tag:blogger.com,1999:blog-74759056992609299872024-03-19T15:12:50.083-04:00Swire Chin's List of International Bank MergersThe most comprehensive, up-to-date and free list of the world's major bank M&A activities.BankingMergershttp://www.blogger.com/profile/09902839579660694793noreply@blogger.comBlogger91125tag:blogger.com,1999:blog-7475905699260929987.post-15539342960830017702021-06-20T18:27:00.002-04:002021-06-20T18:27:58.987-04:00Welcome to Swire Chin's List of International Banking M&As<p><span style="background-color: white; color: #444444; font-family: georgia; font-size: medium;">Welcome to Swire Chin’s List of International Banking Mergers and Acquisitions. This web site aims to chronicle the corporate genealogy and M&A history in the banking industry. Over 80 of the world's largest and most well-known banks have been documented.</span></p><p style="background-color: white; color: #444444;"><span style="font-family: georgia; font-size: medium;">Click on <a href="http://bankingmergers.blogspot.com/2010/01/index-to-list-of-international-bank.html" style="color: #3778cd; text-decoration-line: none;" target="_blank"><span style="color: red;"><b>Index</b></span></a> to access all earlier publications. Existing publications are updated whenever a major banking acquisition or divestment is announced.</span></p><p style="background-color: white; color: #444444;"><span style="font-family: georgia; font-size: medium;">Like many people nowadays, I’ve a love-hate relationship with banks. I do, however, enjoy reading and recording the history of commercial banks. Please feel free to email me if you’ve any comment. My email address can be found on the "About Me" section of the web site.</span></p>BankingMergershttp://www.blogger.com/profile/09902839579660694793noreply@blogger.comtag:blogger.com,1999:blog-7475905699260929987.post-45659804903186007512021-06-20T18:24:00.003-04:002021-06-20T18:24:36.706-04:00Spain Bank Mergers & Acquisitions (Bankia)<p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi2L0-CmudShTznW_jwRcU0BWTZv3-AGMMr51e4fRy08UwZTszq_JMueVJ0inH271_vOSXxZ9CVycy9lkf9dV2OJFVJfBsLPV3MnyYMb_GrYs_kuMwVzKv8V_cpBfU0kHmmwBJYPvpETRo/s1021/Bankia-sede-operativa-madrid-1.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1021" data-original-width="680" height="400" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi2L0-CmudShTznW_jwRcU0BWTZv3-AGMMr51e4fRy08UwZTszq_JMueVJ0inH271_vOSXxZ9CVycy9lkf9dV2OJFVJfBsLPV3MnyYMb_GrYs_kuMwVzKv8V_cpBfU0kHmmwBJYPvpETRo/w266-h400/Bankia-sede-operativa-madrid-1.jpg" width="266" /></a></div><p></p><p><span style="font-family: georgia; font-size: medium;">Photo: Bankia's head office building at plaza de Castilla in Madrid. (Credit: Bankia's official web site.)</span></p><p><span style="font-family: georgia; font-size: medium;"><br /></span></p><p><span style="font-family: georgia; font-size: medium;">Bankia</span></p><p><span style="font-family: georgia; font-size: medium;"><br />Even though Bankia was created only in 2010 from the amalgamation of seven de facto bankrupt Spanish regional savings banks, its oldest constituent predecessor -- Caja Madrid -- dates from 1702. </span></p><p><span style="font-family: georgia; font-size: medium;">Before the 20th century, a state-funded social welfare system to alleviate the hardship faced by the poor during an economic recession was practically non-existent. To help the underclass to survive, the Roman Catholic Church had historically run charitable pawnshops to allow the poor to obtain a small temporary loan (at zero or very low interest rate) or to convert whatever few possessions that they had into cash. The mandate of these charitable pawnshops and loan institutions was not to maximize profits but to offer blacksmiths, farmers, labourers, artisans, servants and the unemployed financial assistance in times of need.</span></p><p><span style="font-family: georgia; font-size: medium;">The first church-sponsored charitable pawnbrokers began in Italy in the 1460s, and the concept spread to Spain and Portugal and eventually to their overseas colonies also. In Spain, such a charitable pawnshop and loan office was known as a “monte de piedad”, or literally a mound of piety. In 1702, an Aragon priest named Francisco Piquer Rudilla established a Monte de Piedad in Madrid, which relied on donations by the city’s wealthy aristocrats to provide small interest-free loans to the working class and underclass on collateral such as tools, clothes or jewellery. In 1836 the Monte de Piedad de Madrid began charging moderate interest on loans to cover increasing operating overhead costs.</span></p><p><span style="font-family: georgia; font-size: medium;">In 1838, a Royal Decree created a savings bank known as the Caja de Ahorros de Madrid (literally, the Savings Casket of Madrid), which is based on the non-profit savings bank model of promoting savings for the working class. The savings bank also had a mandate of social responsibility and Unitarianism by financing local businesses, as well as educational and hospital infrastructure. During much of the 19th century, Caja de Ahorros and Monte de Piedad offered similar service to similar customers.</span></p><p><span style="font-family: georgia; font-size: medium;">In 1896, the Monte de Piedad and Caja de Ahorros de Madrid merged to become Monte de Piedad y Caja de Ahorros de Madrid, whose order of the words was reversed eventually to Caja de Ahorros y Monte de Piedad de Madrid as the banking side of the business became much more prominent than the pawnbroking side.</span></p><p><span style="font-family: georgia; font-size: medium;">Over time, as the state took increasing responsibility for social welfare from the Church, the savings bank dropped the “Monte de Piedad” part of the name completely and became known simply as Caja Madrid.</span></p><p><span style="font-family: georgia; font-size: medium;">A modernization program in the 1970s led to Caja Madrid offering more banking products than previously. During the decade many of its systems and processes were also computerized. Then between the 1980s and 1990s, the bank expanded geographically outside of the capital region.</span></p><p><span style="font-family: georgia; font-size: medium;">Caja Madrid’s nationwide expansion in the latter half of the 1990s coincided with a decade-long real estate bubble that started in 1996 and burst in 2008. As in most asset bubbles, the causes of the housing craze are complex and inter-related. The discussion and theorization of which is not the intention of this article. Suffice to say that between 2000 and 2007, some over 600,000 new dwellings were built yearly in Spain, a number that exceeded the combined figure of the other four major EU economies Germany, France, the United Kingdom and Italy. In total, some five million new homes were constructed in those eight years by the time the speculative housing craze came to a sudden end.</span></p><p><span style="font-family: georgia; font-size: medium;">Riding this mad real estate euphoria, between 1996 and 2010, Caja Madrid expanded exponentially and grew five times in size and became the No. 4 financial institution in the country. But perhaps much more tellingly about Caja Madrid’s over-sized exposure to the housing market, the No. 4 ranked Caja Madrid held the most real estate loans amongst all Spanish banks.</span></p><p><span style="font-family: georgia; font-size: medium;">The overheated housing bubble was not confined to Spain, as similar market conditions also happened in the United States, Great Britain, Ireland, Iceland, Portugal, Italy and Greece; and to a lesser degree other markets around the world. In 2007, the unsustainable housing bubbles first began to burst in the U.S. and Britain, then quickly spread to other markets. This marked the beginning of the infamous 2007 global credit crisis. Banks around the world saw their formerly steady and cheap funding sources disappeared overnight as the inter-bank credit market froze. Banks and institutional investors refused to renew short-term financing for real estate loans that were at risk of default. Banks, investment funds and credit default swap policy holders found themselves exposed to an incredibly complex and untraceable web of liabilities, potentially exposing themselves to trillions of losses.</span></p><p><span style="font-family: georgia; font-size: medium;">In Spain, Caja Madrid was not alone in the midst of this liquidity crisis, as Spain’s entire savings bank industry had been lending recklessly to the real estate speculation. Massive loan losses quickly depleted many banks’ capital base and by July 2010, Spain had to place seven de facto bankrupt regional savings banks (Caja Madrid, Bancaja, Caja Canarias, Caixa Laitana, Caja Rioja, Caja de Ávila and Caja Segovia) into the Sistema Institucional de Protección (“SIP”, literally Institutional Protection Scheme). </span></p><p><span style="font-family: georgia; font-size: medium;">Five months later, the Banco de Espana (Spain’s central bank) formally brokered the consolidation of the seven regional savings banks in the SIP under the administration of Banco Financiero y de Ahorros (roughly “Bank of Finance and Savings”), or commonly known as BFA.</span></p><p><span style="font-family: georgia; font-size: medium;">The foundation that used to own Caja Madrid ended up with 52% of BFA, followed by Bancaja owning just under 38%, and the remaining five small savings banks collectively held just over 10%. Meanwhile, the Spanish government provided the bank with EUR 4.465-billion of liquidity to keep it afloat. </span></p><p><span style="font-family: georgia; font-size: medium;">In March 2011, Bankia was chosen as the new name for the seven consolidated savings banks. Just four months later, the Spanish government rushed to float Bankia on the stock market but found little interest from international institutional investors. Failing to attract overseas professional investors, Bankia turned to those domestic individuals who had little or no knowledge of investing risks and the inside situations of the bank. Bankia branch managers and union leaders encouraged long-time customers and employees to invest by assuring safe and steady returns.</span></p><p><span style="font-family: georgia; font-size: medium;">Bankia’s initial public offering in July 2011 raised EUR 3.1-billion when 47.6% of the bank was floated on the stock market, of which 60% of the IPO was offered to 350,000 individual investors. BFA continued to own 52.4% of Bankia.</span></p><p><span style="font-family: georgia; font-size: medium;">Unfortunately, less than one year after the IPO, in May 2012 Bankia discovered major discrepancies in its financial accounts, which led to its 2011 financial statement being re-stated from a profit of EUR 309-million into a massive EUR 3.3-billion loss. Immediately Bankia was once again on the verge of collapse. The Spanish government converted its 2010 EUR 4.465-billion loan into preferred shares and took over 100% of BFA, wiping out the stakes of the seven savings banks that formerly owned Bankia. Through BFA, Spain now indirectly controlled 45% of Bankia and became its largest shareholder.</span></p><p><span style="font-family: georgia; font-size: medium;">Shockingly, that loan conversion to re-capitalize Bankia was far from enough, and its collapse – if allowed to happen -- would have triggered Spain’s deposit guarantee fund to cover a staggering EUR 60.5-billion of insured deposits. Despite that, depositors would still suffer losses of EUR 52-billion from uninsured deposits. To avoid this disastrous scenario, between December 2012 and December 2013, another Eur 17.96-billion of state aid was injected to BFA (EUR 7.34-billion) and Bankia (EUR 10.62-billion), bringing the total rescue package for Bankia to EUR 22.42-billion. In the restructuring, BFA’s stake in Bankia was raised to 68.4%. The small retail shareholders who bought shares in the 2011 IPO essentially saw their investment wiped out when the shares dropped to “penny stock” levels.</span></p><p><span style="font-family: georgia; font-size: medium;">Meanwhile, to satisfy the terms of the state bailout, Bankia sold its American subsidiary City National Bank of Florida to Chilean bank BCI for USD $883-million in May 2013. Caja Madrid originally bought 83% of the City National Bank of Florida for $927 million cash in 2008.</span></p><p><span style="font-family: georgia; font-size: medium;">Following a period of stabilization of its books, BFA sold a 7.5% stake of Bankia in February 2014 for EUR 1.3-billion to international institutional investors, representing the first time the Spanish state received a repayment following the EUR 22.42-billion provided to the bank. </span></p><p><span style="font-family: georgia; font-size: medium;">Meanwhile, small investors who lost their investment during the first Bankia IPO in 2011 battled in the courts to get compensation. Finally, in January 2016, a Spanish Supreme Court ruling forced Bankia to agree to return the money that the small investors lost when the bank was nationalized in May 2012. Bankia later committed EUR 1.84-billion to fully refund its retail investors for their losses in the doomed 2011 initial public offering.</span></p><p><span style="font-family: georgia; font-size: medium;">Then in December 2017, BFA sold another 7% of Bankia for EUR 818-million, reducing its stake to 60.6%. The mathematics of BFA’s investments and divestments in Bankia between the 2013 and 2017 does not work out based on the official press releases. One can only presume that BFA had converted some of Bankia’s debts into equity holdings.</span></p><p><span style="font-family: georgia; font-size: medium;">In 2018, Bankia bought Banco Mare Nostrum in stock for EUR 825-million. Like Bankia itself, Banco Mare Nostrum was created through the amalgamation of several bankrupt savings banks (Caja Murcia, Caixa Penedès, Caja Granada and Sa Nostra).</span></p><p><span style="font-family: georgia; font-size: medium;">In September 2020, Bankia agreed to merge with fellow Spanish lender CaixaBank to create the largest Spanish bank in terms of domestic market share and assets. The acquisition valued Bankia at EUR 4.3-billion (USD $5.2-billion). At the end of 2019, Bankia served almost eight million clients via its mobile and on-line platforms, over 5,300 ATMs and almost 1,700 branches.</span></p><p><span style="font-family: georgia; font-size: medium;">The CaixaBank-Bankia merger closed in March 2021 and the Spanish state’s 61.8% stake in Bankia would be diluted to 16.1% of the enlarged CaixaBank. The La Caixa Foundation, one of Europe’s biggest charities, would remain CaixaBank’s largest shareholder with 30 per cent of the group compared with its current 40 per cent stake.</span></p><p><span style="font-family: georgia; font-size: medium;"><br /></span></p><div><span style="font-family: georgia; font-size: medium;"><span style="background-color: white; color: #444444;">Click here to return to the </span><a href="http://bankingmergers.blogspot.com/2010/01/index-to-list-of-international-bank.html" style="background-color: white; color: #3778cd;">Index</a><span style="background-color: white; color: #444444;"> page.</span></span></div>BankingMergershttp://www.blogger.com/profile/09902839579660694793noreply@blogger.comtag:blogger.com,1999:blog-7475905699260929987.post-64036362836793508372020-12-28T18:11:00.013-05:002021-07-06T12:29:32.822-04:00United States Bank Mergers & Acquisitions (BB&T)<p> </p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg8BonDcr7P3iZ1ayDnCc0dqcyfNiSNFWULhtxNbw6mR91eqhm67b-DHy2YSyZVO_4_G_gXGYvqhnL3gFzij0MX6MxMPkOEJ_WBvbLNWu07976zo59vgya9MtMQv7YAcC3uccQkqiwt7QY/s2048/Warren_LeMay-48992706943_881157e1a4_o_Greensboro_NC2.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="2048" data-original-width="1536" height="400" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg8BonDcr7P3iZ1ayDnCc0dqcyfNiSNFWULhtxNbw6mR91eqhm67b-DHy2YSyZVO_4_G_gXGYvqhnL3gFzij0MX6MxMPkOEJ_WBvbLNWu07976zo59vgya9MtMQv7YAcC3uccQkqiwt7QY/w300-h400/Warren_LeMay-48992706943_881157e1a4_o_Greensboro_NC2.jpg" width="300" /></a></div><br /><div class="separator" style="clear: both; text-align: center;"><br /></div><p><span style="font-family: georgia; font-size: medium;">A BB&T office in Greensboro, North Carolina. </span></p><p><span style="font-family: georgia; font-size: medium;">Photo credit: Warren LeMay. You can see more of his photos via this link: <a href="https://www.flickr.com/photos/warrenlemay" target="_blank">https://www.flickr.com/photos/warrenlemay</a></span></p><p><br /></p><p><span style="font-family: georgia; font-size: medium;"><b>BB&T (Branch Banking & Trust)</b></span></p><p><span style="font-family: georgia; font-size: medium;">BB&T traces its origins to eastern North Carolina in the aftermath of the American Civil War (1861 to 1865) during which the area was struggling to recover and rebuild from the devastation of four years of bloody fighting between the Union and Confederacy forces. Countless lives were lost, and the livelihoods of those who survived were often ruined. Many families were physically and emotionally torn across both geographical and ideological battle lines. The economy, along with many farms and towns, and businesses and homes suffered catastrophic damages. The end of the Civil War unfortunately did not mean the end of the divisiveness, distrust and political and personal resentments.</span></p><p><span style="font-family: georgia; font-size: medium;">Against, or perhaps one should say despite this hardship, Alpheus Branch, the son of a wealthy planter in Halifax County, moved to Wilson County and eventually married Nannie Barnes, the daughter of prominent figure General Joshua Barnes and one of Wilson’s early founders. Alpheus Branch launched a mercantile business called Branch & Co. and he became acquainted with Thomas Jefferson Hadley, another important local leader. In 1872, Alpheus Branch and Thomas Jefferson Hadley joined forces and launched a private bank named Branch & Hadley. The new concern accepted deposits and made loans to local planters and businesses. The U.S. Southeast by the 1880s had returned to rising prosperity, as the traditional crop of cotton was supplemented by the new cash crop of tobacco. In 1887, Mr. Branch bought out his partner’s interests and Branch & Hadley became Branch & Co., Bankers.</span></p><p><span style="font-family: georgia; font-size: medium;">Then in 1889, Alpheus Branch, his father-in-law Gen. Joshua Barnes, Branch’s old business partner Thomas Jefferson Hadley, along with J.F. Bruton, R. L. Thompson and Walter Brodie were granted a state charter from the North Carolina legislature to establish the Wilson Banking & Trust Co. The original intention of the new business was to offer banking, trustee and custodian services but a legislation change prevented the banking concern from actually carrying out its trust business until 1907.</span></p><p><span style="font-family: georgia; font-size: medium;">Meanwhile, Alpheus Branch had died in 1893 and in 1900, his private bank Branch & Co., Bankers was incorporated into the Branch Banking Co., holder of the state charter and successor to the Wilson Banking & Trust Co. following two name changes. In 1913 – some six years after the launch of the trust services, Branch Banking Co. changed its name to Branch Banking & Trust Co., or BB&T for short.