M & A in European Private Banking

Publication Date	March 2008
Publisher	Highworth Research
Product Type	Report
Pages	314
ISBN Number	not applicable
Product Code	HIR00002

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Summary

This major new report from M & A Monitor, published by Highworth Research, analyses 29 European private banking acquisitions over the past 7 years and draws key conclusions for private banks which may be planning acquisitions in the future.

A recent survey by KPMG International of 166 private banks across 38 countries showed a dramatic increase in private banks planning acquisitions, up from 18% of banks surveyed in 2006 to almost 50% of those surveyed in 2007. The new Report Mergers and Acquisitions in the European Private Banking Sector provides management with a first class data source and planning tool to formulate strategy, update valuation models, and build intelligence to support success in a competitive M & A marketplace.

Leading author: M & A Monitor

The author of this Report, M & A Monitor Ltd, is a leading London financial information company specialising in analysis of mergers and acquisitions across a range of European industries including financial services. M & A Monitor's client base includes the substantial majority of the world's top investment banks and the company's M&A data is universally acknowledged as the most accurate commercially available, being regularly quoted in takeover documents.

Benefits of this Report

Provides rigorous financial analysis of all 29 of the largest private banking transactions in Europe with disclosed transaction values over the period 2000-2007.
The report includes full access to electronic copies of all sources of information (Annual Reports, Press Releases, Takeover Documents etc) used in preparing the write-ups of the individual transactions featured in the report.
Supplies an updating service for 2008 in which subscribers will receive a Transaction Report supplying financial analysis of each new significant acquisition in European private banking, with publicly disclosed valuation data, plus key documents for each transaction.
Provides extensive strategic analysis of the European private banking market and examines the principal drivers of private banking sector consolidation, including rising competition and the drive to achieve economies of scale. The scope for revenue and cost synergies from private banking transactions is also examined, including comprehensive details of the synergies claimed by the parties for such transactions over the 2000 to 2007 period.
Provides key valuation multiples and target company banking performance ratios for 29 private bank acquisitions from 2000-20007, including acquisitions to come in 2008.
Includes valuable updating service for 2008

Content

Contents of the Report include:

European Private Banking 2000-2007: Financial Analysis of Transactions, and Transaction Documents

Tabular data is presented which provides a chronological schedule of significant European private banking mergers and acquisitions from 2000-2007 for which reliable valuation data is available. For each of 29 transactions covered, hyperlinks are provided firstly to the M & A Monitor transaction report which provides extensive financial analysis of the deal, and secondly to selected documents pertaining to the deal.

Transaction Report Content for each Acquisition Covered

The following data-items are provided, where publicly available and/or relevant, for each of the 29 Transaction Reports contained within the report:

1.Target: Country; activities. Bidder: Country; activities Deal: Announcement & completion dates; deal status; deal attitude; deal type; capital owned; capital bid for; cross border; competitive status; regulatory referral; consideration type.
2. Advisors: Bidder's and target's financial advisors and legal advisors.
3. Target financials:
3.1 P & L; interest & discount income; interest expense; net interest income; commission income; commission expense; net commission income; profit on financial transaction; other operating income; total other income; total income; staff costs; depreciation; amortisation; other admin costs; total costs; operating profit; bad debt charge; provisions/adjustments; exceptional; net profit before tax; tax; net profit after tax; minority items; preference share dividends; attributable profit; financial currency; exchange rate to STG.
3.2 Balance sheet: loans & advances to customers; loans & advances to banks; cash & treasury deposits; equity investments; intangible assets; long term business assets; associates/jvs; tangible fixed assets; other assets; customer accounts (current); customer accounts (term/savings); deposits by banks; debt securities issued; provisions; other liabilities; deferred tax; long term business liabilities; ordinary share equity; preference share equity; shareholder funds; minority interests; total assets; risk weighted assets; tier 1 ratio; total capital ratio.
3.3 Accounts source and reliability
4. Deal value
4.1 Deal value source and reliability
4.2 Deal breakdown: ordinary shares; options; preference shares; convertible shares; redeemable shares; other equity shares; total equity value; minorities.
5. Share data
5.1 Number of ordinary shares
5.2 Initial and final: Cash offer value; share offer value; target shares offer ratio; bidder shares offer ratio; extra payment value; ratio for ordinary ,preference, and other shares.
5.3 Number and exercise price of options
5.4 Number, cash offer and target and bidder share ratios for: preference, convertible, redeemable, and other equity shares
5.5 Target, bidder and bid premia for: before - 1 day, 1 week, 2 weeks, 3 weeks, 4 weeks, 30 day average, 2 months, 3 months, day before final increased offer. Premia after - 1 day, 1 week, 2 weeks, 3 weeks, 4 weeks, 1 day before completion.
5.6 Pre-bid speculation data: date; target share price; bid premia %.
6. Comments : background; reasons for acquisition; synergies; reasons for recommending the offer; analyst reactions to the transaction; commentators' reactions to the transaction.
7. Payment details: offer terms; equity value calculation; dividends; target financials; net interest margin; return on average equity; return on average assets; capital adequacy ratios.
8. Target details: overview; operations; segmental breakdown - loans to banks; loans to customers; financial performance.

