Wednesday, August 02, 2006

Bankers gone wild (with acquisition fever) It's been the usual flurry of bank deals since the last time we had a round up, especially in Europe. Cross-border deals are all the rage, along with buying and selling off specific operations, especially those related to mortgages. HSBC triumphant In world news, UK megabank HSBC has now become the #1 bank in the world by assets, with a staggering $1.74 trillion at the end of June, which is growth of 16% since last December. US-based Citigroup, the first world bank to reach a trillion dollars in assets, is now #2 at a mere $1.63 trillion. The other main contender for the world' biggest bank by assets is Japan's Mitsubishi UFJ, which briefly surpassed Citigroup earlier this year when its merger was complete. Still, it has over $1.5 trillion in assets, according to a Wall Street Journal article ("HSBC Overtakes Rival Citigroup", 8/2/06). Other top contenders are Bank of America ($1.4 trillion) and J.P. Morgan Chase ($1.3 trillion). Citigroup still remains the #1 bank in terms of market value ($235 billion). It is closely followed by Bank of America ($242 billion), which grown by dint of 70 acquisitions. Only five years ago, Citigroup had twice the market value of Bank of America. BOA now has around 10% of American deposits, while Citigroup had only around 3%. Crédit Agricole buys Greek bank France's #1 bank, Crédit Agricole, recently got approval for its purchase of Emporiki Bank, the #4 Greek bank. The deal was worth $4.2 billion. The Financial Times reports that Emporiki had been losing money due to intense competition. This is one of the first strikes in what some sources are predicting to be a big round of globalization in the hitherto protected Greek economy, dominated by family enterprises. A Financial Times article ("Globalisation changes face of corporate landscape", 7/28/08, quotes on Greek banker as saying "We have entered an era which will be characterised by the dominance of fewer and bigger firms in many sectors." In response, Greek banks themselves are looking abroad fro growth opportunities. For example, EFG Eurobank, a Greek bank, bought a 70 percent stake in Turkey' Tekfenbank and National Bank of Greece has agreed to acquire a 46 per cent of Turkey's Finansbank. Other banks rumored to be targeted are Serbia's Vojvodanska, Romania's CEC and Egypt's Bank of Alexandria. ABN Anro sells a division Dutch-based ABN Amro announced the sale of its Bouwfonds property division for a total of $2.155 billion. The property-development and asset management unit went to Dutch rival Rabobank NV. The mortgage unit went to SNS Reaal Groep, the #1 Dutch mortgage company. General Electric was reportedly interested in adding Bouwfonds to its credit division. ABN Amro declared the property fund a non-core asset. The company has been offloading other non-core assets recently. It sold its unit handling futures and options to Swiss bank UBS AG in May 2006 for $386 million. It sold its operations in Curacao to First Caribbean Bank. Other minority bank holding have been sold. Land rush on Ukrainian banks Erste Bank, a major Austrian bank announced it will acquire controlling interest in Ukraine's Prestige Bank. While the purchase is a small one ($35 million), Erste plans to expand Prestige with over $100 million in new capital. The move is part of a push by Western European banks into Ukraine, including the 2005 billion-dollar acquisition of Aval Bank by Austria's Raiffeisen. In the same year, France's BNP Paribas bought France's BNP Paribas acquired controlling interest in Ukrssibank for half a billion dollars. In 2005, Italy's Banca Intesa bought a controlling interest in Ukrsotsbank, for over a billion dollars. Other buyers in 2006 include Hungary's OTP Bank, France's Crédit Agricole, and Greece's Eurobank. German banking under assault Germany is one of the most fragmented banking industries in Europe. It includes 316 private banking companies, 576 state-owned Sparkassen (savings banks), 13 state-owned Landesbanken (wholesale banks), and 2,000 cooperatives. The country has resisted more than most countries the consolidation of the industry. But things may be changing. Suddenly a private bank (WestLB AG) bank is after a major share in Landesbank HSH Nordbank. Meanwhile, the city of Berlin has been forced by verdict to sell its majority share in Bankgessellschaft Berlin, a Sparkasse. And private banks are interested. The conservative German banking establishment is up in arms. The private banks complain that they can't compete in the new round of globalization because of the home competition with state-owned banks, something not faced in most other countries. Others Icelandic bank Straumur-Burdarás recently bought a 50 per cent stake in Stamford Partners, a British investment bank, for an undisclosed sum. Deutsche Bank AG  announced it will buy US-based MortgageIT, a mortgage lender with 50 US branches, for $429 million. This follows the May purchase by Deutsche Bank of US mortgage company, Chapel Hill Funding LLC, for an undisclosed sum. US bank Citizens Bank will buy another US bank, Republic Bancorp Inc. for about one billion dollars. Citisens is mostly concentrate din the mid-Atlantic states, while Republic is located in the Midwest 9:52:08 PM

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