Bad loans

RBS – Asian consumer loan
portfolio, 2008

Balance (£m)

% 90+ days past due

Taiwan

Credit cards

447

2

Mortgages

93

0

TTBB legacy mortgages (1)

88

6

TTBB legacy personal loans (1)

114

5

India

Credit cards

217

7

Personal loans

343

4

Mortgages

194

2

Indonesia

Credit cards

49

3

Unsecured personal loans

71

3

Pakistan

Personal loans

40

7

Credit cards

39

9

Singapore

Credit cards

92

1

Unsecured personal loans

93

1

Hong Kong

Unsecured personal loans

73

0

(1) inherited from ABN AMRO Source: RBS

RBI
DealWatch

RBI DealWatch tracks
global financial services mergers and acquisitions, privatisations
and demutualisations, flotations, divestments, share stakes,
strategic alliances and joint ventures

Country

Participants

Type/value

Description

Date

Europe, Middle East,
Africa

Europe

Criteria CaixaCorp, Erste Bank

Acquisition of stake, strategy update

Criteria CaixaCorp, the holding company
controlled by Spain’s largest savings bank, la Caixa, has acquired
a 4.9 percent stake in Austria’s Erste Bank for €628 million ($788
million). It added it is talking with Erste’s main shareholder with
the aim of forming a “preferred partnership agreement” to boost
co-operation between the two savings-focused institutions (see
News Digest).

2 Mar

Spain

Unicaja, Caja Castilla de la Mancha

Merger

Two regional Spanish savings banks, Unicaja
and Caja Castilla de la Mancha (CCM), have confirmed plans to
merge, the first such move in the country of the current economic
crisis, in the process forming one of the five largest savings
banks in Spain. The combined bank will have assets of around €60
billion ($75 billion) and 1,500 branches based in 30 provinces of
the country. The merger, long-rumoured (see RBI 607),
follows disappointing results from Cuenca-based CCM, with profits
of only €42 million in 2008, against €170 million the previous
year, and a nine-fold increase in delinquency rates to 4.6
percent.

2 Mar

France

Banque Populaire, Groupe Caisse d’Epargne

Government, capital support

The French government will subscribe to
preference shares without voting rights in the bank to be formed by
the merger of Banque Populaire and Groupe Caisse d’Epargne and will
eventually hold 20 percent of the capital. In a separate
announcement, French finance minister Christine Lagarde said the
merged banks would receive additional government aid of up to €5
billion ($6 billion). The government has set 1 July for the merger
completion (see News Digest).

2 Mar

South Africa

Nedbank, Old Mutual

Strategy update

Contrary to market speculation, insurer Old
Mutual says it has no plans to sell its 53 percent stake in South
Africa’s Nedbank, the country’s fourth-largest retail bank. A
report in advance of Old Mutual releasing its 2008 results claimed
the insurer’s strategic review would involve the possible sale of
Nedbank. Any buyer of the insurer’s stake would be obliged to bid
for the whole bank unless granted a waiver by South African
authorities. Old Mutual is, however, considering selling
bancassurance joint ventures to Nedbank in return for an increased
stake, reaffirming that the insurer would prefer to increase its
stake in Nedbank in the long run.

2 Mar

Austria

Erste Group

Capital raising

Erste Group has confirmed it is to raise €2.7
billion ($3.4 billion) in fresh capital, with €900 million coming
from private investors and €1.9 billion from the Austrian
government in the form of preferred shares, on which Erste will pay
an annual rate of 8 percent.

27 Feb

Germany

HSH Nordbank

Capital raising

The state governments of Hamburg and
Schleswig-Holstein have agreed to give HSH Nordbank, one of the
country’s major public-sector banks, a €3 billion ($3.8 billion)
capital injection. HSH Nordbank will also receive a €10 billion
credit guarantee from the German states, which each hold a 30
percent stake in the bank.

24 Feb

The Americas

Mexico

Citi, Banamex

Strategy update

While Citi remains unswerving in its
assertion that it plans to retain its Mexican subsidiary Banamex,
acquired for $12.5 billion in 2001, the country’s politicians may
force Citi’s hand. Current Mexican legislation prohibits foreign
governments from owning more than a 10 percent stake in banks that
operate in Mexico, a potential problem for Citi now that the US
government owns a 36 percent stake in the bank. Mexico’s National
Banking and Securities Commission has said it is studying the legal
implications of the US government’s stake in Banamex, while the
country’s opposition party is set to table legislation which, if
passed, would force Citi to reduce its ownership to less than 50
percent (see News Digest).

4 Mar

Trinidad and Tobago

Canadian Imperial Bank of Commerce, Republic
Bank

Possible acquisition

According to local reports, Canadian Imperial
Bank of Commerce (CIBC) is seeking to buy a controlling stake in
Republic Bank, Trinidad and Tobago’s largest bank. While not
referring to Republic Bank by name, CIBC’s CEO, Gerald McCaughey,
told analysts CIBC is “staying tuned” to opportunities to expand
its consumer banking business in the Caribbean. CIBC acquired First
Caribbean International Bank in 2006 and, said McCaughey, “that has
been an operation that we would like to build upon”. In the event
of Republic Bank being on the block, analysts have not ruled out
rival offers being submitted from Scotiabank and Royal Bank of
Canada.

