Banking M&A Digest #35 (1.8.2019)

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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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