taxi services and food delivery.
Source: Reuters, Financial Times
Strategic Cuts
Societe General, a French bank, has agreed to sell PEMA, a truck and trailer rental company, to TIP Trailer Services, a unit of I Squared Capital, as part of restructuring aimed at selling non-core assets. PEMA has a fleet of around 19,000 vehicles in 7 countries.
Source: Reuters
Up-and-Comers
MYbank, an online lender backed by Ant Financial Services Group and Fosun International, seeks to raise about USD 871 million in its maiden fundraising which would value it at almost USD 3.5 billion.
Source: Reuters
Financial Lingo
“Resolvable” – the ability to let banks fail in an orderly manner without risks to depositors (the Bank of England has committed to make all big UK lenders fully “resolvable” by 2022).
Source: Financial Times
Exciting Numbers
According to Equilar, on average, the bosses of the top 5 US global banks owned USD 222 million of stock as at the end of 2018, more than 15x times the average of their counterparts at the top half-dozen global banks in Europe.
Source: Financial Times
A Thought Worth Noting
“The Fed is often wrong.”
Donald John Trump, 45th president, United States of America
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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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