27 Feb

Brazil

Citi, Redecard

Sale of stake

Citi is set to sell its 17 percent stake in
Brazilian card processor and acquirer Redecard in a deal worth
around BRL2.73 billion ($1.15 billion). Redecard, which processes
MasterCard and Diners Club card transactions, posted fourth-quarter
net income of BRL343.1 million (see News Digest).

27 Feb

Canada

ING, ING Canada

Sale of business unit

ING has sold its interest in ING Canada, the
largest provider of property and casualty insurance products and
services in Canada, in a deal worth around C$1.9 billion ($1.53
billion). ING had owned around 70 percent of the outstanding common
shares of ING Canada, which will rebrand in the second quarter as
Intact Insurance. ING’s ownership of ING Bank of Canada, a separate
subsidiary operating as ING Direct, was unaffected by the sale of
the insurance unit.

3 Feb

Asia-Pacific

China, India, Indonesia and Taiwan

HSBC

Strategy update

HSBC’s Asia chief executive, Sandy Flockhart,
has said the bank remains on the lookout for potential buys in core
markets including China, India, Indonesia and Taiwan, but said the
bank’s strategy remains focused on building on its existing
platform. “In India, if the opportunity arose to obtain a larger
footprint, we would have to consider that,” said Flockhart.

3 Mar

Thailand

Siam City Bank, Scotiabank

Possible stake acquisition

Canada’s Scotiabank has been linked to a deal
to acquire a 48 percent stake in Thailand’s Siam City Bank (SCB),
only one month after it paid about C$270 million to acquire an
additional 24 percent stake in the country’s Thanachart Bank,
boosting its stake to 49 percent (see RBI 606). Reports
have suggested Scotiabank is keen to merge Thanachart with SCB, to
form the country’s fifth-largest bank by assets. Thailand’s
Financial Institutions Fund has held a 47.58 percent stake in SCB
since the 1997-1998 Asian financial crisis.

2 Mar

Taiwan

Chinfon Bank

Possible acquisition

Standard Chartered is among possible bidders
for Taiwan’s Chinfon Bank, according to a report in the
Chinese-language Apple Daily. Other possible bidders include Taiwan
Cooperative Bank and US private equity firm Olympus Partners. The
government is set to auction Chinfon Bank, having seized control in
September 2008.

28 Feb

Thailand

Kasikornbank, Muang Thai Fortis Holdings

Stake increase

Kasikornbank, Thailand’s fourth-largest bank,
is to spend THB7.24 billion ($200.6 million) to expand its life
assurance business by increasing its stake from 10 percent to 51
percent in Muang Thai Fortis Holdings. Muang Thai Fortis, a joint
venture between Thailand’s Muang Thai Group and Benelux bancassurer
Fortis, holds a 75 percent stake in unlisted Muang Thai Life,
Thailand’s third-largest life insurer.

26 Feb

Japan

Kansai Urban Banking Corporation, Biwako
Bank

Merger

Kansai Urban Banking Corporation and Biwako
Bank, two regional banks based in the Kansai region, are finalising
a deal to merge in spring 2010. The banks had combined deposits
worth ¥3.74 trillion ($38 billion) at the end of September 2008 and
the merger will create one of the largest banks in the region.

26 Feb

Japan

Citi, Nikko Cordial

Sale of business units

Embattled Citigroup may sell Japanese
investment bank Nikko Citigroup along with retail brokerage Nikko
Cordial, according to reports. Citi had previously intimated that
Nikko Citigroup was core to the bank’s future and would form part
of the bank’s so-called good bank division, Citicorp (see RBI
605). Brokerage Nikko Cordial and its 110 branches went on the
market in February, attracting interest from the country’s three
largest banks, Mitsubishi UFJ, Mizuho Financial Group and Sumitomo
Mitsui.

25 Feb

China

CITIC Bank, BBVA

Stake increase

Spain’s second-largest bank BBVA has
increased its stake in China CITIC Bank to 10.07 percent from 4.83
percent.

24 Feb

Malaysia

Maybank, Bank Islam

Possible acquisition

Malaysia’s largest bank, Maybank, has denied
local press reports that it its Islamic subsidiary is in talks to
buy a stake in Bank Islam, a deal that would create the largest
Sharia-compliant bank in Asia-Pacific. Press comment about a
possible Maybank Islamic-Bank Islam merger coincided with reports
that Kuwait Finance House Malaysia, a subsidiary of Kuwait’s
largest Islamic bank, and Islamic Bank of Asia were both on the
look out for acquisition opportunities.

24 Feb

Source: RBI