</span></p><p><span style="font-family: georgia; font-size: medium;">In comparison with Europe, mainland United States escaped World War I physically unscathed and enjoyed a booming economy in the 1910s and 1920s. During this time, Branch Banking & Trust earned the reputation as one of the larger and stronger banks in North Carolina. The bank also expanded into the insurance and mortgage loan markets in 1922 and 1923 respectively.</span></p><p><span style="font-family: georgia; font-size: medium;">When America’s over exuberance collapsed in 1929, the ensuing stock market crash and Great Depression caught many ordinary people and businesses big and small off-guard. Between January 1930 and January 1932 alone, well over 100 banks in North Carolina went bankrupt when their borrowers defaulted on their loans. As panics set in, bank runs saw the public transferring their deposits from Wilson’s seven other banks to the government-run United States Postal Savings System. What many didn’t know was that the postal savings system was not a bank on its own per se, but simply re-deposited the funds to designated banks. In Wilson County’s case, the postal savings’ banker was none other than Branch Banking & Trust. Thus, while Wilson’s other banks collapsed, BB&T enjoyed the confidence of government officials and remained financially healthy. As a matter of fact, as hundreds of banks failed in North Carolina between 1929 and 1933, BB&T’s network grew from five to eleven branches, and total assets increased almost threefold. </span></p><p><span style="font-family: georgia; font-size: medium;">The 1930s slump then came to an abrupt end when World War II broke out in 1939, as wartime demand for military machinery and foods trumped other concerns. Notwithstanding its massive tolls to lives, properties and the environment elsewhere, the global conflict lifted the American economy, employment and prosperity. A combination of patriotism and war-time restrictions on the production of non-war-related civilian consumer goods also caused personal savings to rise steadily, as things were just generally not available for sale. When peace returned in 1945, the returning soldiers and a massive influx of immigrants from war-torn Europe and other parts of the world to the U.S. led to a sharp increase in the demand for consumer goods, automobiles, machinery, infrastructure construction, housing, food staples, and consumer and business services – in other words – everything.</span></p><p><span style="font-family: georgia; font-size: medium;">BB&T rode on this unprecedented post-WWII growth and the height of the so-called “American century” so that by the end of the 1960s, it ran a network of 60 branches in 35 cities in North Carolina. Legislative changes in the 1980s and 1990s slowly loosened up inter-state banking restrictions in the U.S., and by 1994, BB&T’s network numbered over 260 branches across both North and South Carolina. By this time, BB&T was the fourth largest bank in its home state.</span></p><p><span style="font-family: georgia; font-size: medium;">In late 1994, BB&T Financial Corp. and Winston-Salem-based Southern National Corp. (fifth largest bank in North Carolina) agreed to merge in a deal that was valued at USD $2.2-billion. The combined bank became the largest bank in terms of deposits in North Carolina and the No. 3 in South Carolina with over 430 branches, including a small operation in Virginia. This merger also led to the new bank transferring its headquarters from Wilson to Winston-Salem, the home base of Southern National Corp. In 1996, Southern National took over United Carolina Bancshares Corp. for USD $985-million. United Carolina had a network of 153 branches across North and South Carolinas. The following year, Southern National resurrected and renamed itself BB&T Corp.</span></p><p><span style="font-family: georgia; font-size: medium;">During the rest of the 1990s and the early 2000s, BB&T continued to expand outside of its stronghold in the Carolinas, buying up numerous regional and community banks one by one but yet building up an ever-increasing presence in Virginia, West Virginia, Maryland, Washington DC, Georgia and Tennessee. Some of the more significant takeovers (those valued at at least USD $200-million, or those that represented entry to a new market) are listed below.</span></p><p><span style="font-family: georgia; font-size: medium;">Recent transactions:</span></p><p></p><ul style="text-align: left;"><li><span style="font-family: georgia; font-size: medium;">Between December 1997 and February 1998, BB&T bought Franklin Bancorporation of Washington, D.C. (for USD $165-million) and Maryland Federal Bancorp (USD $265-million). This marked BB&T’s first forays into the wealthy capital city area.</span></li><li><span style="font-family: georgia; font-size: medium;">In August 1998, BB&T acquired two financial institutions in Virginia: MainStreet Financial Corp. of Martinsville for USD $554-million and stockbroker Scott & Stringfellow Financial Inc. of Richmond for USD $131-million. MainStreet operated 46 branches in Virginia and three in Maryland.</span></li><li><span style="font-family: georgia; font-size: medium;">In January 1999, BB&T bought Mason-Dixon Bancshares Inc. of Westminster in Maryland for USD $257-million. The bank had 38 offices in the state.</span></li><li><span style="font-family: georgia; font-size: medium;">Also in January 1999, BB&T took over First Citizens Corp. of Newnan for USD $126-million. While the transaction was small, it became BB&T’s first entry into the state of Georgia with a network of 14 offices in south metropolitan Atlanta.</span></li><li><span style="font-family: georgia; font-size: medium;">In April 1999, BB&T purchased First Liberty Financial Corp. of Macon for USD $500-million. The purchase gave BB&T a network of 52 branches in the Macon and Savannah areas of Georgia.</span></li><li><span style="font-family: georgia; font-size: medium;">In what was its third acquisitions in Georgia in 1999, BB&T took over Premier Bancshares Inc. for USD $624-million in July. Premier had 42 branches in Atlanta and Northern Georgia.</span></li><li><span style="font-family: georgia; font-size: medium;">In July 2000, BB&T acquired FCNB Corp. of Frederick for USD $226-million. FCNB ran 34 offices in the central Maryland-Washington, D.C. corridor.</span></li><li><span style="font-family: georgia; font-size: medium;">Also in July 2000, BB&T purchased One Valley Bancorp Inc. of Charleston for USD $1.13-billion. The acquisition gave BB&T a network of 77 branches in West Virginia and another 48 in Virginia.</span></li><li><span style="font-family: georgia; font-size: medium;">In August 2000, BB&T took over BankFirst Corp. of Knoxville for USD $150-million. The small purchase was BB&T’s first entry into the state of Tennessee.</span></li><li><span style="font-family: georgia; font-size: medium;">In June 2001, BB&T bought Century South Banks Inc. of Alpharetta for USD $467-million. In doing so BB&T gained 40 offices in Georgia, North Carolina, Tennessee and Alabama.</span></li><li><span style="font-family: georgia; font-size: medium;">In August 2001, BB&T took over F&M National Corp. of Winchester. The holding company operated 174 branches and offices providing banking, mortgage, insurance and trust services in the Historic Triangle area of Virginia, Richmond and the metropolitan Washington, D.C. area.</span></li><li><span style="font-family: georgia; font-size: medium;">In November 2001, BB&T acquired MidAmerica Bancorp of Louisville in Kentucky for USD $415-million. MidAmerica operated 30 branches mainly through its Bank of Louisville subsidiary.</span></li><li><span style="font-family: georgia; font-size: medium;">Also in November 2001, BB&T took over AREA Bancshares Corp. for USD $451-million. AREA had 72 branches in Kentucky.</span></li><li><span style="font-family: georgia; font-size: medium;">In May 2002, BB&T bought Regional Financial Corp. (First South Bank) of Tallahassee for USD $275-million. First South Bank operated 22 offices in Tallahassee and the Florida Panhandle, Jacksonville, and along the Gulf Coast from Beverly Hills to Naples.</span></li><li><span style="font-family: georgia; font-size: medium;">In January 2003, BB&T made a big expansion in Virginia when it acquired First Virginia Banks Inc. for USD $3.38-billion. First Virginia’s subsidiaries operated 364 branches in total: 298 in Virginia, 55 in Maryland and 11 in northeast Tennessee.</span></li><li><span style="font-family: georgia; font-size: medium;">In April 2004, BB&T took over Republic Bancshares Inc. St. Petersburg for USD $392-million, gaining a network of 71 branches in Southeast Florida.</span></li><li><span style="font-family: georgia; font-size: medium;">In December 2005, BB&T acquired Main Street Banks Inc. of Atlanta for USD $623-million. Main Street Banks had 29 banking and insurance offices in Atlanta and Athens, Georgia.</span></li><li><span style="font-family: georgia; font-size: medium;">In December 2006, BB&T took over Coastal Financial Corporation of Myrtle Beach for USD $395-million. It had 17 branches in greater Myrtle Beach and seven in greater Wilmington, South Carolina.</span></li><li><span style="font-family: georgia; font-size: medium;">In June 2009, BB&T repaid the U.S. government the USD $3.1-billion that it received under the Troubled Asset Relief Program (TARP) after regulators determined the bank was well capitalized.</span></li><li><span style="font-family: georgia; font-size: medium;">In August 2009 during the global credit crisis that started in 2008, Colonial Bank of Montgomery failed and was shut down by the Alabama State Banking Department and the Federal Deposit Insurance Corporation (FDIC). In a brokered agreement with the FDIC, BB&T took control of all Colonial Bank’s 346 branches and USD $20-billion of client deposits in Alabama, Florida, Georgia, Nevada and Texas. The FDIC and BB&T agreed to share losses on about $15 billion of those assets.</span></li><li><span style="font-family: georgia; font-size: medium;">In February 2019, Winston-Salem-based (North Carolina) BB&T agreed to acquire <a href="http://bankingmergers.blogspot.com/2020/01/usa-bank-mergers-acquisitions-suntrust.html" target="_blank">SunTrust Banks, Inc.</a> for USD $28.24-billion in stock. Announced as a “merger of equals”, the former BB&T shareholders would control 57% of the new bank, with SunTrust holders owning the rest. The new bank would be known as <a href="http://bankingmergers.blogspot.com/2020/01/usa-bank-mergers-acquisitions-truist.html" target="_blank">Truist Financial</a> (pronounced “True-ist”), the unusual choice of which was mocked by many after the announcement. Truist would become the No. 6 bank in the U.S. and move its headquarters to Charlotte, but Winston-Salem would become the bank's headquarters for community banking. At the time of the merger announcement, SunTrust had about 1,300 branches and BB&T about 1,800 branches. A major consolidation of the branch network was expected.</span></li></ul><p></p><div><span style="font-family: georgia; font-size: medium;"><br /></span></div><div><span style="font-family: georgia; font-size: medium;">Click here to return to the <a href="http://bankingmergers.blogspot.com/2010/01/index-to-list-of-international-bank.html">Index</a> page.</span></div><p><br /></p>BankingMergershttp://www.blogger.com/profile/09902839579660694793noreply@blogger.comtag:blogger.com,1999:blog-7475905699260929987.post-50038825430009555322020-01-04T15:46:00.007-05:002020-12-28T18:50:57.777-05:00United States Bank Mergers & Acquisitions (SunTrust Banks)<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgmYNFlfV4EPeYwvtXlHxLkE5aaUMCoMRepp4PW5dTP_lAlz3NhYICrA9tw2hD672baevSoypi2Pa1N1vwY4tm2DuGCep9ubh_Xz601cejqxNsNaCp49LCXLRRDDfXlEErtU1REg_5Uh00/s1600/Michael_Gluzman-5129707951_19fdfd2fdb_oB.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="606" data-original-width="1500" height="161" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgmYNFlfV4EPeYwvtXlHxLkE5aaUMCoMRepp4PW5dTP_lAlz3NhYICrA9tw2hD672baevSoypi2Pa1N1vwY4tm2DuGCep9ubh_Xz601cejqxNsNaCp49LCXLRRDDfXlEErtU1REg_5Uh00/s400/Michael_Gluzman-5129707951_19fdfd2fdb_oB.jpg" width="400" /></a></div>
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<span style="font-size: medium;"><span style="font-family: "georgia" , "times new roman" , serif;"><span style="background-color: white;">Photograph by Michael Gluzman. </span></span><br />
<span style="font-family: "georgia" , "times new roman" , serif;"><br /></span>
<span style="font-family: "georgia" , "times new roman" , serif;">Photo: A blimp branded with SunTrust advertisement seen flying high above Atlanta. Special thanks to Michael Gluzman for granting me the permission to use his image.</span><br />
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<span style="font-family: "georgia" , serif; font-size: medium; line-height: 107%;">SunTrust Banks was formed in
1985 when the Trust Co. of Georgia and Florida’s SunBanks merged – the former traces
its origins to 1891 when the Commercial Travelers Savings Bank was founded in
Atlanta by businessman Joel Hurt. Two years later, Mr. Hurt and another member
of the board Ernest Woodruff spurred the re-organization of the bank into the
Trust Co. of Georgia to better reflect its main business lines: trust and
investment banking. This name would pretty much remain in use for the next 100
years. Though locally, the financial institution was often known simply as “the
Trust Company”.<o:p></o:p></span></div>
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<span style="font-family: "georgia" , serif; font-size: medium; line-height: 107%;">Mr. Woodruff would rise to the president of the Trust Company in 1904, and under his leadership the Trust
Company brokered the consolidations of numerous companies and industries, establishing
its position as a prominent player in the merchant banking and investment
banking business in Atlanta. <o:p></o:p></span></div>
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<span style="font-size: medium;"><span style="font-family: "georgia" , serif; line-height: 107%;">Then in 1919, Mr. Woodruff made
one of the shrewdest and most storied moves in corporate America’s history when he led a consortium to purchase The Coca-Cola Company from formula patent
holder Asa G. Candler for USD $25-million. Later in that same year, the Trust
Company underwrote the partial flotation of The Coca-Cola Co. In return, the
Trust Company received USD $110,000 (in 1919 dollars) worth of Coca-Cola shares
that it held for decades. </span><span style="font-family: "georgia" , serif;">That transaction cemented the
close ties between the two Atlanta institutions for the decades to come. Until
2011, the only hand-written formula recipe of the carbonated brown syrup the
world has known and tasted for over 100 years was stored in a secured vault in
SunTrust Banks’ head office in Atlanta. In that year, the recipe was
transferred to a vault in the World of Coca-Cola, which (the vault, not the
recipe) is now on public display. The Trust Co. of Georgia (and later SunTrust)
also held a stake in the Coca-Cola Co. until 2012.</span></span></div>
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<span style="font-size: medium;"><span style="font-family: "georgia" , serif; line-height: 107%;">The 1920s was an interesting
decade for the predecessor banks that became SunTrust. Back in the early years
of the Trust Company, a certain Colonel Robert James Lowry had been its
president, but he left in 1895 to tend to his own bank Lowry Bank. In 1907,
Lowry National Bank, by then having obtained a national charter, acquired the
commercial banking operations of the Trust Company, rendering the latter once again as
a pure trust company. In exchange, the Trust Company received 2,000 shares of
Lowry National Bank. Then in 1923, the Trust Company combined with Lowry National
and gave up the latter’s national charter, and the new entity adopted the name
Lowry Bank & Trust Co. of Georgia and became a state-chartered bank again.</span><br />
<span style="font-family: "georgia" , serif; line-height: 107%;"><br /></span>
<span style="font-family: "georgia" , serif; line-height: 107%;">Just one year later, a complex three-way reorganization was carried out involving Lowry Bank & Trust and Georgia’s oldest nationally-chartered
bank, Atlanta National Bank: </span><span style="font-family: georgia, serif;">the
trust business of Lowry was once again spun off and resumed the old name the Trust
Co. of Georgia, while Lowry merged with Atlanta National to become Atlanta & Lowry National Bank. </span><span style="font-family: georgia, serif;">Initially, the shareholders of Atlanta & Lowry
National also fully controlled the Trust Co. of Georgia, so both financial
institutions were still closely linked. This changed in 1933 when the federal Banking
Act (part of which was the so-called Glass-Steagall Act) required
deposit-taking banks be separated from securities dealers, and the Trust Co. of
Georgia became fully independent from the First National Bank of Atlanta, the
successor bank of Atlanta & Lowry National following another merger in
1929.</span></span></div>
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<span style="font-family: "georgia" , serif; font-size: medium; line-height: 107%;">During the Great Depressions of
the 1930s, the Trust Company gained majority ownership of five Georgian banks
outside of Atlanta – in Augusta, Columbus, Macon, Rome and Savannah. Between
the 1950s and 1970s, however, a change in policy ideology led to the passing of
banking regulation that witnessed Georgia having one of the most stringent “statewide
banking” restrictions in the U.S. Essentially, to protect small local banks,
banks based in a city or county were no longer permitted to acquire banks
outside of their home turfs – in other words – banks could not cross city or
county borders. This severely "boxed" Georgia's banks into their home markets until 1970. In 1971, the name Trust Company
Bank and TCG Bank were adopted and when statewide banking became legal, it
promptly expanded into other markets in the state.<o:p></o:p></span></div>
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<span style="font-family: "georgia" , serif; font-size: medium; line-height: 107%;"><br /></span></div>
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<span style="font-family: "georgia" , serif; font-size: medium; line-height: 107%;">Outside of the home state,
federal legislation known as the McFadden Act (1927) and Bank Holding Company
Act (1956) gave each individual state the power to prohibit “inter-state
banking”, so that banks in one state could not cross the state line and operate
in another state, unless the home state of the acquired bank allowed such
acquisitions. The inter-state banking ban only began to be relaxed in the late
1970s, beginning in state of Maine, and very slowly spreading to other
states throughout the 1980s.<o:p></o:p></span></div>
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<span style="font-family: "georgia" , serif; font-size: medium; line-height: 107%;"><br /></span></div>
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<span style="font-family: "georgia" , serif; font-size: medium; line-height: 107%;">In some cases, the relaxation
of inter-state banking began with regional reciprocal inter-state banking
agreements. In 1985, Georgia and Florida passed reciprocal interstate banking agreements
allowing the banks from either state to enter each other’s jurisdiction.
