Banking M&A Digest #37 (15.8.2019)

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My weekly notes on banking and financial services – 

by Aivars Jurcans

Done! And Done

Bank of Nova Scotia, a Canadian lender, and Colpatria, a Colombian investment firm, has agreed to sell Colfondos, their jointly-held pension fund administrator, to AFP Habitat, a Chilean private pension fund manager. 

Source: Reuters

JC Flowers, a PE firm, will reduce its stake in Japan’s Shinsei Bank from 21.4% to 3.8% by selling shares worth around USD 700 million. JC Flowers together with Ripplewood, another US PE firm, took over the failed Long-Term Credit Bank and relaunched it as Shinsei in 2000.

Source: Reuters

Deals on the Table

Oversea-Chinese Banking Corporation, Singapore’s 2nd largest lender, is said to be considering a bid for almost 90% of shares in PT Bank Permata, an Indonesian lender backed by Standard Chartered. 

Source: Bloomberg

German government is said to be considering the potential sale of its 15.6% stake in Commerzbank and has reached out for external advisers. 

Source: Financial Times

Central Huijin Investment, an arm of state-controlled China Investment Corporation, is said to be in talks to invest in Hengfeng Bank. Based in Shandong province and formed out of early banking reforms in the late-1980s, Hengfeng (previously known as Evergrowing Bank) has assets of USD 201 billion.

Source: Financial Times

Metrics to Watch

Aviva’s, a UK insurer, GBP 24.4 billion of regulatory capital is 194% of the regulatory minimum, compared to its target range of 160%-180%. The capital surplus is worth up to GBP 4 billion.

Source: Financial Times

HSBC North America’s efficiency ratio – its costs as a proportion of its revenues – remains over 80%. It is thought unlikely to meet its target of a 6% return on tangible equity in 2020; its ROTE in 2018 was 2.7%.

Source: Financial Times

Where the Money Goes

Assured Guarantee which offers insurance to debt investors has agreed to take over BlueMountain Capital Management, a USD 19.3 billion money manager.  Assured Guarantee will pay USD 160 million for the acquisition and will invest additional USD 590 million in the firm and its funds. 

Source: Bloomberg

Up-and-Comers

N26, a Berlin-based fintech, estimates that their cost base is 1/5th or 1/6th of the cost base of a traditional retail bank. 

Source: Financial Times

Exciting Numbers

Bad loans on the balance sheets of Italian banks in the beginning of 2019 totalled around EUR 190 billion, or 9% of total loans, compared to EUR 391 billion, or 17%, at the end of 2016.

Source: WSJ

A Thought Worth Noting

“The theory works only when fully implemented, and a full implementation of quantitative easing requires negative deposit interest rates, so that people start to invest and  consume, also in the private sector.”

Kari Stadigh, CEO, Sampo

 

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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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