One of the latest deals comes from Swiss bank UBS, which is acquiring 51% of South Korean asset manager Daehan Investment & Securities from Hana Financial Group for Won180bn ($194.3m). The deal consideration has been increased from the initial Won150bn agreed last year and UBS will pay a further Won30bn over the next three to five years in an earn-out provision.
ING, reportedly the preferred buyer of Morgan Stanley’s fund Landmark Asset Management, has also expressed interest in the country’s asset management business. And investment bank JPMorgan has received approval to set up asset management operations in the country.
Another South Korean asset management transaction is Macquarie’s sale of Macquarie-IMM Investment Management, with about Won10,000bn in assets under management, to US-based Goldman Sachs. The sale raised questions about why the Australian bank would disinvest from a sector that is expected to boom. Macquarie, however, has the biggest foreign investment banking presence in South Korea and the Goldman Sachs’ offer has been reported to be “too good to ignore”.
Based on the assets under management, the offer has been estimated to be between Won120bn and Won180bn. Macquarie also runs another asset management unit, Macquarie Shinhan Infrastructure Asset Management, with Shinhan Financial Group, South Korea’s second biggest lender.
Foreign banks are also anticipating that South Korea’s mandatory corporate pension scheme, which will require the outsourcing of a fixed portion of retirement savings to a third-party financial services firm, will apply to many local companies creating additional business opportunities in the sector. The scheme will be implemented in 2010.
South Korea’s own forecast about the asset management sector, as elaborated by the country’s financial watchdog, the Financial Supervisory Service, is that the market will grow at a double-digit rate.
According to the Asset Management Association in Korea, South Koreans had $260bn invested in funds at the end of March, up 18% from the end of 2005. Foreign asset managers control about 18% of the Korean market.
UniCredit/Capitalia talks
Italy’s UniCredit and Capitalia have announced they are in talks on a possible merger. A deal would create Italy’s largest banking group with a vast retail network and combined value of about €100bn ($136bn). UniCredit would benefit from Capitalia’s strong presence in the south of Italy. Capitalia is reportedly also in merger talks with another bank, while UniCredit is apparently also considering a tie up with Paris-based Société Générale.
Germany’s Dresden Bank is buying two family-owned asset managers in Belgium to expand its wealth management business. The two asset managers, Van Moer Santerre & Cie and Damien Courtens & Cie, have a combined 3000 clients and €500m under management.
French private banks have won a battle to compete in the country’s savings market. The European Commission has ruled against a law that gives the Caisse d’Epargne, Credit Mutuel and the Banque Postale exclusive rights to market two tax-free products popular with consumers.
Private equity firm Advent International is understood to have won a bid battle to take over Lloyds TSB Registrars for about $550m. Lloyds put up the business for sale as part of plans to divest non-core assets.
Paris-based Crédit Agricole has announced it will set up an investment bank in Saudi Arabia with local partner Banque Saudi Fransi, according to the al-Watan newspaper. Calyon, part of Crédit Agricole, will have a majority stake in the new bank, which will provide securities services, merger and acquisition advisory services, and other financial consultancy services. Calyon owns more than 30% of Banque Saudi Fransi.
Bank of Cyprus has announced it is looking at acquisitions in Ukraine and Russia, as well as considering joint ventures. Bank of Cyprus is currently rolling out a branch network in Romania, where it began leasing operations last year. The bank already has some banking activities in Russia employing 30 people.
New Islamic bank
Kazakhstan’s TuranAlem and Dubai-based Emirates Bank International have announced plans to establish the first Islamic banking operation in Kazakhstan. The venture will be split 50/50.
South-east Asian lender DBS Bank and 22 investors from the Middle East Gulf region have launched Singapore’s first Islamic bank, the Islamic Bank of Asia. The new entity will focus on commercial banking, corporate finance, capital markets and private banking. The bank will have an initial capital of $418m.
Industrial and Commercial Bank of China has applied for regulatory approval to open a branch in New York. The bank is awaiting approval to upgrade its representative office to a branch that can offer lending and deposit services. It plans to add more outlets in countries with strong trade and economic ties with China.
Indonesia’s PT Bank Lippo has announced it will open a sharia (Islamic) unit in the fourth quarter of the year. Bank Lippo is 86.97% owned by Santubong Investment BV, a unit of the Malaysian government’s investment arm, Khazanah Nasional Bhd.
Colombia’s largest bank, Bancolombia, has acquired more than 98% of Banco Agricola Comercial de El Salvador, paying $865m. Banco Agricola, known as Banagricola, is the largest bank in El Salvador by Tier 1 capital. Bancolombia has raised $590m in loans from international banks to finance the acquisition.
Ecuadorian buy-out
Ecuador’s Banco del Pichincha has bought the portfolio and liabilities of Banco Centro Mundo, owned by Chilean group Atlas Cumbres, in a deal worth an estimated $100m. The sale is part of the restructuring process carried out by Atlas Cumbres in Latin America. About 300,000 clients of Banco Centro Mundo will now be Banco del Pichincha’s clients and there will be a liquidation of Banco Centro Mundo’s offices in Ecuador.
India’s largest bank, State Bank of India, has expressed concerns about competition from big foreign players in the highly fragmented Indian banking market. It wants approval from the government to merge with seven units to add 50% more branches to its network and boost lending. State Bank of India has assets amounting to less than $156bn, compared with US-based Citi’s $1900bn and Industrial and Commercial Bank of China’s $962bn.
US-based JPMorgan has announced that its most likely acquisition targets are US regional banks. It was recently reported as a potential bidder for Harris Bank in Chicago, which is owned by Bank of Montreal.
Correction
In last month’s issue we mistakenly used a photo of Nomura chairman Junichi Ujiie in a People story on page 17 about prime minister Shinzo Abe’s financial reform programme. Apologies for the error.