The relaxation started a frenzy of cross-state-line consolidations across the
Southeast as banks sought to expand into neighbouring markets as well as to
build up their own scale to avoid being swallowed up. In July 1985, the Trust Co. of
Georgia and Orlando-based SunBanks, Inc. merged and became the first
inter-state banking merger under the reciprocal agreement in the Southeast. The
new parent company took the name SunTrust Banks, Inc. but the two banks remained separate legal entities for years, as full operational integration across state
lines was still illegal. The newly created SunTrust banks had USD $16.3-billion
of assets. Soon after, other smaller acquisitions were made.<o:p></o:p></span></div>
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<span style="font-family: "georgia" , serif; font-size: medium; line-height: 107%;"><br /></span></div>
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<span style="font-family: "georgia" , serif; font-size: medium; line-height: 107%;">In 1986, SunTrust entered the
Tennessee for the first time by acquiring the Third National Corp. of Nashville
for USD $734-million. SunTrust added Third National’s 12 banks and 134 offices
in the state to its 44 banks and 480 offices in Georgia and Florida. Also in
1986, SunTrust Securities was established to expand the bank’s product line.<o:p></o:p></span></div>
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<span style="font-family: "georgia" , serif; font-size: medium; line-height: 107%;"><br /></span></div>
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<span style="font-family: "georgia" , serif; font-size: medium; line-height: 107%;">Following years of operating
under a decentralized manner and a mishmash of separate legal subsidiaries, SunBanks in Florida, Trust Co. of Georgia and Third National in Tennessee were
unified as SunTrust beginning in 1995, when nationwide banking
finally became legal in most states in America.<o:p></o:p></span></div>
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<span style="font-family: "georgia" , serif; font-size: medium; line-height: 107%;"><br /></span></div>
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<span style="font-family: "georgia" , serif; font-size: medium; line-height: 107%;">Recent transactions:<o:p></o:p></span></div>
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<ul>
<li><span style="font-family: "georgia" , serif; font-size: medium; line-height: 107%;">In 1998, SunTrust made a major
move northward when it spent USD $8.6-billion to acquire Richmond-based
(Virginia) Crestar Financial Corp. The purchase made SunTrust the 10<sup>th</sup>
largest bank in the country. Crestar’s 396 branches in Virginia, Maryland and
the District of Columbia would join SunTrust’s 697-office network in Florida,
Georgia, Tennessee and Alabama.</span></li>
<li><span style="font-family: "georgia" , serif; font-size: medium; line-height: 107%;">Also in 1998, SunTrust spent
USD $150-million to acquire Tennessee’s Securities Co., a provider of equities
underwriting services.</span></li>
<li><span style="font-family: "georgia" , serif; font-size: medium; line-height: 107%;">In 2001, SunTrust purchased the
Florida network of Huntington Bancshares Inc. for USD $705-million. Already a
major player in the state, the purchase bolstered SunTrust to the No. 3 bank in
Florida with 59 additional branches. </span></li>
<li><span style="font-family: "georgia" , serif; font-size: medium; line-height: 107%;">Also in 2001, SunTrust made a
bold move by launching a USD $14.7-billion hostile bid for North Carolina-based
<a href="http://bankingmergers.blogspot.com/2009/10/united-states-bank-mergers-acquisitions.html" target="_blank">Wachovia Corp.</a> SunTrust’s offer was about $1 billion higher than the one that
Wachovia had accepted from First Union Corp. However, Wachovia’s shareholders
eventually opted to merge with First Union instead of with SunTrust.</span></li>
<li><span style="font-family: "georgia" , serif; font-size: medium; line-height: 107%;">Also in 2001, SunTrust acquired
institutional capital markets business Robinson-Humphrey Company from Citigroup
subsidiary Salomon Smith Barney to form SunTrust Robinson Humphrey.</span></li>
<li><span style="font-family: "georgia" , serif; font-size: medium; line-height: 107%;">In 2004, SunTrust further
cemented its position in the Southeast when it took over Memphis-based National
Commerce Financial Corp. for USD $6.98-billion. National Commerce Financial
operated primarily as the National Bank of Commerce and Central Carolina Bank with
over 460 offices in Tennessee, North and South Carolina, Mississippi, Arkansas,
Georgia, Virginia, West Virginia and Alabama. The purchase made SunTrust the
No. 7 bank in the U.S. and the third largest in the Southeast with just over 1,690 branches and over 2,700 ATMs.</span></li>
<li><span style="font-family: "georgia" , serif; font-size: medium; line-height: 107%;">In 2012, partly due to more
stringent federal capital requirements, SunTrust sold its remaining 59 million
of the 60 million shares of The Coca-Cola Co. that it first obtained in 1919
when its predecessor Trust Co. of Georgia underwrote the carbonated drink
maker’s the initial public offering. The remaining 1 million shares were
donated to the SunTrust Foundation.</span></li>
<li><span style="font-family: "georgia" , serif; font-size: medium; line-height: 107%;">In 2019, Charlotte-based (North
Carolina) <a href="http://bankingmergers.blogspot.com/2020/12/united-states-bank-mergers-acquisitions.html" target="_blank">BB&T Corp.</a> agreed to acquire SunTrust Banks, Inc. for USD $28.24-billion
in stock. Announced as a “merger of equals”, the former BB&T shareholders
would control 57% of the new bank, with SunTrust holders owning the rest, with a combined market capitalization of about USD $66-billion. The new
bank would be known as <a href="http://bankingmergers.blogspot.com/2020/01/usa-bank-mergers-acquisitions-truist.html" target="_blank">Truist Financial</a> (pronounced “True-ist”), the unusual
choice of which was mocked by many after the announcement. Truist would become
the No. 6 bank in the U.S. and be based in Charlotte. SunTrust had about 1,300 branches
and BB&T about 1,800 branches. As 740 branches of the two banks are within two
miles of each other, many of them might be consolidated within a few years.</span></li>
</ul>
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<span style="line-height: 107%;"><span style="font-family: "georgia" , "times new roman" , serif; font-size: medium;"><span style="background-color: white;">Click here to return to the </span><a href="http://bankingmergers.blogspot.com/2010/01/index-to-list-of-international-bank.html" style="background-color: white; text-decoration-line: none;" target="_blank">Index</a><span style="background-color: white;"> page.</span></span></span></div>
<br />BankingMergershttp://www.blogger.com/profile/09902839579660694793noreply@blogger.comtag:blogger.com,1999:blog-7475905699260929987.post-11266468554544481672020-01-04T13:45:00.002-05:002020-12-28T18:47:59.240-05:00USA Bank Mergers & Acquisitions (Truist Financial)<span style="font-family: georgia; font-size: medium;"><b>Truist Financial</b></span><div><span style="background-color: white; color: #444444;"><span style="font-family: georgia; font-size: medium;"><br /></span></span></div><div><span style="background-color: white; color: #444444;"><span style="font-family: georgia; font-size: medium;"><br /></span></span></div><div><span style="font-size: medium;"><span style="background-color: white;"><span style="font-family: georgia;"><span style="color: #444444;">Truist Financial Corp. was formed in December 2019 by the merger of </span><a href="http://bankingmergers.blogspot.com/2020/12/united-states-bank-mergers-acquisitions.html" target="_blank"><b><span style="color: #2b00fe;">BB&T Corp.</span></b></a><span style="color: #444444;"> of Winston-Salem (North Carolina) and </span><a href="http://bankingmergers.blogspot.com/2020/01/usa-bank-mergers-acquisitions-suntrust.html" target="_blank"><b><span style="color: #2b00fe;">SunTrust Banks, Inc.</span></b></a><span style="color: #444444;"> of Atlanta. The merger was announced back in February 2019 and at the time valued at </span></span></span><span style="background-color: white; color: #444444; font-family: georgia;">USD $28.24-billion in stock. Announced as a “merger of equals”, the former BB&T shareholders would control 57% of the new bank, with SunTrust holders owning the rest. The unusual choice of the name was mocked by many after the announcement. Truist would become the No. 6 bank in the U.S. and move its headquarters to Charlotte, but Winston-Salem and Atlanta would both retain some "head office" functions for certain divisions of Truist.</span></span></div><div><span style="background-color: white; color: #444444; font-family: georgia; font-size: medium;"><br /></span></div><div><span style="background-color: white; color: #444444; font-family: georgia; font-size: medium;">At the time of the merger announcement, SunTrust had about 1,300 branches and BB&T about 1,800 branches. A major consolidation of the branch network was expected.</span></div><div><span style="background-color: white; color: #444444; font-family: georgia; font-size: medium;"><br /></span></div><div><span style="background-color: white; color: #444444; font-family: georgia; font-size: medium;">Click here to return to the <a href="http://bankingmergers.blogspot.com/2010/01/index-to-list-of-international-bank.html" target="_blank">Index</a> page.</span></div>BankingMergershttp://www.blogger.com/profile/09902839579660694793noreply@blogger.comtag:blogger.com,1999:blog-7475905699260929987.post-76544078964568629002018-09-07T22:44:00.001-04:002018-09-07T22:45:14.962-04:00Great Britain/ India/ Hong Kong Bank Mergers & Acquisitions (Mercantile Bank)<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgS3D3CtG6DxlEsqVcUdr22oOfn9r0QHswNwlR1pexpe83ChOsJFvVb35f1RguyhfGGBEk3RmHDDL18NZEVC7SXsl856IkKZI522yGhK6Zmen-mtvem_TdIoTaabVyd-j4CUzwN8omh5xo/s1600/2016AIMG_5821.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1067" data-original-width="1600" height="213" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgS3D3CtG6DxlEsqVcUdr22oOfn9r0QHswNwlR1pexpe83ChOsJFvVb35f1RguyhfGGBEk3RmHDDL18NZEVC7SXsl856IkKZI522yGhK6Zmen-mtvem_TdIoTaabVyd-j4CUzwN8omh5xo/s320/2016AIMG_5821.jpg" width="320" /></a></div>
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<span style="font-family: "georgia" , serif; font-size: 13pt;">Photo:
A bill of exchange, a sort of promissory note for making payment, dating from
1859. This is one of the earliest surviving documents from the Chartered
Mercantile Bank of India, London and China, which was known as the Mercantile
Bank of Bombay between 1853 and 1857; the Chartered Mercantile Bank of India,
London and China between 1857 and 1892; the Mercantile Bank of India between
1893 and 1957, and the Mercantile Bank Ltd. between 1958 and 1984.</span><span style="font-family: "georgia" , serif; font-size: 13.0pt;"><o:p></o:p></span></div>
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<span style="font-family: "georgia" , serif; font-size: 13.0pt;"><b>Mercantile
Bank Ltd.</b><o:p></o:p></span></div>
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<br /></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="font-family: "georgia" , serif; font-size: 13.0pt;">The
Mercantile Bank Ltd. had a very storied past full of ups and downs. It was once
upon a time a local Indian bank, then it became a British bank, and eventually
a Hong Kong bank in its final decades. The bank was founded in 1853 as the
Mercantile Bank of Bombay as a trade finance bank. By 1857,
the bank had opened offices in London, Madras (now Chennai), Colombo, Kandy,
Calcutta (now Kolkata), Singapore, Hong Kong, Canton (now Guangzhou), and
Shanghai.<o:p></o:p></span></div>
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<br /></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="font-family: "georgia" , serif; font-size: 13.0pt;">In that same
year of Mercantile Bank of Bombay’s founding, however, the establishment of a
rival British overseas bank also with a focus on British India, China and the
colonies in the Orient applied for and obtained a Royal Charter from Queen
Victoria, and called itself the Chartered Bank of India, Australia and China
(today’s Standard Chartered plc).<o:p></o:p></span></div>
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<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="font-family: "georgia" , serif; font-size: 13.0pt;">A Royal
Charter used to be the only means to establish a public or
private corporation, but by the mid-19<sup>th</sup> century it certainly was
not the sole process to do so. While a Royal Charter defines a corporation’s
privileges and purposes such as those of a town or a city, the granting of such
by the Victorian era no longer indicated, for example, Royal patronage, nor implied
or express state guarantee in times of troubles. Even
though a Royal Charter is technically granted only to a body or business which
can demonstrate pre-eminence and stability, constitutionally or legally, there is
no reason to believe that a “chartered” business is any more or less likely to
be successful than those without a charter.<o:p></o:p></span></div>
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<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="font-family: "georgia" , serif; font-size: 13.0pt;">Nevertheless,
the Mercantile Bank of Bombay felt that it was at a competitive disadvantage
and did not want to be outdone by the regal sounding Chartered Bank of India,
Australia and China, which had a habit of promoting itself as being “Incorporated
in England by Royal Charter 1853.”<span style="mso-spacerun: yes;"> </span>Therefore,
in 1857, the Mercantile Bank of Bombay also obtained a Royal Charter and
renamed itself the Chartered Mercantile Bank of India, London and China, and
moved its head office from Bombay to London. In doing so, the Chartered
Mercantile Bank of India, London and China was often mixed up with the Chartered
Bank of India, Australia and China – the fact that both banks were founded in 1853
doubtlessly added to the confusion.<o:p></o:p></span></div>
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<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="font-family: "georgia" , serif; font-size: 13.0pt;">Following
the tradition in Great Britain at the time, banknotes in the British colonies
were often issued by certain authorised commercial banks. After receiving the
Royal Charter, the Chartered Mercantile Bank of India, London and China gained
the privilege to issue banknotes in Hong Kong (starting in 1859), in Penang
(starting in the 1860s) and later also in Malacca and Singapore. As a matter of fact, the bank played a prominent role in the early banking development in the
Straits Settlements and the Federated Malay States, which became today’s
Malaysia and Singapore.<o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "georgia" , serif; font-size: 13.0pt;">In 1892,
however, the Chartered Mercantile Bank suffered a liquidity crisis and had its
Royal Charter revoked. It was re-capitalised as the Mercantile Bank of India in
1893, but it ceased to issue all banknotes. <o:p></o:p></span></div>
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<br /></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="font-family: "georgia" , serif; font-size: 13.0pt;">In the early
20<sup>th</sup> century, growth returned to the Mercantile Bank of India and it,
for example, acquired the locally-incorporated Bank of Calcutta (founded 1895). </span></div>
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<span style="font-family: "georgia" , serif; font-size: 13pt;"><br /></span></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="font-family: "georgia" , serif; font-size: 13pt;">In 1912, the
Mercantile Bank regained the privilege to issue banknotes in Hong Kong. It also issued banknotes in the Chinese port city of Shanghai for years during the early 20</span><sup style="font-family: Georgia, serif;">th</sup><span style="font-family: "georgia" , serif; font-size: 13pt;"> century. (Between 1846 and 1945, Great Britain controlled “concessions” -- extraterritorial jurisdictions -- in
China, and the Shanghai International Settlement was probably the most
well-known one of all.) </span><span style="font-family: "georgia" , serif; font-size: 13pt;">Surviving 19</span><sup style="font-family: Georgia, serif;">th</sup><span style="font-family: "georgia" , serif; font-size: 13pt;">
century banknotes issued by the Chartered Mercantile Bank of India, London and
China from Hong Kong, Singapore, Malacca, and Penang; and even mid-20</span><sup style="font-family: Georgia, serif;">th</sup><span style="font-family: "georgia" , serif; font-size: 13pt;">
century examples by the Mercantile Bank of India from Hong Kong and Shanghai are very rare, and can command very significant valuations at auctions.</span></div>
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<span style="font-family: "georgia" , serif; font-size: 13pt;"><br /></span></div>
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<span style="font-family: "georgia" , serif; font-size: 13.0pt;">In 1916, the
Mercantile Bank of India took over the Bank of Mauritius. This was the third
bank of the same name – none of them were related to one another -- to have existed
in Mauritius. This particular Bank of Mauritius was established in 1894 to take over the
local operations of the Oriental Bank Corporation that had gone bankrupt. The Oriental
Bank Corporation was another prominent Anglo-Indian bank that was active in
British India, Ceylon, Singapore, Hong Kong and China in the mid-19<sup>th</sup>
century before its demise.<o:p></o:p></span></div>
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<br /></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="font-family: "georgia" , serif; font-size: 13.0pt;">While rival
British overseas banks like the Chartered Bank of India, Australia and China
and The Hongkong and Shanghai Banking Corporation (HSBC) have had a strong focus
in Hong Kong, China and the rest of the Far East, the Mercantile Bank’s main
focus was in British India, where the bank had half of its branches.<o:p></o:p></span></div>
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<br /></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="font-family: "georgia" , serif; font-size: 13.0pt;">In 1947,
British India gained independence and became India and Pakistan. The newly
formed nation-states wanted to nurture their own domestic industries and became
increasingly restrictive to the British businesses including the Mercantile
Bank of India. New regulations in place banned foreign banks from opening new
branches, and growth in the 1950s for the Mercantile Bank in India was much
hampered. <o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<br /></div>
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<span style="font-family: "georgia" , serif; font-size: 13.0pt;">Towards the late
1950s, it was believed that the Mercantile Bank of India would be vulnerable to
a takeover by an American bank eager to have a presence (however restrictive) in
the Indian market. Ironically, right around the same time, the decision was
made to drop the reference of India from the name and the bank became the
Mercantile Bank Ltd. <o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<br /></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="font-family: "georgia" , serif; font-size: 13.0pt;">In 1957, The
Hongkong and Shanghai Banking Corporation pre-empted the rumoured American
interest by first acquiring a 20% stake in Mercantile Bank Ltd., before fully acquiring
the remaining shares in 1959.<o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "georgia" , serif; font-size: 13.0pt;">HSBC kept
the Mercantile Bank operations separate and independent for many years. In
1966, Mercantile Bank relocated its head office from London to Hong Kong. Interestingly,
Mercantile Bank continued to be a banknote issuer in Hong Kong until 1974 (along
with HSBC and the Standard Chartered Bank). In 1984, finally Mercantile Bank’s
operations were integrated into HSBC, except for the small Thai operations,
which were sold to Citibank. The sale of this small unit of the Mercantile Bank
appeared to have caused much confusion about the final years of the bank, as
many sources, including Wikipedia, often suggest mistakenly that HSBC sold the entire
Mercantile Bank to Citibank in 1984.<o:p></o:p></span></div>
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<span style="font-family: "georgia" , serif; font-size: 13.0pt;">Click here to return to the <a href="http://bankingmergers.blogspot.com/2010/01/index-to-list-of-international-bank.html">Index</a> page.</span></div>
<br />BankingMergershttp://www.blogger.com/profile/09902839579660694793noreply@blogger.comtag:blogger.com,1999:blog-7475905699260929987.post-24248350792445147352018-08-11T12:05:00.000-04:002018-09-09T18:33:51.134-04:00Great Britain Bank Mergers & Acquisitions (Clydesdale Bank, Yorkshire Bank, Virgin Money)<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj0V0OW9Kci-aPoNDt5Yn2Yu73Wv0Jlo5xUD1sPS6rDQt9NREGRU-9s2FADs18eYKB-J3kVDTP_P4jGQUFwOYlPl0qrZKuaU2DRyehx0TqjXqDtpHzsx_QmMpeE2DtfGHSY3WWZJVp2sLQ/s1600/Clydesdale-Yorkshire-Virgin-B.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1067" data-original-width="1600" height="213" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj0V0OW9Kci-aPoNDt5Yn2Yu73Wv0Jlo5xUD1sPS6rDQt9NREGRU-9s2FADs18eYKB-J3kVDTP_P4jGQUFwOYlPl0qrZKuaU2DRyehx0TqjXqDtpHzsx_QmMpeE2DtfGHSY3WWZJVp2sLQ/s320/Clydesdale-Yorkshire-Virgin-B.jpg" width="320" /></a></div>
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<br /></div>
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</div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="color: #444444; font-family: "Georgia",serif; font-size: 13.0pt; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;">Photo: The Virgin Money lounge in
Sheffield, Yorkshire, has a complimentary bowling alley for clients to enjoy.
