Set against a backdrop of
watchfulness and, at best, cautious optimism, banking M&A in
2009 was characterised by lower asset values and government
bailouts – and while the number of deals remained surprisingly
consistent, the total value of those deals dropped sharply.
Dan Jones
reports.

In a year in which many banks concentrated on
rebuilding their own fragile businesses rather than looking to
acquire others, it is perhaps surprising that the number of
financial services mergers and acquisitions in 2009 (4,641 as of
the second week of December) is on course to match 2008’s total
(4,662), according to exclusive data from Thomson
Reuters.

The context of such purchases, however,
remains very different to that of 2007 and indeed much of 2008, as
a glance at the highest value deals this year demonstrates. The
league table of the largest banking deals in 2009 puts things into
perspective – eight of the top ten deals involved de facto
government bailouts for fallen giants such as Royal Bank of
Scotland (RBS) and Citigroup.

The exceptions are asset management firm
BlackRock’s acquisition of Barclays Global Investors for $15.2
billion and Swiss private bank Julius Baer’s early-year capital
raising, but the year has been characterised by sales that, if not
distressed, certainly reflect a new era of lower asset prices and,
consequently, bargain buys. This is reflected in the sharp fall in
the total value of deals in 2009 – though the number of deals this
year is consistent with activity in 2008, the total financial
volume of $382.2 billion seen in 2009 represents a 44 percent drop
from the $684.8 billion worth of deals transacted in 2008.

But if 2009 was characterised by governmental
financial assistance, then 2010 may be defined by the next stage of
that process: the forced divestments of business units – consumer
finance arms, insurance divisions and others – now considered
‘non-core’ by either regulators or the banks themselves. Units
already on the block include retail banking assets at RBS and
Lloyds Banking Group (see RBI 622) as well as Citigroup
businesses grouped in its Citi Holdings division such as most of
Citi’s western European retail banking businesses (see RBI 619).

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From a retail banking perspective, the largest
deals of 2009 have already included notable divestments, such as
RBS’s divestment of its businesses in Taiwan, Singapore, Indonesia,
Hong Kong, the Philippines and Vietnam, which were sold to
Australia’s ANZ for $550 million. And perhaps most notably of all,
many of 2009’s largest acquisitions saw banks looking to gain
market share in their domestic market, as opposed to the
cross-border expansion that characterised the pre-crisis
period.

By value, the top five retail banking deals of
2009 were:

• Société Générale’s €676 million
($989 million) purchase of the 20 percent of Crédit du Nord it did
not already own from Belgium’s Dexia.

• Criteria CaixaCorp (the holding
company controlled by Spain’s largest savings bank, la Caixa)
acquiring a 4.9 percent stake (later increased to 5.1 percent) in
Austria Erste Bank for €628 million ($918 million).

• Bradesco’s purchase of fellow
Brazilian institution Banco ibi for BRL1.4 billion ($799
million).

• ANZ’s purchase of selected
Asia-Pacific assets from RBS for $550 million.

• Barclays’ acquisition of the UK’s
Standard Life Bank from insurer Standard Life for £226 million
($366.5 million).

Mergers and Acquisitions
2009 – largest banking deals by value, January-December
Acquirer/investor	Target	Value ($bn)	Country	Date
HM Treasury (1)	Royal Bank of Scotland	41.88	UK	26.02.09
Preferred Shareholders	Citigroup	28.08	US	30.07.09
BlackRock Inc	Barclays Global Investors Ltd	15.2	US	11.06.09
HM Treasury (2)	Royal Bank of Scotland	13.14	UK	26.02.09
Preferred Shareholders	Citigroup	10.5	US	23.07.09
Preferred Shareholders	Bank of America	9.5	US	25.06.09
CNCE	Banque Federale des Banques	8.9	France	26.06.09
Shareholders	Julius Baer-Private Banking	7.6	Switzerland	01.10.09
HM Treasury	Royal Bank of Scotland	7.52	UK	16.03.09
US Dept of the Treasury	GMAC	7.5	US	20.05.09
Notes: (1) pending; (2) intended. Source: Thomson Reuters

