European banking deals head east
Three more recent European banking deals bear witness to a consolidation that, albeit slow by comparison to the US, is moving along. Most notable is the expansion of Western European banking firms in Eastern Europe.
Commerzbank buys out Eurohypo
German banking firm Commerzbank announced the purchase of the remaining shares of mortgage bank Eurohypo from Deutsche Bank and the Allianz finance group (Dresdner Bank). Commerzbank had owned 32% of the company. The deal cost around $5.3 billion.
Commerzbank, founded in 1870, was the #3 bank in Germany, after Deutsche Bank and HVB. The acquisition of Eurohypo will make it the #2 German-owned bank, and the #1 bank inside Germany.
Eurohypo AG is the #1 mortgage lender in Europe, the #1 provider of public financing, and the #10 bank by assets in Germany. (The hypo refers to the German word "hypotheke," meaning "mortgage." The bank was founded by the 2002 merger of the real estate divisions of the same three German banks. The company has expanded its operations to North America and Asia.
Deutsche Bank buys Russian UFG
Deutsche Bank consolidated its position on Russia by buying Russian investment bank UFG for around $420 million. The bank was started by an American, who tried unsuccessfully to sell it two years ago. Now Western banking firms are flocking to Russia, which is booming thanks to the demand for fuels and metals.
As a Wall Street Journal article ("Deal Makers Return To Red-Hot Russia", 12/6/2005) puts it:
This year has been an extraordinary year for investment banking in Moscow, with an explosion of initial public offerings of stock, giant-size loans to Russian corporations and frenzied merger-and-acquisition activity -- a lot of it from Russian companies buying assets abroad.
Of course, the article notes, all the activity is tempting but the risks a re great, as Russia flips from a free market welcoming outside investment to a xenophobic state-run market from day to day, and with plenty of fraud in the mix.
Austrian bank expands in Romania
Erste Bank, Austria's oldest bank (founded in 1819) and one of the biggest, acquired the #1 bank in Romania, Banca Comerciala Romana SA for $4.5 billion. That bank has a 26% share of the Romanian market. Erste beat out Portugal-based BCP Bank.
French bank acquires Ukrainian bank
French bank BNP Paribas announced it would buy a controlling stake in UkrSibbank, the #4 bank in Ukraine for a price estimated to be around $500 million. BNP Paribas is the #1 bank in France, and one of the top ten in Europe.
More on European banking deals
Unicredito buys HVB
HSBC buys Metris
Banking without borders
Banco Santander/Abbey National
Merger fever
Italian consolidation
