A range of exciting mergers and acquisitions are proceeding among banks unaffected by subprime concerns.
The credit markets may be in crisis but that hasn’t stopped bankers thinking about – and doing – interesting merger and acquisition (M&A) deals. The most striking deal is Industrial and Commercial Bank of China’s (ICBC) decision to take a 20% stake in South Africa’s Standard Bank. This $5.56bn deal is both the largest foreign acquisition by a Chinese commercial bank and the largest foreign investment in South Africa since the end of apartheid. It is a deal that crystallises China’s push into Africa and was put together in a remarkably tight 45 days as capital markets were in turmoil and senior banking heads rolled.
Jiang Jianqing, ICBC’s chairman, and Jacko Maree, Standard Bank’s chief executive, were unencumbered by such baggage and thus able to calmly and quickly reach conclusion on the epoch-making move – helped of course by Goldman Sachs, which has a stake in ICBC and initiated the deal.
Jaws also dropped at Santander’s disposal of Banca Antonveneta only weeks after it acquired the bank. The E9bn offered by Banca Monte dei Paschi di Siena (MPS), a 60% premium on what Santander paid, proved irresistible. For MPS the deal was make or break if the bank was going to remain a significant player in the rapidly consolidating Italian market.
Then there are the deals being talked about: the proposed merger by Portugal’s BPI with the country’s largest listed bank, Millennium BCP, only five months after BPI fended off a hostile bid from BCP. It is a rather audacious move on BPI’s part but shows how damaging a failed M&A deal can be. BCP’s chief executive, Paulo Teixera Pinto, who masterminded the initial attack on BPI resigned in August whereas BPI’s boss Fernando Ulrich, who successfully defended his bank, has emerged as something of a hero.
However, the outcome of this is still less significant than if SEB and Nordea got together to create a new force in European banking – an idea that was being mooted in October. Several options are available for Nordea with the Swedish government pledged to sell its 19.9% stake.
One thing is clear. Bank chief executives unaffected by subprime are not waiting until the crisis resolves itself to complete major strategic moves.