RBI DealWatch
RBI DealWatch tracks global financial services mergers and acquisitions, privatisations and demutualisations, flotations, divestments, share stakes, strategic alliances and joint ventures.
Europe, Middle East, Africa
Country	Participants	Type/value	Description	Date
UK	Lloyds Banking Group	Capital raising	Lloyds Banking Group (LBG) has completed its £13.5 billion ($22 billion) rights issue, with shareholders – including the UK treasury, which still holds a 43 percent stake in the group – taking up 95 percent of the shares on offer.	14 Dec
Slovenia	KBC, Nova Ljubljanska Banka, China Development Bank	Possible stake acquisition	China Development Bank is eyeing up a bid for KBC’s non-strategic 30.6 percent stake in Slovenia’s largest bank, Nova Ljubljanska Banka, according to Slovenian press reports.	11 Dec
The Netherlands	ING	Repayment of state aid	ING is to repay state aid of $5.6 billion prior to the year-end, with the proceeds of a €7.5 billion ($11.1 billion) rights issue expected to complete on 21 December. ING received a €10 billion capital injection from the Dutch government in 2008 and guarantees on €21.6 billion of US mortgage-related assets this year.	11 Dec
Czech Republic	AnaCap Financial Partners, Banco Popolare Ceská Republika	Acquisition	European private equity house AnaCap Financial Partners is to acquire Banco Popolare Ceská Republika, the seven-branch-strong Czech subsidiary of Italy’s Banco Popolare, subject to due diligence and regulatory approvals.	10 Dec
Cyprus	Piraeus Bank, Marfin Popular Bank	Denial of merger rumours	Greece’s Piraeus Bank has denied local press reports linking it with a merger with Cyprus-based Marfin Popular Bank.	10 Dec
Angola	BES, BES Angola, Portmill	Sale of business unit	Portugal-based BES has completed the sale of a 24 percent stake in BES Angola to Portmill (an Angolan investor) for $375 million. Following the deal, BES will retain a stake of 51.94 percent in the Angolan lender.	10 Dec
France	Société Générale, Dexia, Credit du Nord	Stake increase	Société Générale has reached an agreement to buy the remaining 20 percent it does not own of French regional retail bank Crédit du Nord from Belgian-based Dexia, in a deal valued at around €600 million ($885.8 million) to €700 million.	10 Dec
Poland	Noble Bank, GMAC Bank Polska	Purchase of business unit	Polish-based Noble Bank has agreed a deal to buy GMAC Bank Polska from US-based GMAC. Noble will pay 95 percent of the book value of the assets, estimated to be around $46 million, as of 31 July.	9 Dec
Luxembourg	Dexia	Possible sale of business unit	Under pressure to shed businesses after receiving a €6 billion ($8.9 billion) government bailout last year, Belgian-headquartered Dexia is weighing up plans to sell its Luxembourg-based wealth management unit. The division has around €15 billion of private banking assets under management.	8 Dec
Russia	VTB, Sistema-Hals	Stake increase	VTB has exercised an option to acquire a further 31.5 percent stake in Sistema-Hals, Russia’s largest private-sector property developer, taking its stake up to 51.2 percent.	3 Dec
Ukraine	Raiffeisen Bank Aval	Capital raising	Raiffeisen Bank Aval, the Ukraine-based subsidiary of Raiffeisen International, has received a $150 million 10-year loan from the European Bank for Reconstruction and Development to boost its capital base.	2 Dec
UK	Yorkshire Building Society, Chelsea Building Society	Acquisition	The UK’s second-largest building society, the Yorkshire, is to acquire loss-making rival Chelsea Building Society, the country’s fifth-largest, in a deal expected to complete in April 2010. The newly-enlarged group will comprise assets of more than £35 billion ($57.1 billion) with around 2.7 million members served by a branch network of 178 outlets.	1 Dec
UK	Barclays, BlackRock	Sale concluded	Barclays has completed the sale of its asset management arm to US fund manager BlackRock for $15.2 billion, more than $1.7 billion in excess of the sum agreed when it struck the original deal in June.	1 Dec
