Bank acquisitions still hot
Despite the credit crunch and the resulting shakiness in the financial sector, there are lots of banks apparently that have not been hurt by the subprime mortgage debacle and they are continuing to make acquisitions, both domestically and internationally. True, none of the recent deals are blockbusters, but there are a significant number of deals in the hundred millions or low billions.
In fact, the shaky credit position of some banks gives others without credit problems an opening for "white Knight"-type buyouts.
According an expert cited by the Wall Street Journal ("National Penn and KNBT to merge", 9/9/07), "'Nationally, the number of banking deals this year is on pace to match or fall slightly short of the number last year.'" The article goes on to say: "There were 292 [US} banking mergers last year, worth $108.7 billion. So far this year, there have been 200 deals announced or completed, worth $60.1 billion."
Commerzbank and Bank Forum
Germany's Commerzbank announced it would buy a majority share in Ukraine's Bank Forum. The deal is for $600 million. The deal is part of Western European banks' massive investment in Eastern European banks over the past decade. Bank Forum is the #10 bank Ukraine, while Commerzbank is the #2 lender in Germany.
Other Western European banks have a presence in Ukraine include France's BNP Paribas, Austria's Erste Bank, France's Credit Agricole, and others. It looks like Bank Forum Bank was one of the few locally-owned banks left to buy.
Commerzbank's CEO has stated he has more acquisitions in mind, and rumors have Germany's WestLB AG, a regional savings bank, as a likely target. Commerzbank recently agreed to sell its Japanese fund-management group, Commerz International Capital Management to an equity fund for around $100 million. Commerzbank is planning to concentrate on European operations.
Standard Chartered and American Express
In an $860 million deal, American Express is selling off its international banking operations (American Express Bank) to UK-based private bank Standard Chartered PLC. American Express Bank has operations in 47 countries with 1,700 locations. Standard Chartered is similarly widespread with 1,200 offices in 55 countries. The company has an especially strong presence in Asia and the Middle East.
The move is part of a gradual sell-off of non-core American Express business over the past few years, including tax, as it concentrates on its credit card business.
Standard Chartered bought Taiwan's Hsinchu International Bank last year for $1.2 billion.
Landesbank Baden-Wuerttemberg and Landesbank Sachsen Girozentrale
German state-owned bank Landesbank Baden-Wuerttemberg (LBBW) announced it would buy the Landesbank Sachsen Girozentrale, another state-owned bank. The deal for $410 million) is a result of credit vulnerabilities.
LBBW is the largest German state-owned bank, wholesale banks normallyowned by the one of the 13states in the German Federal Republic. In 2005,LBBW bought (state-owned) Landesbank Rheinland-Pfalz.
Royal Bank of Canadian Alabama National Bank
Royal Bank of Canada, the #1 bank in that country, announced it would buy US-based Alabama National BanCorporation, a regional bank in that state. The deal is for $1.6 billion.
As a Bloomberg story ("Royal Bank Buys Alabama National for $1.6 Billion", 9/6/07) points out, this is part of a pattern:
Canadian banks, barred from merging at home, are taking advantage of a stronger dollar to step up their acquisitions abroad. Royal Bank bought Atlanta-based Flag Financial Corp. in December for $433.5 million, and added 39 branches in Alabama from AmSouth Bancorp. Bank of Nova Scotia, the second-biggest bank, agreed last week to buy Chile's Banco del Desarrollo for about $1.03 billion."
National Penn and KNBT
Mid-size bank chain National Penn, with locations in southeast Pennsylvania, annoucn3ed it would by KNBT in northeast Pennsylvania for stock worth $420 million. The merger will create the fifth-largest bank chain in the state. Not such a big deal, but it is in my backyard.