The insets show a Clydesdale Bank branch at London's Piccadilly Circus, and a
Yorkshire Bank branch in Whitby, North Yorkshire.<o:p></o:p></span></div>
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<br /></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="color: #444444; font-family: "Georgia",serif; font-size: 13.0pt; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;">Photo Sources: Virgin Money lounge in
Sheffield, Virgin Money; Clydesdale Bank in London, Swire Chin; Yorkshire Bank
in Whitby: Swire Chin.<o:p></o:p></span></div>
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<br /></div>
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<br /></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<b><span style="color: #444444; font-family: "Georgia",serif; font-size: 13.0pt; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;">CYBG (Clydesdale Yorkshire Bank Group
d.b.a. Virgin Money)</span></b><span style="color: #444444; font-family: "Georgia",serif; font-size: 13.0pt; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;"><o:p></o:p></span></div>
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<br /></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="color: #444444; font-family: "Georgia",serif; font-size: 13.0pt; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;">The Clydesdale Bank, Yorkshire Bank
and Virgin Money each has a complex history and relationship with each other
since their separate beginnings. They were established independently of each
other but interestingly, all three banks have been under partial or full
Australian ownership at one some point. Glasgow-based CYBG plc is the parent
company of Clydesdale Bank and Yorkshire Bank, which in May 2018 agreed to
acquire challenger bank Virgin Money for GBP 1.7-billion.<o:p></o:p></span></div>
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<br /></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<b><span style="color: #444444; font-family: "Georgia",serif; font-size: 13.0pt; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;">CYBG plc (Clydesdale Bank lineage)</span></b><span style="color: #444444; font-family: "Georgia",serif; font-size: 13.0pt; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;"><o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="color: #444444; font-family: "Georgia",serif; font-size: 13.0pt; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;">The Clydesdale Banking Company was
founded by Glasgow’s businessmen in May 1838 in the joint-stock format to serve
the local market. The Clyde is a major river that flows through Glasgow, and
the vale area surrounding the river is called Clydesdale. Right from its start,
offices were opened in the industrial city of Glasgow as well as in the capital
city of Edinburgh about 40 miles to the east. Within its first year of
operations, Clydesdale also opened two country (rural) branches in Falkirk and
Campbeltown.<o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="color: #444444; font-family: "Georgia",serif; font-size: 13.0pt; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;">The 19<sup>th</sup> century was
the hundred years that witnessed the most rapid, disruptive and yet
transformative technological, social and economic changes in British history.
Newly-invented machinery greatly expanded the output of consumer and industrial
goods, as well as of agricultural produce. Meanwhile, the ever-expanding
railway network not only made transportation of raw materials, finished goods,
people and communications (such as news, letters and parcels) much faster and
cheaper, it also allowed perishable produce to reach destinations much farther
than previously possible before spoiling.<o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="color: #444444; font-family: "Georgia",serif; font-size: 13.0pt; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;">This mechanization and transportation
revolution, which was part of the overall industrial revolution, favoured
larger-scale farms and manufacturing factories over the one-person artisan
shops and small-scale farms that previously dominated the economy. This shift
towards larger scale operations required much larger capital investments and
financings, and the formerly local banks and small private banks were
ill-capitalized to support and take on the risk of these burgeoning capital-intensive
industries. During the mid-19<sup>th</sup> century, many of these small
provincial or private banks amalgamated with each other, and converted into
joint-stock banks that could raise capital by issuing new shares to
shareholders.<o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="color: #444444; font-family: "Georgia",serif; font-size: 13.0pt; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;">In 1840, Clydesdale Bank took over
the Greenock Union Bank. Despite that, by 1857, it still only had 13 branches
and remained a smallish bank. It was perhaps this prudence that kept the bank
in relative financial health, for in that same year, the 101-branch Western
Bank of Scotland, the second largest bank in Scotland at the time after the
Royal Bank of Scotland (RBS), collapsed during a general financial panic, and
Western Bank’s operations were broken up and taken over by other rivals,
including the RBS, Clydesdale and others. During the same crisis, the City of
Glasgow Bank also suspended payments (operations), and likewise some operations
were transferred to Clydesdale Bank, which doubled its number of its branches.<o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="color: #444444; font-family: "Georgia",serif; font-size: 13.0pt; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;">As London rose to become the premier
financial centre of the world in the second half of the 19<sup>th</sup> century,
Clydesdale Bank opened a branch in London in 1877. <span style="background: white;">Back in 1874, Clydesdale Bank had opened a few branches in Northern
England in the area that is right next to its Scottish home market. But b</span>eyond
the these few “cross-border” branches, <span style="background: white;">banking
in England, Scotland and Northern Ireland has historically been quite separate
from each other -- in other words -- English banks have very few branches and
minuscule market share in Scotland and Northern Ireland, and vice versa for the
Scottish and Northern Irish banks. This did not mean that banks from all three
"countries" could not acquire or control banks in each other's
territories, though this typically involved the much more powerful English
banks having a stake in Scottish or Northern Irish banks rather than the other
way around. (Unlike Scotland and Northern Ireland, Wales is not a separate
legal jurisdiction and its legal system is integrated with that of
England.) </span><br />
<span style="background: white;"><br />
Shortly after World War I, the smaller and weaker Scottish banks found
themselves facing challenging market conditions, and a wave of Anglo-Scottish
takeovers happened. In 1919, London City and Midland Bank (later becoming
Midland Bank and today’s HSBC), at the time the world’s largest bank based on
deposits, took over Clydesdale Bank. Then in 1923, Midland further
acquired the North of Scotland Bank. As in all Anglo-Scottish or Anglo-Irish
bank takeovers, the management, corporate identities, boards of directors and
operations of the acquired banks remain separate from the parent bank. Hence,
both Clydesdale and the North of Scotland enjoyed to a large degree their
autonomies. This only changed in 1950 when Midland’s two Scottish units were combined
to become the Clydesdale and North of Scotland Bank. Eventually, the rather
cumbersome name was shortened back to Clydesdale Bank.</span><o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="background: white; color: #444444; font-family: "Georgia",serif; font-size: 13.0pt; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;">In early-1980s,
Midland Bank itself became mired in the Latin American debt crisis, and had to
divest its loss-making businesses and raise new funds to shore up its depleted
capital. In 1987, Midland Bank sold Clydesdale Bank in Scotland (for GBP
420-million) and Northern Bank in Northern Ireland and Ireland (for a symbolic
AUD $2) to the National Australia Bank (NAB) group. NAB was at the time keen to
expand outside of its Australian and New Zealand home markets. In 1990, NAB
further acquired Yorkshire Bank for GBP 976-million (see separate section
below). These three purchases gave NAB a meaningful but if only regional
footprint in Northern England, Scotland, Ireland and Northern Ireland, but not
in the economic powerhouse in Greater London and Southern England.</span><span style="color: #444444; font-family: "Georgia",serif; font-size: 13.0pt; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;"><o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="color: #444444; font-family: "Georgia",serif; font-size: 13.0pt; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;">During the early 2010s, however,
Clydesdale Bank and Yorkshire Bank were caught up in an industry-wide (in Great
Britain) unethical and fraudulent mis-selling and mis-handling of a financial
product known as payment protection insurance (PPI), negatively impacting
hundreds of thousands of affected clients.<o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="color: #444444; font-family: "Georgia",serif; font-size: 13.0pt; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;">Worse still, this PPI scandal broke
out in the midst of the decade-long worldwide credit crisis that began in 2007,
which resulted in soaring loan and trading losses, ultra-low interest rate
spreads (which adversely impacted bank profitability), reduced demands for
loans, little appetite for merger and other investment banking activities, and
the need to unwind risky and complex financial positions – a process often
called de-leveraging.<o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="color: #444444; font-family: "Georgia",serif; font-size: 13.0pt; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;">By 2014, NAB concluded its British
operations were too small to compete efficiently with the bigger players in the
market, and that it would be unaffordably costly to try to win market share. A
decision was made to exit the United Kingdom retail banking market. However, by
this time the PPI scandal had blown up into a very expensive mistake for both
Clydesdale and Yorkshire Banks. The two banks eventually had to set aside at
least GBP 2.1-billion of potential compensation to the PPI
claimants. In order to make Clydesdale and Yorkshire Banks a
financially viable autonomous business, NAB agreed to cover GBP 1.58-billion of
the PPI scandal provisions to relieve their financial pressure.<o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="color: #444444; font-family: "Georgia",serif; font-size: 13.0pt; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;">Finally, in early 2016, NAB spun off
and floated Clydesdale Bank and Yorkshire Bank under a holding company called
CYBG plc. NAB transferred 75% of CYBG shares to NAB shareholders, and sold the
remaining 25% stake to institutional shareholders. To allow the Australian
shareholders easy access to trade CYBG shares, CYBG was listed on both the
London Stock Exchange and the Australian Securities Exchange.<o:p></o:p></span></div>
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<br /></div>
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<br /></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<b><span style="color: #444444; font-family: "Georgia",serif; font-size: 13.0pt; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;">CYBG plc (Yorkshire Bank lineage)</span></b><span style="color: #444444; font-family: "Georgia",serif; font-size: 13.0pt; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;"><o:p></o:p></span></div>
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<br /></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="color: #444444; font-family: "Georgia",serif; font-size: 13.0pt; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;">In 1859, Yorkshireman Colonel Edward
Akroyd, a wealthy owner of large textile mills in Halifax, founded the West
Riding of Yorkshire Provident Society and Penny Savings Bank. His wish was to
encourage his workers to handle income prudently and to save for a rainy day.
Col. Akroyd was one of those Victorian benevolent industrialists who strongly
believed in caring for and improving the livelihoods of his employees and their
families. As a matter of fact, he even had housing complexes and a school built
right next to some of the factories where his workers worked.<o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="color: #444444; font-family: "Georgia",serif; font-size: 13.0pt; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;">As a provident society, the bank was
originally a co-operative (a mutual bank). The new bank took off to a great
start and began setting up offices in nearby towns. Being Britain’s largest
county, Yorkshire’s administration was divided into three “ridings”: East, West
and South. Col. Akroyd initially only had planned to operate in the West
Riding. But in 1861, the bank abandoned both the “provident society” format and
the West Riding focus, becoming the Yorkshire Penny Bank with well over 100
offices across the entire county.<o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="color: #444444; font-family: "Georgia",serif; font-size: 13.0pt; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;">Banking back then, particularly for a
penny bank catering to the working lower class, was very different from today.
The offices often amounted to no more than a counter located in a village
school room, or a church basement, and typically only opened for business one
evening a week. Yorkshire Penny Bank was said to be the first bank in the world
to introduce the “school bank” concept in 1865, maintaining accounts for school
children (as opposed to having an office inside a school for working adult
clients). The bank’s first full-time daily branch opened in 1871. In any case,
the Yorkshire Penny Bank became a local institution for the county.<o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="color: #444444; font-family: "Georgia",serif; font-size: 13.0pt; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;">Col. Edward Akroyd was so much loved
and respected that some 15,000 mourners showed up at his funeral in 1887. His
former residence in Halifax is now the Bankfield Museum.<o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="color: #444444; font-family: "Georgia",serif; font-size: 13.0pt; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;">In the 1911, however, an audit
determined that the Yorkshire Penny Bank’s reserves were significantly
underfunded and the Bank of England brokered a joint rescue-takeover of the
bank by a long list of English clearing banks: National Provincial Bank,
Westminster Bank, William Decons Bank, Lloyds Bank, Barclays Bank and Glyn
Mills.<o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="color: #444444; font-family: "Georgia",serif; font-size: 13.0pt; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;">At its centenary in 1959, the bank
adopted a simplified name of Yorkshire Bank.<o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="color: #444444; font-family: "Georgia",serif; font-size: 13.0pt; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;">In 1990, the National Australia Bank
(NAB) group was keen to expand in the British Isles after its 1987 takeover of
the Clydesdale Bank (in Scotland) and Northern Bank (in Northern Ireland and
Ireland) from Midland Bank. Meanwhile, the English banks controlling Yorkshire
Bank were also eager to divest their minority stakes, and Yorkshire Bank was
sold to NAB for GBP 976-million (USD $1.65-billion). At that time, National Westminster
(NatWest) held 40% of Yorkshire, Barclays (32%), Lloyds (20%) and the Royal
Bank of Scotland (the remaining 8%).<o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<b><span style="color: #444444; font-family: "Georgia",serif; font-size: 13.0pt; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;">Virgin Money (pre-CYBG takeover)</span></b><span style="color: #444444; font-family: "Georgia",serif; font-size: 13.0pt; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;"><o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="color: #444444; font-family: "Georgia",serif; font-size: 13.0pt; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;">Long dominated by historical banks
established in the 1600s, 1700s and 1800s, the British banking industry
witnessed monumental changes after the 2007 global credit crisis and the
technological disruption introduced by the internet and mobile phone in the 2010s.
One result of these changes was the rapid emergence of new, mostly “branchless”
banks, such as Virgin Money. This happened because: 1) the business of banking
has moved rapidly towards internet and mobile-phone banking away from in-person
branch banking; 2) the traditional “High Street” banks were busily cutting back
branches and staff to reduce costs following heavy losses from the credit
crisis; and 3) new banks with minimal numbers of branches have lower overhead
costs and can offer better rates and prices for their clients. In the United
Kingdom, these new banks are called “challenger banks” as they aimed to
challenge the long-established “High Street” banks.<o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="color: #444444; font-family: "Georgia",serif; font-size: 13.0pt; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;">Virgin Money itself has a very short
history, having been established only in 1995 initially as “Virgin Direct
Personal Financial Service Ltd.” by Sir Richard Branson’s Virgin Group.