Key transaction documents provided

Documents provided include, as available: annual reports and accounts of target and bidder; interim accounts; press releases, offer documents and presentations.

Deals for which Transaction Reports, and Documents are provided include:

1. Fortis' acquisition of Banque Generale du Luxembourg (31/01/2000)
2. Mediolanum's acquisition of Fibanc Inversiones (21/07/2000)
3. Dexia's acquisition of Labouchere (3/08/2000)
4. Arcofin's acquisition of Banque Vernes Artesia (19/02/2001)
5. Credit Mutuel's acquisition of Banque Transatlantique (22/05/01)
6. Credit Mutuel's acquisition of Banque Transatlantique (6/07/01)
7. CGNU's acquisition of Banque Nagelmackers (23/07/2001)
8. Sarasin's acquisition of Rabobank's international private banking business (4/03/2002)
9. Mediobanca's acquisition of Compagnie Monegasque de Banque (3/05/2002)
10. Almanij's acquisition of Theodor Gilissen Bankiers (20/06/2003)
11. Royal Bank of Scotland's acquisition of Bank von Ernst (9/01/2003)
12. The Bank of NT Butterfield's acquisition of Leopold Joseph (05/02/2004)
13. Bayerische Hypo-und Vereinsbank's acquisition of Westfalenbank (24/05/2004)
14. Union of Swiss Raffeisen Banks acquisition of Vontobel Holdings (7/06/2004)
15. Fortis acquisition of Banca Intermobiliare di Investimenti e Gestione (29/06/2004)
16. Mediobanca's acquisition of Compagnie Monegasque de Banque (3/12/2004)
17. Almanij' acquisition of Kredietbank Luxembourg (23/12/2004)
18. Skandinaviska Enskilda Banken's acquisition of Privatbanken ASA (25/04/2005)
19. Banque Degroof's acquisition of Banque Degroof Luxembourg (21/06/2005)
20. Julius Baer's acquisition of UBS' independent private banks (5/09/2005)
21. Banco Sabadell's acquisition of Banco Urquijo(24/05/2006)
22. Sanpaolo IMI's acquisition of Banca Fideuram (4/07/2006)
23. Banco Sabadell's acquisition of Caceis Bank Espana (25/09/2006)
24. Banco Santander's acquisition of KBL Fumagalli Solda (8/11/2006)
25. Rabobank's acquisition of Bank Sarasin (9/01/20077)
26. Banca Profilo's acquisition of Societe Bancaire Privee ((19/03/2007)
27. BNP Paribas's acquisition of Banco Exelbank (23/03/2007)
28. Fondiaria-SAI's acquisition of Banca Gesfid 22/05/2007)
29. Assicurazioni Generali's acquisition of Banca del Gottardo (7/11/2007)

Strategic Background

This section of the report provides a clear understanding of the strategic background to the European private banking marketplace and the key factors which are likely to influence consolidation in the next few years.