UK	JC Flowers	Strategy update	US-based private equity group JC Flowers has reportedly set aside up to $2.3 billion to target forced banking divestments over the next 12 months in the UK.	25 Nov
UK	JPMorgan Chase, Cazenove	Stake increase	JPMorgan Chase is to acquire the remaining half of UK stockbroker Cazenove, which it does not already own, in a deal which values the latter at around £2 billion ($3.3 billion).	19 Nov
Czech Republic	KBC	Initial public offering	KBC is to sell a 30 percent to 40 percent stake in its Czech-based subsidiary, CSOB, on the Prague stock exchange in 2010 as part of its restructuring plan (see RBI 623).	18 Nov
Spain	Santander	Merger of business units	Santander is to merge its wealth management and private banking businesses as part of an internal business reorganisation.	17 Nov
The Americas
Country	Participants	Type/value	Description	Date
US	Citigroup	TARP repayment	Citigroup is close to agreeing a deal to repay the US Treasury some of the financial aid it received last year, according to US media reports. The reports suggest that the bank will sell over $10 billion in common stock in order to help fund the repayment.	14 Dec
Venezuela	Assorted banks	Bank failures	The Venezuelan government has stepped up its intervention in the country’s banking sector by shutting an eighth institution in three weeks. The government has alleged widespread regulatory violations took place at the eight banks.	11 Dec
US	Republic Federal Bank, SolutionsBank, Valley Capital Bank	Bank failures	The number of US banks to have failed in 2009 has risen to 133 with the failure of Florida’s Republic Federal Bank, Kansas’ SolutionsBank and Arizona’s Valley Capital Bank.	11 Dec
Argentina	Banco Supervielle	Initial Public Offering	Banco Supervielle, the Argentine institution with 120 branches across the country, is planning an initial public offering in 2011, according to Bloomberg.	10 Dec
US	Bank of America	Capital raising, TARP repayment	Bank of America has repaid $45 billion of Troubled Asset Relief Program funds using $26.2 billion in excess liquidity and the proceeds of a shares offering which raised gross proceeds in excess of $19 billion.	10 Dec
US	New York Community Bank, AmTrust Bank	Acquisition	New York Community Bank has acquired around $12 billion in assets and assumed liabilities of about $21 billion from the failed AmTrust Bank in a deal brokered by the Federal Deposit Insurance Corporation (see page 21).	7 Dec
US	Citigroup, Kuwait Investment Authority	Stake sale	Sovereign wealth fund Kuwait Investment Authority has transferred its preferred stock in Citigroup to common shares and sold the entire holding for $4.1 billion, a 37 percent return on its initial January 2008 investment of $3 billion.	7 Dec
US	AIG	Possible sale of business unit	American International Group, the beleaguered US-based insurer almost 80 percent-owned by the government, is reportedly seeking bids for its International Lease Finance Corporation unit, a division which has a portfolio of around 1,000 aircraft, with a book value of more than $40 billion.	4 Dec
North America	BMO Bank of Montreal, Citi, Diners Club	Acquisition of credit card unit	BMO Bank of Montreal (BMO) has snapped up the North American credit card business of Diners Club from Citigroup, in the process doubling its corporate card portfolio. BMO said the acquisition is expected to add nearly $1 billion of receivables and $7.8 billion of card transactions in 2010. BMO is targeting to close the deal by the end of the first quarter.	24 Nov
US	People’s United Financial, Financial Federal Corporation	Acquisition	Connecticut-based People’s United Financial has agreed a deal worth around $738 million to acquire Financial Federal Corporation in a deal designed to boost its equipment financing business.	23 Nov