Initially Virgin Direct was an income personal equity plan (known as “income
PEP”) platform as a 50-50 partnership with insurer and asset manager Norwich
Union. The income PEP was a registered account that allowed people over the age
of 18 to invest a maximum annual amount in shares of British companies
tax-free, meaning that the income and capital gains generated within the income
PEP were not taxable. In 1999, the British government replaced the income PEP
with the “Individual Savings Account” (ISA), which means that people are now
able to put their money into a savings account and term deposit to earn
interest tax-free, instead of being required to invest only in stocks that are
more risky.<o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="color: #444444; font-family: "Georgia",serif; font-size: 13.0pt; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;">By having a lower maintenance fees
than other financial institutions, Virgin Direct claimed that it received 4,000
phone calls on its opening day, and attracted GBP 42-million of assets under
management in the first month.<o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="color: #444444; font-family: "Georgia",serif; font-size: 13.0pt; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;">In 1996, Virgin launched the Virgin
Personal Pension product, again using the easy-to-understand and low-fee
strategy to lure new clients from the traditional financial-services firms.<o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="color: #444444; font-family: "Georgia",serif; font-size: 13.0pt; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;">By 1997, Virgin Direct had already
attracted GBP 1-billion in funds under management, at which time it launched
the One account in partnership with the Royal Bank of Scotland (RBS) and
Australian financial service group AMP (originally Australian Mutual Provident)
to offer the “offset mortgage” product. At its launch, RBS owned 50% of the One
account platform, with Virgin Direct and AMP each owning a 25% stake.<o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="color: #444444; font-family: "Georgia",serif; font-size: 13.0pt; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;">A traditional mortgage loan typically
has a set interest rate, a fixed repayment schedule, and strict limitations on
how much, if any, of the outstanding mortgage loan can be repaid ahead of (or
behind) schedule. An offset mortgage like the Virgin One, on the other hand,
charges interest on the outstanding mortgage balance less the balances in the
borrower’s savings accounts on a daily basis. In other words, every time money
is deposited into the borrower’s savings account (such as a payroll deposit),
the balance of the mortgage loan drops (hence “is offset”) by that deposit.
This flexible mortgage payment option has the potential to speed up
significantly the full repayment of the loan than a traditional mortgage.<o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="color: #444444; font-family: "Georgia",serif; font-size: 13.0pt; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;">Initially available only to Virgin
Direct’s 200,000-strong income PEP and Personal Pension clients, the One
account was so popular that it was expanded to the general public by 1998.<o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="color: #444444; font-family: "Georgia",serif; font-size: 13.0pt; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;">Also in 1997, Australia’s AMP
acquired Norwich Union’s 50% stake in Virgin Direct. As part of the agreement,
AMP gained the worldwide licence to use the “Virgin” brand in retail financial
services.<o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="color: #444444; font-family: "Georgia",serif; font-size: 13.0pt; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;">In 2000, Virgin Group once again
partnered with AMP to launch “virginmoney.com” as a one-stop on-line
“supermarket” for financial products such as ISAs, unit trusts (mutual funds),
mortgages and life insurance.<o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="color: #444444; font-family: "Georgia",serif; font-size: 13.0pt; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;">In 2001, the Royal Bank of Scotland
took over the Virgin One mortgage platform from Virgin Direct (25%) and AMP
(25%) for about GBP 100-million. Virgin One had about 70,000 accounts and GBP
3.75-billion of mortgage receivables at that time.<o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="color: #444444; font-family: "Georgia",serif; font-size: 13.0pt; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;">In 2002, Virgin Direct and
VirginMoney.com were amalgamated to become Virgin Money, and continued to be
jointly-owned by Virgin Group and AMP. Meanwhile, Virgin Money launched its
first credit card offering. Despite the agreement with AMP to license the
“Virgin Direct” brand worldwide in 1997, it was only in 2003 that Virgin Money
Australia was launched to offer credit card products outside of Britain for the
first time. Virgin Money Australia eventually expanded into the superannuation,
mortgage and insurance business. Further expansion saw Virgin Money opening for
business in South Africa in 2006 and the United States in 2007. However, the
American banking market is incredibly competitive and difficult to penetrate.
Merely three years late, Virgin Money US was shuttered. And the South African
operations also remained minuscule.<o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="color: #444444; font-family: "Georgia",serif; font-size: 13.0pt; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;">In 2004, AMP spun off and floated its
British operations into HHG plc, which included the 50% stake in Virgin Money,
which HHG immediately sold to Virgin Group for GBP 90-million (AUD
$220-million), hence allowing Virgin Group to fully control Virgin Money for
the first time. Even though by now Virgin Money had over 700,000 clients across
Britain and GBP 4.7-billion of client assets, profits remained very slim.<o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="color: #444444; font-family: "Georgia",serif; font-size: 13.0pt; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;">In 2010, American billionaire
financier Wilbur Ross acquired a 21% stake in Virgin Money for GBP 100-million.
The following year, Virgin Money and Virgin Group, backed by Wilbur Ross and
Abu Dhabi investor Stanhope Investments, took over the nationalized regional
bank Northern Rock from the British Treasury for GBP 747-million in cash plus
GBP 150-million of debt funding. The British government had sunk GBP
1.4-billion back in 2007 to rescue and nationalize the bankrupt Northern Rock,
which had 75 branches at the time of the Virgin acquisition.<o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="color: #444444; font-family: "Georgia",serif; font-size: 13.0pt; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;">Following the combination, Virgin
Group’s stake in Virgin Money was diluted to 46%, with Wilbur Ross’s various
investment vehicles holding 44% and Stanhope Investments the remaining 10%.<o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="color: #444444; font-family: "Georgia",serif; font-size: 13.0pt; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;">The year 2011 also saw the opening of
the first Virgin Money lounges in Edinburgh and Norwich. Virgin Money lounges
are meant to give clients a place to relax and unwind. The lounges offer
complimentary refreshments, wi-fi internet service, newspapers, magazines and
iPads. Each lounge has a unique design, such as the imitation of the interior
of a Virgin Atlantic Airways airliner, or a bowling alley, or a cinema. Virgin
Money lounges are offered free of charge for community events after hours. As
of 2018, there are eight Virgin Money lounges.<o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="color: #444444; font-family: "Georgia",serif; font-size: 13.0pt; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;">Like its British parent, Virgin Money
Australia was never particularly successful nor profitable. In 2013,
conceding that its Australian business failed to gain market share and deliver
anticipated profitability, Virgin Money sold Virgin Money Australia to local
regional lender Bank of Queensland for AUD $40-million.<o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="color: #444444; font-family: "Georgia",serif; font-size: 13.0pt; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;">In 2014, Virgin Money was floated on
London stock exchange when owners Sir Richard Branson’s Virgin Group and Wilbur
Ross each unloaded about 15% of the bank. Following the IPO, both investors
retained about one-third of the British bank.<o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<b><span style="color: #444444; font-family: "Georgia",serif; font-size: 13.0pt; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;">CYBG plc (doing business as Virgin
Money)</span></b><span style="color: #444444; font-family: "Georgia",serif; font-size: 13.0pt; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;"><o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="color: #444444; font-family: "Georgia",serif; font-size: 13.0pt; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;">In May 2018, CYBG agreed to take over
Virgin Money for GBP 1.7-billion (USD $2.3-billion) in cash. The combined
operations would become the No. 6 bank in the United Kingdom with 6 million
clients. Despite that, the new bank would still only control about 2% of the
market share, compared with market leader Lloyds' 24% share. Virgin
Money’s 74 branches will be combined into CYBG’s 169-branch network, but branch
closures and 1,500 job losses are planned. Existing CYBG shareholders would own
62% of the new bank, with existing Virgin Money holders owning the rest. Virgin
Group’s stake in Virgin Money will fall from 34.8% to 13.1%.<o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="color: #444444; font-family: "Georgia",serif; font-size: 13.0pt; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;">In a rather controversial and
puzzling arrangement, the new bank plans to adopt the brand “Virgin Money” for
all of its “High Street” (i.e. retail banking) operations and will pay an
annual GBP 12-million licence fee to Virgin Group for the first three years,
rising to GBP 15-million in the fourth year, then a 1% annual royalty based on
revenue to Sir Richard Branson. Some existing clients and employees of both
Clydesdale and Yorkshires are also said to be dismayed about the branding
changes.<o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="color: #444444; font-family: "Georgia",serif; font-size: 13.0pt; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;">Furthermore, as one of the three clearing
banks in Scotland, Clydesdale Bank has been issuing part of the Scottish Pound
banknotes since its establishment in 1838. CYBG, Virgin Money and the Bank of
England had not clarified if Clydesdale’s banknote issuing privilege could be
transferred to Virgin Money, or if the new Virgin Money would keep the Scottish
Pound issue under “Clydesdale Bank.”<o:p></o:p></span></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<br /></div>
<div class="MsoNormal" style="background: white; line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="color: #444444; font-family: "Georgia",serif; font-size: 13.0pt; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-CA;">Click here to return to the <a href="http://bankingmergers.blogspot.com/2010/01/index-to-list-of-international-bank.html" target="_blank"><span style="color: #4d469c;">Index</span></a> page.</span><span style="font-family: "Georgia",serif; font-size: 13.0pt;"><o:p></o:p></span></div>
<br />BankingMergershttp://www.blogger.com/profile/09902839579660694793noreply@blogger.comtag:blogger.com,1999:blog-7475905699260929987.post-84667577489814789522017-12-30T18:21:00.001-05:002018-01-01T13:36:49.768-05:00United States Bank Mergers & Acquisitions (KeyCorp)<div class="separator" style="clear: both; text-align: center;">
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<span style="font-family: "georgia" , "times new roman" , serif;">Photo: KeyBank Center is a multi-purpose, indoor sports arena in downtown Buffalo, New York. It's the home arena of the Buffalo Sabres NHL ice hockey team.</span><br />
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<span style="font-family: "georgia" , "times new roman" , serif;">KeyBank is based in Cleveland,
Ohio, but traces its main lineage to two regional banks: the original KeyBank from Albany, New York and Society National Bank from Cleveland.<o:p></o:p></span></div>
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<strong><span style="font-weight: normal;"><span style="font-family: "georgia" , "times new roman" , serif;">The 19<sup>th</sup> century
was a time of rapid growth for states around the Great Lakes region. The
opening of the 362-mile Erie Canal back in 1825 allowed people, grains, bulk
goods, mail and natural resources to bypass the Appalachian Mountains, sharply
reducing the time, costs and dangers involved in moving between the U.S. Eastern
Seaboard and the Midwest. In other words, the Erie Canal opened up migration,
communications, and the economy for a much vaster expanse of land.<o:p></o:p></span></span></strong></div>
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<span style="font-family: "georgia" , "times new roman" , serif;"><strong><span style="font-weight: normal;">It was under such an
economic and social environment that KeyBank’s predecessors were established in
the early- and mid-19<sup>th</sup> century.</span></strong><o:p></o:p></span></div>
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<span style="color: #26282a;"><span style="font-family: "georgia" , "times new roman" , serif;"><b>The KeyBank (KeyCorp) lineage</b><o:p></o:p></span></span></div>
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<span style="color: #26282a;"><span style="font-family: "georgia" , "times new roman" , serif;">The New York branch of KeyBank’s
lineage dates back to the 1825 establishment of the Commercial Bank of Albany
(Albany is the capital of New York state). <o:p></o:p></span></span></div>
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<span style="color: #26282a;"><span style="font-family: "georgia" , "times new roman" , serif;">As mentioned elsewhere in this
collection of bank histories, the banking industry in the United States had
been one of fragmented regulation and instability during the 18<sup>th</sup> and
most of the 19<sup>th</sup> centuries. During that time, <strong><span style="font-weight: normal;">no nationwide regulation even existed, as each state had its own laws
governing that state’s banking system. It was only in 1863 and 1864 that
the U.S. Congress passed two National Banking Acts to formally establish a
single national currency, and to create a nationwide banking regulatory
framework to co-exist with the state regulations. As such, the National Banking
Acts were not meant to seize banking regulation from the individual states to
the federal government; rather, it aimed to provide a single superlative
oversight system to monitor federally-chartered banks, as an additional layer
of governance over state regulations. Banks back then, as they still do now,
are free to choose to obtain either a state or a federal charter.</span></strong><o:p></o:p></span></span></div>
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<span style="font-family: "georgia" , "times new roman" , serif;"><strong><span style="color: #26282a; font-weight: normal;">In 1865,
following a conversion from a state charter to a national charter, the </span></strong><span style="color: #26282a;">Commercial Bank of Albany<strong><span style="font-weight: normal;"> adopted the name
National Commercial Bank of Albany.</span></strong><o:p></o:p></span></span></div>
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<span style="font-family: "georgia" , "times new roman" , serif;"><strong><span style="color: #26282a; font-weight: normal;">In 1919, the
National Commercial Bank of Albany combined with the Union Trust Co. to become
the National Commercial Bank and Trust Co.</span></strong><span style="color: #26282a;"><o:p></o:p></span></span></div>
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<span style="font-family: "georgia" , "times new roman" , serif;"><strong><span style="color: #26282a; font-weight: normal;">Like all
modern sizeable banks in the U.S., KeyBank grew out of many small local banks
of humble origins. Another predecessor of KeyBank was the Trust and Deposit Co.
of Onondaga in Syracuse in upstate New York, which was founded in 1869.
In 1919, the Trust and Deposit Co. of Onondaga amalgamated with its local rival
First National Bank of Syracuse to become First Trust & Deposit.</span></strong><span style="color: #26282a;"><o:p></o:p></span></span></div>
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<span style="font-family: "georgia" , "times new roman" , serif;"><strong><span style="color: #26282a; font-weight: normal;">In 1971, the
National Commercial Bank and Trust Co. took over First Trust & Deposit and
became First Commercial Bank. Throughout the 1970s, First Commercial expanded
its presence by acquiring other banks in Western New York state. In 1979, First
Commercial adopted a new and less ubiquitous name: “Key”.</span></strong><span style="color: #26282a;"><o:p></o:p></span></span></div>
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<span style="font-family: "georgia" , "times new roman" , serif;"><strong><span style="color: #26282a; font-weight: normal;">From 1956 until the
1980s, the Bank Holding Company Act </span></strong><strong><span style="color: #26282a; font-weight: normal;">prohibited inter-state banking in the U.S., meaning that banks from one state were prohibited from acquiring or chartering a bank in another state, though in some
states, inter-state bankinging was allowed but typically only for neighbouring states that
had a regional reciprocal agreement such that, for example, banks based in
Minnesota could establish branches in North Dakota, and vice versa.</span></strong></span></div>
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<span style="font-family: "georgia" , "times new roman" , serif;"><strong><span style="font-weight: normal;">In any case, when certain
states began to relax inter-state banking restrictions in the 1980s, KeyBank
bought a few banks in the Mountain States of Wyoming, Utah and Idaho, plus in
Alaska. Taking advantage of Alaska’s inter-state banking agreement with other
states, KeyBank used the Alaska subsidiary to acquire several small banks in
Oregon. By now, it was clear that unlike other banks seeking to enter the
“sexy” large urban centres such as Chicago or New York City, KeyBank was
content to expand into the rural, less known backwater markets.</span></strong><o:p></o:p></span></div>
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<span style="font-family: "georgia" , "times new roman" , serif;"><strong><span style="font-weight: normal;">For many years, KeyBank had
also wanted to expand into the New England region, but was forbidden from doing
so due to regulations aimed at preventing New York-based banks from dominating
in New England. The restriction was probably meant to bar the Manhattan
powerhouses, but still applied to regional players such as KeyBank from Albany,
New York.</span></strong><o:p></o:p></span></div>
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<span style="font-family: "georgia" , "times new roman" , serif;"><strong><span style="font-weight: normal;">By 1987, more and more of
the inter-state banking bans were being lifted, and Rhode Island-based Fleet
Financial merged with Albany’s Norstar Bancorp. To satisfy anti-trust
requirements, Fleet/ Norstar agreed to sell eight Maine branches and their
client accounts to KeyBank, marking Key’s first entry into the New England
region<span style="color: red;">.</span></span></strong><span style="color: #26282a;"><o:p></o:p></span></span></div>
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<span style="font-family: "georgia" , "times new roman" , serif;"><strong><span style="font-weight: normal;">KeyBank continued its cautious
and steady approach to expansion in the 1990s, buying up banks in Idaho,
Washington state, Colorado as well as in its home state of New York.