1. Introduction
1.1Definition of Private Banking
1.2The Explosion in HNWI
1.3Ongoing Growth Prospects for Global HNWI Numbers and Total Financial Wealth
1.4The Concurrent Growth of the Private Banking Sector
2.The Contemporary Global Private Banking Sector
2.1Private Banking revenue Streams
2.2Introduction to the Top Ten Players
2.2.1UBS
2.2.2Citigroup
2.2.3Merrill Lynch
2.2.4Credit Suisse
2.2.5J P Morgan
2.2.6Morgan Stanley
2.2.7HSBC
2.2.8Deutsche Bank
2.2.9Wachovia
2.2.10Pictet
2.3Private Banking Pure-Plays

2.3.1 ulius Baer
2.3.2EFG International
3. European Private Banking M & A Activity
3.1Introduction
3.2The Drivers of Consolidation
3.2.1Increasing Competition & Costs
3.2.2The Drive to Achieve Economies of Scale
3.3Synergies in European Private Banking Transactions
3.3.1Cost Synergies
3.3.2Revenue Synergies
3.4The Geographical Remit of Consolidation
3.4.1The Geographical Remit of Consolidation within Europe
3.4.1.1 Western Europe
3.4.1.1.1France and Spain
3.4.1.1.2 Switzerland
3.4.1.1.3United Kingdom
3.4.1.1.4Germany
3.4.1.2The Emerging Markets of Europe
3.4.1.2.1The CEE Region
3.4.1.2.2The SEE Region
3.5 The Buyers in European Private Banking Transactions
3.5.1 Geographic Origins of Buyers in European Private Banking Transactions
3.5.2 Specific Identities of Buyers in European Private Banking Transactions - Stated Intentions of the Major Players
3.5.3 The interest of Private Equity Firms in Investing in the European Private Banking Sector
3.6 The Outlook for M & A Activity in European Private Banking
4. Valuations Attributed to European Private Banks in M & A Deals
4.1 Identification of Relevant Transactions
4.2 Key Valuation Multiples
4.3 The Correlation between the Health of Global Financial Markets and Valuations in Private Banking Sector M & A
4.4 The effect of the 2007 US Sub-Prime Loans Crisis on the European private Banking Sector

Appendix A

Schedule of Deals in Private Banking 2002 - 2007 for which Deal Values have not been disclosed

Appendix B

Contents of an M & A Monitor Transaction Report for each of the 29 Deals analysed

Appendix C: Tables and Figures

Figures

1. Regional Financial Wealth Growth 2003-2006 and Projections to 2011
2. Growth in Assets under Management of the Top Eight Private Banks 2004-2006
3. Total Value of M & A's with announced Deal Values 2003-2006
4. Key drivers of Consolidation in the Global Private Banking Sector
5. Percentage of Total Global Mergers and Acquisitions for the years 2000-2005
6. Percentage of European Deals by Target Country in 2006
7. Value of Banking M & A deals in Emerging Europe from 1996 to 2005
8. Domestic versus cross-border deals for 2000-2005
9. Stated Acquisition Strategies of Private Banks in Europe from 2006-2009
10. Price - to - book ratios since January 2000
11. Price - to- bank earnings ratios since January 2000
12. Price - to - book ratios for pure-plays and larger groups2006-2008E
13. FTSE 100 Index from January 2000 to August 2007
14. Number of European Banking Deals 2000-2007
15. Average price-to-book and price-to-bank earnings ratios 2000
16. Share Prices for Julius Baer, EFG International and UBS 2006-2007
17. Percentage decrease in share prices from June 2007 to September 2007.

Tables

1. Number of HNWI and total HMNW wealth worldwide from 1997-2006.
2. Number of HNWI and HNWI wealth in Europe from 2004 to 2006
3. Top ten private bank operations for year ended 31 December
4. 2007E pre-tax profit of top ten wealth management businesses
5. Price-to-book and price-to-bank-earnings ratios for deals since January 2000.