US	Citigroup	Possible sale of business unit	Private equity groups, including US-based Blackstone Group, have been linked with a possible deal to acquire Citigroup’s auto loan unit CitiFinancial Auto, which maintains a loan portfolio of around $16 billion.	23 Nov
US	American Express, Revolution Money	Acquisition	American Express has agreed a $300 million deal to acquire online payments startup Revolution Money with the purchase expected to be concluded in early 2010 (see RBI 622).	23 Nov
Asia Pacific
Country	Participants	Type/value	Description	Date
Malaysia	Maybank, Siam City Bank	Stake acquisition denial	Maybank has denied reports that it intends to bid for a stake in Thailand’s Siam City Bank, the seventh largest commercial bank in Thailand.	14 Dec
Vietnam	Maybank, An Binh Bank	Stake increase	Malaysia’s largest bank, Maybank, is to pay $19.3 million to increase its stake in Vietnam’s An Binh Bank from 15 percent to 20 percent . Maybank purchased its 15 percent holding for $135 million in March 2008.	11 Dec
China, India, Malaysia	Royal Bank of Scotland, HSBC	Sale of business units	HSBC is reportedly close to reaching a deal with Royal Bank of Scotland (RBS) to acquire the remaining Asia-Pacific assets – in China, India and Malaysia – being divested by RBS as part of its strategic review.	10 Dec
Mongolia	Anod Bank	Bank collapse	Anod Bank has collapsed into receivership, the second bank in Mongolia to be taken into the control of the country’s central bank in less than a month (see Zoos Bank, below). The performing assets of Zoos and Anod, among 16 commercial banks based in the country, will be amalgamated into a new state-owned lender.	10 Dec
Australia	ANZ, AWB	Sale of business unit	ANZ has agreed a deal to acquire Agribusiness AWB’s Landmark Financial Services unit comprising an A$2.4 billion ($2.2 billion) loan book and deposits of around A$300 million at net book value. ANZ said the deal would boost its strategy to become a leader in agribusiness financial services in Australasia.	8 Dec
Hong Kong	China Pacific Insurance	Proposed initial public offering	China’s third-largest insurer, China Pacific, is planning to raise up to HK$28.3 billion ($3.65 billion) from a Hong Kong initial public offering.	6 Dec
Hong Kong	AIA Group	Proposed initial public offering	The Asian life insurance unit of American International Group, AIA Group, is looking to raise between $5 billion and $10 billion in a planned initial public offering according to a report in The Wall Street Journal.	4 Dec
China	BBVA, China Citic Bank	Stake increase	Spain’s second-largest-bank BBVA has exercised its call option to raise its stake in China Citic Bank by 4.93 percent to 15 percent in a deal worth around €1 billion.	4 Dec
India	Kotak Mahindra Bank	Strategy update	India-based private sector lender Kotak Mahindra Bank is on the look out for a possible acquisition according to local media reports. Uday Kotak, the bank’s executive vice-chairman and managing director said: “In our position, we will buy, we will be consolidators, we are sitting on huge capital. We have surplus capital, our capital adequacy is more than 20 percent and our businesses are generating significant cash.”	4 Dec
Taiwan	ICBC, Cathay Financial	Possible stake purchase	Industrial and Commercial Bank of China is eyeing up a deal to acquire a 20 percent stake in Taiwan’s Cathay Financial for around $3.4 billion in what would be the first direct investment by a Chinese bank into a Taiwan financial group.	2 Dec
Japan	MUFG	Capital raising	Japan’s Mitsubishi UFJ, the country’s largest bank, is to raise up to ¥1.06 trillion ($12 billion) in a share sale expected to be Japan’s largest ever secondary common stock offering.	30 Nov
Mongolia	Zoos Bank	Bank collapse	Zoos Bank, Mongolia’s sixth-largest bank, has been nationalised following the appointment of a receiver.	24 Nov
China	Manulife, ABN Amro TEDA Fund Management	Stake purchase	Manulife, the largest US insurer by market value, has snapped up a 49 percent stake in China-based ABN Amro TEDA Fund Management for $156 million in cash.	23 Nov
Source: RBI