However, managing such a far-flung network of bank subsidiaries was an
expensive business. Achieving synergy and sharing corporate functions was no
simple matter when the branches were far from each other and were subject
to various states’ regulations. Nevertheless, KeyBank undertook an efficiency
drive to reduce costs and improve competitiveness by integrating systems and
sharing cost centres wherever possible.</span></strong><o:p></o:p></span></div>
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<span style="font-family: "georgia" , "times new roman" , serif;"><strong><span style="color: #26282a;">The Society
National Bank (Society Corp.) lineage</span></strong><span style="color: #26282a;"><o:p></o:p></span></span></div>
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<span style="font-family: "georgia" , "times new roman" , serif;"><strong><span style="color: #26282a; font-weight: normal;">The Ohio branch
of KeyBank’s ancestry began with Cleveland-based Society National Bank, which
commenced business in 1849 as the “Society for Savings”, a mutual savings bank
(i.e. a co-op bank similar to a credit union).</span></strong><span style="color: #26282a;"><o:p></o:p></span></span></div>
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<strong><span style="color: #26282a; font-weight: normal;"><span style="font-family: "georgia" , "times new roman" , serif;">As explained
earlier, the mid-19<sup>th</sup> century was generally a boom time for the
U.S. Midwest following the opening of the Erie Canal system in the 1820s. The
second half of the 19<sup>th</sup> century witnessed a flood of settlers
arriving from both the Eastern Seaboard and from overseas, who were chiefly
German, Irish, Scandinavian and Jewish displaced by econo-political or ethnic
turmoil in their homelands.<o:p></o:p></span></span></strong></div>
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<strong><span style="color: #26282a; font-weight: normal;"><span style="font-family: "georgia" , "times new roman" , serif;">Society for
Savings grew rapidly along with Cleveland during the 19<sup>th</sup> century.
In 1890, the savings bank moved into a new 10-story head office building on
Public Square in downtown Cleveland, which was the tallest building in the city at the
time. This Romanesque Revival building still stands prominently and is today a
designated National Landmark.<o:p></o:p></span></span></strong></div>
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<span style="font-family: "georgia" , "times new roman" , serif;"><strong><span style="color: #26282a; font-weight: normal;">Despite having
just one single office, Society for Savings was so trusted that it was one of
the four largest banks in Cleveland when it celebrated its centenary in 1949. It
was only in 1953 that Society for Savings opened its first branch office in a
Cleveland suburb.</span></strong><span style="color: #26282a;"><o:p></o:p></span></span></div>
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<span style="font-family: "georgia" , "times new roman" , serif;"><strong><span style="font-weight: normal;">However, as a mutual savings
bank, Society for Savings was restricted to offering only personal banking, so
in 1956 it created a separate subsidiary called Society National Bank to
provide commercial banking and other lending and investing activities not
allowed to mutual savings societies. Just two years later, the decision was
made to re-organize the entire Society group: first, Society Corporation was
created as a joint-stock parent company for Society National Bank, which then took
over the assets, liabilities, reserves and operations of the mutually-owned
Society for Savings. The conversion from a co-op bank to a public joint-stock
business (a process known as “demutualization”) gave Society National much
greater and easier access to raise new capital, and to escape from the many
operation restrictions that co-op banks were subject to. Members of the former banking
co-op received stock certificates of the new entity based on the amount of
their deposits, hence becoming shareholders of the newly-formed joint-stock
bank.</span></strong><o:p></o:p></span></div>
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<strong><span style="color: #26282a; font-weight: normal;"><span style="font-family: "georgia" , "times new roman" , serif;">By the end of
the 1970s, Society Corp. had used this new freedom to acquire over a dozen
banks inside Ohio, such as the 1979 acquisition of Canton-based (Ohio) Harter
BanCorp. This expansion continued throughout the 1980s, including the 1983
acquisition of Interstate Financial Corp. for USD $80-million. Interstate
Financial was the parent company of the Third National Bank & Trust of
Dayton, and had subsidiaries in Virginia, Maryland, Florida and Indiana.
The following year, Society acquired a credit- and bank-card processing company
called BancSystems Association, which began as a joint-venture between Society
Corp., National City Bank and Central National Bank in 1969.<o:p></o:p></span></span></strong></div>
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<span style="font-family: "georgia" , "times new roman" , serif;"><strong><span style="font-weight: normal;">Then later in 1984, Society
Corp. took over Cleveland-based Central National Bank’s parent Centran Corp.
for USD $220-million, making Society the fifth largest bank in Ohio. The
banking holding company spent the next several years re-organizing the many
acquisitions under nine regional districts, and shutting branches that were
deemed overlapping.</span></strong><o:p></o:p></span></div>
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<span style="font-family: "georgia" , "times new roman" , serif;"><strong><span style="color: #26282a; font-weight: normal;">Due to complex
state and federal banking regulations at the time, the subsidiary banks under
the Society Corp. umbrella were organized as separate legal entities and
not as a single integral network.</span></strong><span style="color: #26282a;">
Towards the closing of the 1980s<strong><span style="font-weight: normal;">, bans on inter-state banking
finally began to be relaxed, or dismantled altogether, which unleashed a wave
of consolidations as smaller banks merged to form larger, more powerful banks,
and stronger, larger banks bought smaller rivals to gain market share. In
anticipation of this rapidly changing operating environment, Society Corp. sold
BancSystems Association Inc. to Electronic Data Systems Corp. (EDS) in 1989 to strengthen its capital base.</span></strong><o:p></o:p></span></span></div>
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<span style="font-family: "georgia" , "times new roman" , serif;"><strong><span style="color: #26282a; font-weight: normal;">In 1988,
Society Corp. signed an agreement to be the anchor tenant of a new, 57-storey,
948-foot tall skyscraper in downtown Cleveland, which was completed in 1991.</span></strong><span style="color: #26282a;"><o:p></o:p></span></span></div>
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<span style="font-family: "georgia" , "times new roman" , serif;"><strong><span style="color: #26282a; font-weight: normal;">In 1990,
Society Corp. bought Toledo’s financially-troubled Trustcorp Inc. for USD
$495-million, whose Trustcorp Bank subsidiary operated in northwest Ohio and
neighbouring communities in Indiana and Michigan. Then in 1991, Society Corp.
made its largest ever acquisition up to that time by taking over Cleveland’s
Ameritrust Corp. for USD $1.2-billion. Ameritrust had bank and trust operations
in Ohio, Michigan, Indiana, Connecticut, New York, Florida, Texas, Missouri and
Colorado.</span></strong><span style="color: #26282a;"><o:p></o:p></span></span></div>
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<span style="font-family: "georgia" , "times new roman" , serif;"><strong><span style="color: #26282a; font-weight: normal;">Recent
transactions:</span></strong><span style="color: #26282a;"><o:p></o:p></span></span></div>
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<li><strong><span style="color: #26282a; font-weight: normal;"><span style="font-family: "georgia" , "times new roman" , serif;">In 1994,
KeyCorp of Albany, New York and Society Corp. of Cleveland agreed to merge in a
deal valued at USD $7.8-billion. The combination was seen as a merger of
equals. Post-merger, the Society name was dropped, but KeyCorp relocated
its headquarters from Albany into the 57-storey Society Center (now Key Tower)
in downtown Cleveland.</span></span></strong></li>
<li><span style="font-family: "georgia" , "times new roman" , serif;"><strong><span style="color: #26282a; font-weight: normal;">In 1998,
KeyCorp bought Cleveland brokerage firm McDonald & Co. for USD
$653-million. McDonald & Co. managed USD $5-billion of assets through 44
offices in 11 states. However, KeyCorp </span></strong><strong><span style="font-weight: normal;">sold McDonald & Co.’s branch network to UBS in 2007 for
USD $280-million, while retaining its</span></strong><span style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial;"> former institutional businesses, including investment banking, debt
and equity capital markets, public finance and research.</span></span></li>
<li><span style="font-family: "georgia" , "times new roman" , serif;">In 2002, KeyCorp bought Union
Bankshares Ltd. of Denver, Colorado, for USD $54-million. Its subsidiary Union
Bank & Trust had seven branches in Denver.</span></li>
<li><strong><span style="color: #26282a; font-weight: normal;"><span style="font-family: "georgia" , "times new roman" , serif;">In 2004,
KeyCorp bought EverTrust Financial of Everett, Washington for USD $195-million.
Its subsidiary EverTrust Bank operated 12 branches in Washington state.</span></span></strong></li>
<li><strong><span style="color: #26282a; font-weight: normal;"><span style="font-family: "georgia" , "times new roman" , serif;">In 2007,
KeyCorp bought U.S.B. Holding of Nanuet, New York, for USD $575-million. Its
subsidiary Union State Bank had 31 branches mainly in New York state’s Hudson
Valley just north of New York City.</span></span></strong></li>
<li><strong><span style="color: #26282a; font-weight: normal;"><span style="font-family: "georgia" , "times new roman" , serif;">In January 2012,
KeyCorp agreed to buy 37 branches and their client accounts in the Buffalo
region from First Niagara Bank for USD $110-million. First Niagara had in 2011
acquired 195 former HSBC branches and their client accounts in upstate New
York, New York City and Connecticut for USD $1-billion from Britain’s HSBC Holdings.</span></span></strong></li>
<li><span style="font-family: "georgia" , "times new roman" , serif;">In 2015, KeyCorp acquired First
Niagara Financial Group (based in Buffalo, New York) for USD $3.7-billion.
First Niagara’s 300 branches in New York, Pennsylvania, Connecticut and
Massachusetts joined Key’s over 900-branch network.</span></li>
<li><span style="font-family: "georgia" , "times new roman" , serif;">In April 2016, KeyCorp agreed to
sell 18 branches and their client accounts in the Buffalo area to Northwest
Bank to satisfy the U.S. Department of Justice and Federal Reserve’s anti-trust
concerns.</span></li>
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BankingMergershttp://www.blogger.com/profile/09902839579660694793noreply@blogger.comtag:blogger.com,1999:blog-7475905699260929987.post-76796476766109853102017-05-30T22:01:00.001-04:002019-09-15T14:10:34.870-04:00Canada Bank Mergers & Acquisitions (Mouvement des caisses Desjardins)<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh6pdcvG2pKcWWyrRn42CozcCvo4ZgmsK9cI80T4igKULLAbFC5FEzPvqEvm34EHT79i1lVP91-NX-hCP_w-P5ReObyps3vYh0A8k5Whqr24eAK9CwXbBcXUD6i_YJL2CiHRi5GDVziRr0/s1600/2015AIMG_9363.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1600" data-original-width="1067" height="320" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh6pdcvG2pKcWWyrRn42CozcCvo4ZgmsK9cI80T4igKULLAbFC5FEzPvqEvm34EHT79i1lVP91-NX-hCP_w-P5ReObyps3vYh0A8k5Whqr24eAK9CwXbBcXUD6i_YJL2CiHRi5GDVziRr0/s320/2015AIMG_9363.jpg" width="213" /></a></div>
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<span style="font-family: "georgia" , "times new roman" , serif; font-size: large;">Photo: Complexe Desjardins, 150 rue Sainte-Catherine Ouest in Montréal, is the head office of Mouvement des caisses Desjardins.</span><br />
<span style="font-family: "georgia" , "times new roman" , serif; font-size: large;"><span style="font-family: "georgia" , "times new roman" , serif;"><br /></span>
<span style="font-family: "georgia" , "times new roman" , serif;"><br /></span>
</span><br />
<div class="yiv2372739489msonormal" style="background: white; margin: 0cm;">
<b><span style="font-family: "georgia" , "times new roman" , serif; font-size: large;">Co-operative banking and Quebec</span></b></div>
<div class="yiv2372739489msonormal" id="yui_3_16_0_ym19_1_1496183269051_4693" style="background: white; margin: 0cm 0cm 0pt;">
<span style="font-family: "georgia" , "times new roman" , serif; font-size: large;"><br /></span></div>
<div class="yiv2372739489msonormal" id="yui_3_16_0_ym19_1_1496183269051_4692" style="background: white; margin: 0cm 0cm 0pt;">
<span id="yui_3_16_0_ym19_1_1496183269051_4691" style="-webkit-padding-start: 0px;"><span style="font-family: "georgia" , "times new roman" , serif; font-size: large;">Quebec, the French-speaking
province of Canada, often emphasizes itself as a “distinct society” because of
its French heritage, French-language culture and Roman Catholic society.
The rest of Canada sometimes makes fun (sarcastic or otherwise) of this “distinct
society” assertion, but Quebec’s banking sector is indeed very different from
the rest of Canada. While the Big Five banks oligarchy enjoys an absolute
domination in so-called English Canada; in Quebec, the commercial banks’
combined share of the banking market based on deposits is only 55%, with the
remaining 45% of deposits being held by co-operative credit unions known as
“caisses populaires”. Interestingly, this market environment is very similar to
France itself, where mutual banks (“les banques coopératives”) also enjoy a
significant market share, particularly outside of major cities.<o:p></o:p></span></span></div>
<div class="yiv2372739489msonormal" id="yui_3_16_0_ym19_1_1496183269051_4559" style="background: white; margin: 0cm 0cm 0pt;">
<span style="font-family: "georgia" , "times new roman" , serif; font-size: large;"><br /></span></div>
<div class="yiv2372739489msonormal" id="yui_3_16_0_ym19_1_1496183269051_4703" style="background: white; margin: 0cm 0cm 0pt;">
<span id="yui_3_16_0_ym19_1_1496183269051_4704" style="-webkit-padding-start: 0px;"><span style="font-family: "georgia" , "times new roman" , serif; font-size: large;">At the closing of the 19<sup style="-webkit-padding-start: 0px;">th</sup><span class="apple-converted-space"> </span>century,
a vast majority of Quebec’s 1.6 million inhabitants were Francophone and Roman
Catholic. Their livelihoods were closely dependent on agriculture and most of
them were too poor to possess a bank account. Access to regular bank credit
(loans) was non-existent due to their unreliable income and lack of savings or
property as collateral. In situations where they absolutely needed to borrow
money for emergencies, frequently their only source was unscrupulous lenders
who offered usury at extremely high interest rates, rendering the borrowers
into a cycle of perpetual indebtedness and poverty. This situation was
not unique to Quebec, but indeed had been a common social ill across Europe and
North America for centuries.<o:p></o:p></span></span></div>
<div class="yiv2372739489msonormal" style="background: white; margin: 0cm 0cm 0pt;">
<span style="font-family: "georgia" , "times new roman" , serif; font-size: large;"><br /></span></div>
<div class="yiv2372739489msonormal" style="background: white; margin: 0cm 0cm 0pt;">
<span style="-webkit-padding-start: 0px;"><span style="font-family: "georgia" , "times new roman" , serif; font-size: large;">As the 19<sup style="-webkit-padding-start: 0px;">th</sup><span class="apple-converted-space"> </span>century progressed, the "worth" and demand for farm labourers collapsed as a result of the mechanization of agriculture that had been brought on by the Industrial Revolution. Masses of farm workers were displaced by newly-invented agricultural machines, and they sought factory work in
towns and cities, where the working and living conditions were often
appalling. A social and labour movement began to rise up to fight this social,
economic and political inequality. One result of this social movement was
the birth of the co-operative movement in the mid-19<sup style="-webkit-padding-start: 0px;">th</sup><span class="apple-converted-space"> </span>century. The co-operative
movement was based on democratic, anti-discriminatory, open-membership and
mutually beneficial principles. In a co-operative business (often called simply
a “co-op”), every customer must first become a member and co-owner of the business with a small fee.
Because a co-op is collectively and mutually owned by the member-customers themselves,
there is much less pressure to squeeze out more profits at the expense of
customers, for it would be just like paying the right hand with money from the
left hand of the same person. In fact, profitable co-ops periodically
distribute part of their surplus (profits) to their members.<o:p></o:p></span></span></div>
<div class="yiv2372739489msonormal" style="background: white; margin: 0cm 0cm 0pt;">
<span style="font-family: "georgia" , "times new roman" , serif; font-size: large;"><br /></span></div>
<div class="yiv2372739489msonormal" style="background: white; margin: 0cm 0cm 0pt;">
<span style="-webkit-padding-start: 0px;"><span style="font-family: "georgia" , "times new roman" , serif; font-size: large;">The world’s first co-operative
business was established in Rochdale, Lancashire, England, in 1844. Most of the
founders of the Rochdale Society of Equitable Pioneers were weavers, who pooled
together their resources to open a shop to provide fresh and nutritious food produce that was otherwise
unaffordable for many poor people at the time. Meanwhile in 1850, German politician and social
reformer Hermann Schulze-Delitzsch established the world’s first banking co-op
(credit union) in Delitzsch.<o:p></o:p></span></span></div>
<div class="yiv2372739489msonormal" style="background: white; margin: 0cm 0cm 0pt;">
<span style="font-family: "georgia" , "times new roman" , serif; font-size: large;"><br /></span></div>
<div class="yiv2372739489msonormal" style="background: white; margin: 0cm 0cm 0pt;">
<span style="-webkit-padding-start: 0px;"><span style="font-family: "georgia" , "times new roman" , serif; font-size: large;">For the rest of this publication,
the terms “caisse populaire”, “credit union”, “mutual bank”, “banking co-op”,
and “co-op bank” are used interchangeably not to confuse the reader, but
because indeed these terms all refer to the same type of bank in various
countries. (In Britain, Ireland and some Commonwealth countries, a banking co-op
is known as a “building society”.)<o:p></o:p></span></span></div>
<div class="yiv2372739489msonormal" style="background: white; margin: 0cm 0cm 0pt;">
<span style="font-family: "georgia" , "times new roman" , serif; font-size: large;"><br /></span></div>
<div class="yiv2372739489msonormal" style="background: white; margin: 0cm 0cm 0pt;">
<span style="-webkit-padding-start: 0px;"><span style="font-family: "georgia" , "times new roman" , serif; font-size: large;">Credit unions in North America often
cater to a geographic locale, a profession or a group of employees at a specific
workplace, or to an ethnic group.<span style="-webkit-padding-start: 0px;"> Initially, the credit unions in Quebec
operated autonomously. Over time, however, they pooled together their resources
to collaborate with each other, and three alliances emerged: the Desjardins
group, the Quebec Credit Union League and the<span class="apple-converted-space"> </span></span><span style="-webkit-padding-start: 0px;">Fédération des caisses d’économie du Québec.
The two latter alliances eventually amalgamated into the Desjardins group, but
they would be described briefly under separate headings.</span><o:p></o:p></span></span></div>
<div class="yiv2372739489msonormal" style="background: white; margin: 0cm 0cm 0pt;">
<span style="-webkit-padding-start: 0px;"><span style="font-family: "georgia" , "times new roman" , serif;"><span style="-webkit-padding-start: 0px; font-family: "georgia" , "times new roman" , serif; font-size: large;"><br /></span></span></span></div>
<div class="yiv2372739489msonormal" style="background: white; margin: 0cm;">
<span style="font-family: "georgia" , "times new roman" , serif; font-size: large;"><br /></span></div>
<div class="yiv2372739489msonormal" style="background: white; margin: 0cm 0cm 0pt;">
<span style="font-family: "georgia" , "times new roman" , serif; font-size: large;"><b>Mouvement des caisses Desjardins (Desjardins group)</b></span></div>
<div class="yiv2372739489msonormal" style="background: white; margin: 0cm 0cm 0pt;">
<span style="font-family: "georgia" , "times new roman" , serif; font-size: large;"><br /></span></div>
<div class="yiv2372739489msonormal" style="background: white; margin: 0cm 0cm 0pt;">
<span style="-webkit-padding-start: 0px;"><span style="font-family: "georgia" , "times new roman" , serif; font-size: large;">In the final years of the 19<sup style="-webkit-padding-start: 0px;">th</sup><span class="apple-converted-space"> </span>century,
Quebec journalist-turned-social-reformer Alphonse Desjardins had become aware
of the ruthlessly high interest being charged by lenders to the underclass.
After making contact with Europe’s banking co-op promoters, Mr. Desjardins
founded the Caisse populaire de Lévis in December 1900. This became North
America’s very first credit union. Lévis is the hometown of Mr. Desjardins and
is situated on the south shore of the St. Lawrence River across from Quebec
City.<o:p></o:p></span></span></div>
<div class="yiv2372739489msonormal" style="background: white; margin: 0cm 0cm 0pt;">
<span style="font-family: "georgia" , "times new roman" , serif; font-size: large;"><br /></span></div>
<div class="yiv2372739489msonormal" style="background: white; margin: 0cm 0cm 0pt;">
<span style="-webkit-padding-start: 0px;"><span style="font-family: "georgia" , "times new roman" , serif; font-size: large;">Interestingly, during Caisse
populaire de Lévis’ first six years of existence, there was no legal framework
to recognise such a business form. Despite Mr. Desjardins’ numerous attempts to
get the Canadian parliament to legislate credit unions, the lawmakers failed to
pass the legislation every time. It was only in 1906 that Mr. Desjardins was
able to convince the Quebec provincial legislature to recognise credit unions
as “legal” financial institutions. To this day, credit unions in Canada are
still regulated by individual provinces even though banks are regulated at the
federal level.<o:p></o:p></span></span></div>
<div class="yiv2372739489msonormal" style="background: white; margin: 0cm 0cm 0pt;">
<span style="font-family: "georgia" , "times new roman" , serif; font-size: large;"><br /></span></div>
<div class="yiv2372739489msonormal" style="background: white; margin: 0cm 0cm 0pt;">
<span style="-webkit-padding-start: 0px;"><span style="font-family: "georgia" , "times new roman" , serif; font-size: large;">Society in the early 20<sup style="-webkit-padding-start: 0px;">th</sup>-century Quebec was still
overwhelmingly rural and Roman Catholic, and villages and towns were organised
into parishes. As such, many of the caisses populaires at the time operated out
of the basements of parish churches.<o:p></o:p></span></span></div>
<div class="yiv2372739489msonormal" style="background: white; margin: 0cm 0cm 0pt;">
<span style="font-family: "georgia" , "times new roman" , serif; font-size: large;"><br /></span></div>
<div class="yiv2372739489msonormal" style="background: white; margin: 0cm 0cm 0pt;">
<span style="-webkit-padding-start: 0px;"><span style="font-family: "georgia" , "times new roman" , serif; font-size: large;">Together, the tireless Alphonse
Desjardins and his wife Dorimène travelled to other towns in Quebec, Ontario and New
England to promote the co-op banking movement across Canada and the United
States.<o:p></o:p></span></span></div>
<div class="yiv2372739489msonormal" style="background: white; margin: 0cm 0cm 0pt;">
<span style="font-family: "georgia" , "times new roman" , serif; font-size: large;"><br /></span></div>
<div class="yiv2372739489msonormal" style="background: white; margin: 0cm 0cm 0pt;">
<span style="-webkit-padding-start: 0px;"><span style="font-family: "georgia" , "times new roman" , serif; font-size: large;">Mr. Desjardins also believed that
the habit of money-saving was a virtue that should be instilled not just to the
working youths or adults, but to youngsters and school children. As early as
1901, he had tested the concept of a school-based credit union. In 1907, he
formally launched the first caisse scolaire, again in his hometown of Lévis, to
promote penny savings by children.<o:p></o:p></span></span></div>
<div class="yiv2372739489msonormal" style="background: white; margin: 0cm 0cm 0pt;">
<span style="font-family: "georgia" , "times new roman" , serif; font-size: large;"><br /></span></div>
<div class="yiv2372739489msonormal" id="yui_3_16_0_ym19_1_1496183269051_4708" style="background: white; margin: 0cm 0cm 0pt;">
<span id="yui_3_16_0_ym19_1_1496183269051_4707" style="-webkit-padding-start: 0px;"><span style="font-family: "georgia" , "times new roman" , serif; font-size: large;">Interestingly, Mr. Desjardins is
also the father of the banking co-op movement in the United States of America.
At the beginning of the 20<sup style="-webkit-padding-start: 0px;">th</sup><span class="apple-converted-space"> </span>century, as many as 600,000 Franco-Canadians lived in the New England region to seek better opportunities and
lives, making up as much as 10% of the population at one point. This was the result of
a phenomenon known as the “Quebec Diaspora”. It was during a trip to visit the
Quebec expat communities in 1908 that Mr. Desjardins founded the Caisse populaire
in Sainte-Marie de Manchester in New Hampshire, creating the first credit union
in America.<o:p></o:p></span></span></div>
<div class="yiv2372739489msonormal" id="yui_3_16_0_ym19_1_1496183269051_4709" style="background: white; margin: 0cm 0cm 0pt;">
<span style="font-family: "georgia" , "times new roman" , serif; font-size: large;"><br /></span></div>
<div class="yiv2372739489msonormal" id="yui_3_16_0_ym19_1_1496183269051_4706" style="background: white; margin: 0cm 0cm 0pt;">
<span id="yui_3_16_0_ym19_1_1496183269051_4705" style="-webkit-padding-start: 0px;"><span style="font-family: "georgia" , "times new roman" , serif; font-size: large;">Also in 1908, Mr. Desjardins
launched North America’s first workplace or profession-based credit union,
known in French as a caisse d’économie or a “group caisse”, when the Civil
Service Savings and Loan Society was established in Ottawa for federal
government employees. This also became the first credit union in Canada outside
of Quebec. The Civil Service Savings and Loan evolved into present-day Alterna Savings credit union, but is not part of the Desjardins group.</span></span><br />
<span style="-webkit-padding-start: 0px;"><span style="font-family: "georgia" , "times new roman" , serif; font-size: large;"><br /></span></span>
<span style="-webkit-padding-start: 0px;"><span style="font-family: "georgia" , "times new roman" , serif; font-size: large;">In 1913, for the first time the word “Desjardins” – the
founder’s name – was used when Saint-Sauveur-des-Monts’ caisse populaire was
established.<o:p></o:p></span></span></div>
<div class="yiv2372739489msonormal" style="background: white; margin: 0cm 0cm 0pt;">
<span style="font-family: "georgia" , "times new roman" , serif; font-size: large;"><br /></span></div>
<div class="yiv2372739489msonormal" style="background: white; margin: 0cm 0cm 0pt;">
<span style="-webkit-padding-start: 0px;"><span style="font-family: "georgia" , "times new roman" , serif; font-size: large;">However, during these early days,
not all of the credit unions would survive. The operations very much relied on
volunteers, and the local economies could be unstable at the best of times. In
any case, Alphonse and Dorimène Desjardins helped establish well over 130 caisses populaires in Quebec, around 20 in Ontario and nine in
the United States. Following her husband’s death in 1920, Dorimène Desjardins
continued to be consulted on key decisions regarding the development of the
movement for a number of years. Though never given an official position during
her lifetime, today the Desjardins group considers Dorimène an equal co-founder
as much as her husband Alphonse.<o:p></o:p></span></span></div>
<div class="yiv2372739489msonormal" style="background: white; margin: 0cm 0cm 0pt;">
<span style="font-family: "georgia" , "times new roman" , serif; font-size: large;"><br /></span></div>
<div class="yiv2372739489msonormal" style="background: white; margin: 0cm 0cm 0pt;">
<span style="-webkit-padding-start: 0px;"><span style="font-family: "georgia" , "times new roman" , serif; font-size: large;">Initially, each of the many
caisses populaires was run independently, catering to its local community and
had little collaboration with each other. In 1920, this began to change when
the caisses populaires in the Trois-Rivières region formed the first “Union
régionale”, initiating a strategy to create a liquidity oversight mechanism, to
promote collaboration, and to defend the caisses populaires’ interests. In the
next several years, three other Unions régionales were created in Quebec City,
Montreal and Gaspé respectively. Over time, each of the four Unions régionales
also established a new regional caisse to manage and transfer the affiliated
caisses’ capital, and to clear cheque payments. This set the beginning of a
more cohesive network.<o:p></o:p></span></span></div>
<div class="yiv2372739489msonormal" style="background: white; margin: 0cm 0cm 0pt;">
<span style="font-family: "georgia" , "times new roman" , serif; font-size: large;"><br /></span></div>
<div class="yiv2372739489msonormal" style="background: white; margin: 0cm 0cm 0pt;">
<span style="-webkit-padding-start: 0px;"><span style="font-family: "georgia" , "times new roman" , serif; font-size: large;">The Great Depression that started
in 1929 heightened the importance of regular and accountable audits of the
caisses populaires. The Quebec government agreed to fund this regulatory
mechanism, provided that the four Unions régionales establish a centralised and
responsible organisation. This agreement led to the creation of the Fédération
de Québec des unions régionales des caisses populaires Desjardins in 1932. For
the first time, the many caisses populaires across Quebec came under a
single umbrella organisation. However, there were still many other credit
unions that were not under this Desjardins federation – see below.<o:p></o:p></span></span></div>
<div class="yiv2372739489msonormal" style="background: white; margin: 0cm 0cm 0pt;">
<span style="font-family: "georgia" , "times new roman" , serif; font-size: large;"><br /></span></div>
<div class="yiv2372739489msonormal" style="background: white; margin: 0cm 0cm 0pt;">
<span style="-webkit-padding-start: 0px;"><span style="font-family: "georgia" , "times new roman" , serif; font-size: large;">In 1944, the Desjardins group
branched into the property insurance business when the Société d’assurance des
caisses populaires (SCAP) was created. Four years later, a life insurance
division was founded: Assurance-vie Desjardins.<o:p></o:p></span></span></div>
<div class="yiv2372739489msonormal" style="background: white; margin: 0cm 0cm 0pt;">
<span style="font-family: "georgia" , "times new roman" , serif; font-size: large;"><br /></span></div>
<div class="yiv2372739489msonormal" style="background: white; margin: 0cm 0cm 0pt;">
<span style="-webkit-padding-start: 0px;"><span style="font-family: "georgia" , "times new roman" , serif; font-size: large;">At the close of the 1940s, the
Unions régionales agreed to contribute to a central reserve fund (“fonds de
sécurité”) in case emergency capital was needed for any of the member caisses
populaires, further bonding the Desjardins group together.<o:p></o:p></span></span></div>
<div class="yiv2372739489msonormal" style="background: white; margin: 0cm 0cm 0pt;">
<span style="font-family: "georgia" , "times new roman" , serif; font-size: large;"><br /></span></div>
<div class="yiv2372739489msonormal" style="background: white; margin: 0cm 0cm 0pt;">
<span style="-webkit-padding-start: 0px;"><span style="font-family: "georgia" , "times new roman" , serif; font-size: large;">Throughout the 1960s, the
historically religious, frugal, conservative and less affluent Quebec society
underwent rapid changes. Rising consumer confidence and the rise of consumerism let to appeals for
easier credit, and the caisses populaires relaxed their long-held opposition to
personal loans.<o:p></o:p></span></span></div>
<div class="yiv2372739489msonormal" style="background: white; margin: 0cm 0cm 0pt;">
<span style="font-family: "georgia" , "times new roman" , serif; font-size: large;"><br /></span></div>
<div class="yiv2372739489msonormal" style="background: white; margin: 0cm 0cm 0pt;">
<span style="-webkit-padding-start: 0px;"><span style="font-family: "georgia" , "times new roman" , serif; font-size: large;">Desjardins officially launched its
inter-caisse computer system in 1975, allowing clients to make transactions at any caisse in the network, putting Desjardins several years ahead of the Big
Five banks in Canada.<o:p></o:p></span></span></div>
<div class="yiv2372739489msonormal" style="background: white; margin: 0cm 0cm 0pt;">
<span style="font-family: "georgia" , "times new roman" , serif; font-size: large;"><br /></span></div>
<div class="yiv2372739489msonormal" style="background: white; margin: 0cm 0cm 0pt;">
<span style="-webkit-padding-start: 0px;"><span style="font-family: "georgia" , "times new roman" , serif; font-size: large;">Two important events happened in
1979 to the Desjardins group: first, the Caisse centrale Desjardins (CCD) was
created. As its name suggests, CCD performs certain “central bank” functions
for the numerous caisses within the group, such as managing the Unions
régionales’ reserves and clearing and settling payments (e.g. cheques) both
between Desjardins’ member caisses and with other Canadian and foreign banks.
The second momentous event was the merger of the Fédération de Québec des
unions régionales des caisses populaires Desjardins and the Fédération des
caisses d’économie du Québec, creating a massive network of community credit
unions and workplace credit unions. The ten Unions régionales became regional
federations following the combination. The combined entity adopted the name
Confédération des caisses populaires et d’économie Desjardins du Québec.<o:p></o:p></span></span></div>
<div class="yiv2372739489msonormal" style="background: white; margin: 0cm 0cm 0pt;">
<span style="font-family: "georgia" , "times new roman" , serif; font-size: large;"><br /></span></div>
<div class="yiv2372739489msonormal" style="background: white; margin: 0cm 0cm 0pt;">
<span style="-webkit-padding-start: 0px;"><span style="font-family: "georgia" , "times new roman" , serif; font-size: large;">The 1980s was a decade of expansion
and diversification for Desjardins. In 1981, the credit unions under the Quebec
Credit Union League (see separate heading below) joined the Desjardins group.
And in the same year, after years of consideration, Desjardins finally
began offering Visa card products. The year also saw the installation of the
first ATM (bank machine). In order to broaden its deposit base and penetrate the
vast credit (loan) market in Canada’s primary financial market, Caisse centrale
Desjardins opened an office in Toronto in 1986.<span class="apple-converted-space"> </span><span style="-webkit-padding-start: 0px;">Then
in 1988, for the first time Desjardins entered the securities brokerage
business when it acquired a stake in discount brokerage Disnat. A securities
arm called Corporation Desjardins des valeurs mobilières (CDVM) was promptly
created, which in 1989 acquired a majority stake in full-service broker
Deragon, Langlois. By 1991, Desjardins had taken full control of both Disnat
and Deragon, Langlois, which eventually became today’s Desjardins Securities.</span><o:p></o:p></span></span></div>
<div class="yiv2372739489msonormal" style="background: white; margin: 0cm 0cm 0pt;">
<span style="font-family: "georgia" , "times new roman" , serif; font-size: large;"><br /></span></div>
<div class="yiv2372739489msonormal" style="background: white; margin: 0cm 0cm 0pt;">
<span style="-webkit-padding-start: 0px;"><span style="font-family: "georgia" , "times new roman" , serif; font-size: large;">As many as 500,000 Canadians own
vacation homes in the U.S. Sunbelt (chiefly in Florida and Arizona). Each year,
these so-called “snowbirds” fly down to the U.S. to escape the long and cold
Canadian winter. It was only natural for Quebec’s largest financial institution
to cater to these seasonal Canadian residents in Florida. In 1992,
Desjardins launched the Desjardins Bank in Hallandale Beach (near Fort
Lauderdale) in Florida, and now runs a four-office network in the state.<o:p></o:p></span></span></div>
<div class="yiv2372739489msonormal" style="background: white; margin: 0cm 0cm 0pt;">
<span style="font-family: "georgia" , "times new roman" , serif; font-size: large;"><br /></span></div>
<div class="yiv2372739489msonormal" id="yui_3_16_0_ym19_1_1496183269051_4726" style="background: white; margin: 0cm 0cm 0pt;">
<span id="yui_3_16_0_ym19_1_1496183269051_4725" style="-webkit-padding-start: 0px;"><span style="font-family: "georgia" , "times new roman" , serif; font-size: large;">In 2001, Desjardins decided to
simplify its bureaucratic and cumbersome three-tier structure (the caisses
populaires, regional federations and the Confédération) by removing one layer
of management. The ten regional federations and the Confédération were combined
into a new Federation.<o:p></o:p></span></span></div>
<div class="yiv2372739489msonormal" style="background: white; margin: 0cm;">
<span style="font-family: "georgia" , "times new roman" , serif; font-size: large;"><br /></span></div>
<div class="yiv2372739489msonormal" style="background: white; margin: 0cm;">
<span style="font-family: "georgia" , "times new roman" , serif; font-size: large;">As of the time of publication (early 2017), the Desjardins group serves
over five million members on-line, over the telephone, and through more than 800 branches and 2,000 ATMs (bank
machines) in Quebec and Ontario. In addition to banking products, the group also
offers auto, home, property and life insurance, asset management, and
full-service and discount brokerage service.<o:p></o:p></span></div>
<div class="yiv2372739489msonormal" style="background: white; margin: 0cm;">
<span style="font-family: "georgia" , "times new roman" , serif; font-size: large;"><br /></span></div>
<div class="yiv2372739489msonormal" style="background: white; margin: 0cm 0cm 0pt;">
<span style="font-family: "georgia" , "times new roman" , serif; font-size: large;"><br /></span></div>
<div class="yiv2372739489msonormal" style="background: white; margin: 0cm 0cm 0pt;">
<span style="font-family: "georgia" , "times new roman" , serif; font-size: large;"><b style="-webkit-padding-start: 0px;"><span style="-webkit-padding-start: 0px;">Quebec
Credit Union League</span></b><o:p></o:p></span></div>
<div class="yiv2372739489msonormal" id="yui_3_16_0_ym19_1_1496183269051_4727" style="background: white; margin: 0cm 0cm 0pt;">
<span style="font-family: "georgia" , "times new roman" , serif; font-size: large;"><br /></span></div>
<div class="yiv2372739489msonormal" id="yui_3_16_0_ym19_1_1496183269051_4729" style="background: white; margin: 0cm 0cm 0pt;">
<span style="-webkit-padding-start: 0px;"><span style="font-family: "georgia" , "times new roman" , serif; font-size: large;">Initially,<span class="apple-converted-space"> </span><span style="-webkit-padding-start: 0px;">the
workplace credit union mode proliferated more so<span class="apple-converted-space"> </span></span><span style="-webkit-padding-start: 0px;">in
the U.S.<span class="apple-converted-space"> </span></span><span id="yui_3_16_0_ym19_1_1496183269051_4728" style="-webkit-padding-start: 0px;">than
in Canada. But in the 1940s, the Canadian subsidiaries of American corporations
caught on with the movement and Bell Canada (at the time a subsidiary of the
American Bell Telephone Co.) was one of the first large private employers to
have a workplace or profession-specific credit union, where savings were made
through payroll deductions. Within a few years, Montreal’s firefighters,
hospital workers, and police all established their own caisses d’économie, as
did workers from Canadian National Railway and the Canadian Pacific Railway. In
1944, some of these predominantly English-speaking workplace credit unions
banded together and created the Quebec Credit Union League to promote their cause
and co-ordinate their activities. During the 1950, dozens of French-speaking
credit unions also joined the Quebec Credit Union League so that its membership
numbered 70 caisses by the time it joined the Confédération des caisses
populaires et d’économie Desjardins du Québec in 1981.</span><o:p></o:p></span></span></div>
<div class="yiv2372739489msonormal" id="yui_3_16_0_ym19_1_1496183269051_4729" style="background: white; margin: 0cm 0cm 0pt;">
<span style="-webkit-padding-start: 0px;"><span style="font-family: "georgia" , "times new roman" , serif;"><span style="-webkit-padding-start: 0px; font-family: "georgia" , "times new roman" , serif; font-size: large;"><br /></span></span></span></div>
<div class="yiv2372739489msonormal" id="yui_3_16_0_ym19_1_1496183269051_4730" style="background: white; margin: 0cm 0cm 0pt;">
<span style="font-family: "georgia" , "times new roman" , serif; font-size: large;"><br /></span></div>
<div class="yiv2372739489msonormal" id="yui_3_16_0_ym19_1_1496183269051_4731" style="background: white; margin: 0cm 0cm 0pt;">
<span style="font-family: "georgia" , "times new roman" , serif; font-size: large;"><b style="-webkit-padding-start: 0px;"><span style="-webkit-padding-start: 0px;">Fédération des caisses d’économie
du Québec</span></b><o:p></o:p></span></div>
<div class="yiv2372739489msonormal" id="yui_3_16_0_ym19_1_1496183269051_4732" style="background: white; margin: 0cm 0cm 0pt;">
<span style="font-family: "georgia" , "times new roman" , serif; font-size: large;"><br /></span></div>
<div class="yiv2372739489msonormal" id="yui_3_16_0_ym19_1_1496183269051_4714" style="background: white; margin: 0cm 0cm 0pt;">
<span id="yui_3_16_0_ym19_1_1496183269051_4715" style="-webkit-padding-start: 0px;"><span style="font-family: "georgia" , "times new roman" , serif; font-size: large;">During the 1960s, a seismic shift
in socio-economic and political ideology later termed the “Quiet Revolution”
was brewing in Quebec, and one key discord was the contentious issue of the
historic domination of the English language in Quebec’s business world and
amongst its socio-political elites. In September 1962, 14 French-speaking
caisses d’économie split from the English-language Quebec Credit Union League
and formed the French-language Fédération des caisse d’économie du Québec. Within a few months, another 18 caisses d’économie had joined the federation.<o:p></o:p></span></span></div>
<div class="yiv2372739489msonormal" id="yui_3_16_0_ym19_1_1496183269051_4713" style="background: white; margin: 0cm 0cm 0pt;">
<span style="font-family: "georgia" , "times new roman" , serif; font-size: large;"><br /></span></div>
<div class="yiv2372739489msonormal" id="yui_3_16_0_ym19_1_1496183269051_4711" style="background: white; margin: 0cm 0cm 0pt;">
<span id="yui_3_16_0_ym19_1_1496183269051_4712" style="-webkit-padding-start: 0px;"><span style="font-family: "georgia" , "times new roman" , serif; font-size: large;">In 1979, the Fédération des
caisses d’économie du Québec’s 116 affiliated caisses agreed to combine with
the Desjardins Group, resulting in the new Confédération des caisses populaires
et d’économie Desjardins du Québec.<o:p></o:p></span></span></div>
<div class="yiv2372739489msonormal" id="yui_3_16_0_ym19_1_1496183269051_4710" style="background: white; margin: 0cm 0cm 0pt;">
<span style="font-family: "georgia" , "times new roman" , serif; font-size: large;"><br /></span></div>
<div class="yiv2372739489msonormal" id="yui_3_16_0_ym19_1_1496183269051_4716" style="background: white; margin: 0cm 0cm 0pt;">
<span style="-webkit-padding-start: 0px;"><span style="font-family: "georgia" , "times new roman" , serif; font-size: large;">Recent
transactions:<o:p></o:p></span></span></div>
<div class="yiv2372739489msonormal" style="background: white; margin: 0cm 0cm 0pt;">
</div>
<ul>
<li><span style="font-family: "georgia" , "times new roman" , serif; font-size: large;">In 2000, Desjardins General
Insurance acquired The Personal Insurance Co. and CIBC General Insurance Co.
from CIBC for CAD $330-million. The acquisition gave Desjardins 400,000 new
policies.</span></li>
<li><span style="font-family: "georgia" , "times new roman" , serif; font-size: large;">In 2011, Desjardins acquired
Western Financial Group for CAD $443-million. Western Financial Group had 121
offices in British Columbia, Alberta, Saskatchewan and Manitoba offering
insurance and investment products to individual clients.</span></li>
<li><span style="font-family: "georgia" , "times new roman" , serif; font-size: large;">In 2013, Desjardins took a 40% stake
in on-line brokerage Qtrade Financial Group. Qtrade held CAD $7.5-billion of
client assets.</span></li>
<li><span style="font-family: "georgia" , "times new roman" , serif; font-size: large;">In 2015, Desjardins bought the
Canadian property and casualty, and life insurance operations of State Farm
Mutual Automobile Insurance Co. The acquisition added over 1.2 million clients
to Desjardins and would nearly double Desjardins’ annual premium revenue from
CAD $2-billion to $3.9-billion.</span></li>
<li><span style="font-family: "georgia" , "times new roman" , serif; font-size: large;">In February 2017, Desjardins sold
its Western Financial Group and Western Life Assurance operations to<span style="-webkit-padding-start: 0px; font-family: "georgia" , "times new roman" , serif;"> Wawanesa Mutual Insurance Co. for CAD
$775-million.</span></span></li>
</ul>
<span style="font-family: "georgia" , "times new roman" , serif; font-size: large;">Click here to return to the <a href="http://bankingmergers.blogspot.ca/2010/01/index-to-list-of-international-bank.html">Index</a> page.</span>BankingMergershttp://www.blogger.com/profile/09902839579660694793noreply@blogger.comtag:blogger.com,1999:blog-7475905699260929987.post-66375999139206035862016-11-16T11:14:00.000-05:002016-11-16T11:15:17.570-05:00Italy Bank Mergers & Acquisitions (Banco BPM)<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiB3D_PICCLZq6bASQ0YrYK9u2rxF8EqHdcqnDC2vNe_xZvdfpX178zaFKPRy1gdGJURkKqjkQSW8ke_e-dXPJMVUQjSR_uDXnZ8IREyATUA28gRAs9_jyNAtV33S38Vq3P8_x1QvciQ4c/s1600/AIMG_5745.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="213" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiB3D_PICCLZq6bASQ0YrYK9u2rxF8EqHdcqnDC2vNe_xZvdfpX178zaFKPRy1gdGJURkKqjkQSW8ke_e-dXPJMVUQjSR_uDXnZ8IREyATUA28gRAs9_jyNAtV33S38Vq3P8_x1QvciQ4c/s320/AIMG_5745.jpg" width="320" /></a></div>
<br />
<span style="font-family: "georgia" , "times new roman" , serif;">In the 1970s, Italy suffered from a severe shortage of small-denomination coinage, and commercial banks issued their own small-denomination banknotes known as miniassegno (or miniassegni in plural) like this 50 Italian lira miniassegno issued by the Banca Popolare di Milano (today's Banco BPM). Though not legal tender, the miniassegni were widely circulated and used to represent small change at the time.</span><br />
<span style="font-family: "georgia" , "times new roman" , serif;"><br /></span>
<span style="font-family: "georgia" , "times new roman" , serif;"><br /></span>
<br />
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<b><span style="font-family: "georgia" , "times new roman" , serif;">Banco
BPM (2016 to present)<o:p></o:p></span></b></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<br /></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="font-family: "georgia" , "times new roman" , serif;">Banco BPM was formed in October 2016 by
the merger of two joint-stock co-operative banks with very similar names: Banca
Popolare di Milano (Banca BPM) and Banco Popolare. Note that the bank was known as Banc<i>a</i> BPM before the merger with Banco
Popolare, but Banc<i>o </i>BPM after the
2016 merger. Banco BPM can trace its origins to many regional banks, whose histories
can be best explained by the three banking groups that they evolved into during
the first decade of the 21<sup>st</sup> century.<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<br /></div>
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<br /></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<b><span style="font-family: "georgia" , "times new roman" , serif;">The
old Banca Popolare di Milano (Banca BPM)<o:p></o:p></span></b></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<br /></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="font-family: "georgia" , "times new roman" , serif;">Inspired by the co-operative moment that
was prevalent in 19<sup>th</sup> century Europe, a young economist named Luigi
Luzzatti in 1865 founded the Banca Popolare di Milano. (Mr. Luzzatti would
later become Italy’s Prime Minister in 1910.) Banking in the 19<sup>th</sup>
century in most of the world was typically a local business, as nationwide branch
networks did not exist until the 20<sup>th</sup> century is most cases. For
Banca Popolare di Milano, its first two branches outside of its head office
building opened in 1881, but only to be shut two years later, which for banks in
the era was not uncommon. Before the days of computers and the internet,
capital, money and information could not be easily and instantly transferred or
accessed between offices. For a bank to open a branch office was almost no
different from launching a brand new bank, for the branch would require its own
capital and its own deposit base. In
other words, opening new branches was simply a risky and costly affair for any
bank. <o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<br /></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="font-family: "georgia" , "times new roman" , serif;">It wasn’t until 1911, some 30 years
after its first attempt, that BPM opened a branch office in Milan once again. This
time, the venture was very successful, as clients flocked to the new office and
a strong deposit base was built soon. The start of World War I in 1914 initially
brought panic to Italy, and a run on deposits at BPM. But being the industrial
heartland of the country, soon Milan and the rest of Northern Italy prospered
from the war’s soaring demand for industrial goods. Unfortunately, when peace
returned in 1918, inflation remained stubbornly high, and the massive debts
incurred during the war became unsustainable. The economic chaos led to a sharp
depreciation of the Italian lira, and social unrest intensified during the 1920s.
<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<br /></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="font-family: "georgia" , "times new roman" , serif;">The Great Depression of 1929, which
originated in the United States, further aggravated Italy’s already decade-long
stagflation. This economic and social crisis culminated in the 1933 collapse of
the Italian banking system. The three largest banks in the country were nationalized
while many smaller ones either went bankrupt, or were ordered by the Italian
government to join the somewhat more healthy banks. <o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<br /></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="font-family: "georgia" , "times new roman" , serif;">In due course, BPM did survive both the
Great Depression and World War II. By the time peace returned in 1945, BPM had
5 branches as well as 33 agencies.<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<br /></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="font-family: "georgia" , "times new roman" , serif;">In the 1950s, BPM sought to expand beyond
its Lombardy border. However, Italy’s bureaucratic and protectionist political
system banned regional banks based in one province from entering another
province directly. They were, however, allowed to acquire regional banks
outside of their domicile in some cases, particularly if the target banks were financially
unstable. In 1957, BPM made its first corporate acquisition by taking over the
Banca Popolare di Roma (founded in 1924), allowing the Milan-based bank to
expand into Rome and forge direct links between Italy’s two largest cities.<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<br /></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="font-family: "georgia" , "times new roman" , serif;">During the 1960s and 1970s, BPM
benefited from Milan’s and Lombardy’s robust industrial economy. As such, BPM
opened many new branches to capture the growing economic prospect. However, BPM
also faced fierce competition from other co-operative and savings banks, as
well as the much bigger national banks that specialized in corporate and
merchant banking. Over time, regional banks formed strategic alliances with
each other to achieve better synergy, to spread their credit risk, and to offer
greater geographical reach for their respective clients. During this period,
BPM acquired a minority stake in an agricultural bank called Banca Agricola
Milanese and well as a 60% stake in a fellow co-operative bank called Banca Briantea.<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<br /></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="font-family: "georgia" , "times new roman" , serif;">While BPM was keen as a consolidator of
other banks, Banca d’Italia, the Central Bank, blocked numerous merger attempts
proposed by BPM and other co-operative, savings and even national banks. The
long-held political and corporate culture of small-scale, local and autonomous
businesses was not to be ruffled. In 1979, however, when Banca Popolare
Cooperativa Vogherese became illiquid, BPM was permitted to rescue and take
over the ailing bank.<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<br /></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="font-family: "georgia" , "times new roman" , serif;">BPM for the first time opened offices
outside of Italy (in London, New York and Frankfurt) during the 1980s to
provide support to the bank, and to raise its profile internationally. Towards
the end of the decade<span style="background: white;">, the European Union began
to constitute a “single-market” framework, with the aim to open up borders to
allow free movement of goods, services, capital and people between all member
states, to be effective in 1993. This policy would throw the Italian banking
market wide open to competition from other EU banks. To prepare the
backward and fragmented domestic banking market for the new competition, Italy
proposed a plan that centred on four goals:
de-nationalization (relinquishment of state management), consolidation,
modernization and strengthening. The former anti-consolidation policy was
relaxed and in due course, BPM took over the Banca Popolare di Bologna e
Ferrara in 1988, and the Banca Popolare di Apricena in 1989.<o:p></o:p></span></span></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<br /></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="background: white;"><span style="font-family: "georgia" , "times new roman" , serif;">Throughout the 1990s,
BPM entered the equipment finance (leasing) and life insurance business by forming
joint-ventures with merchant and investment bank Mediobanca and insurer RAS.
And in 1994, BPM became the first co-operative bank in Italy to be listed on
the main stock market. Previously, its stock had been listed on the restricted
market. As such, Italy’s co-operative banking sector began a hybrid
mutual-joint-stock arrangement, where its ownership structure displays traits
of typical co-operative format (mutually-owned by members) but yet with shares
that can be bought and sold via the stock market (joint-stock shareholding).<o:p></o:p></span></span></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<br /></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="font-family: "georgia" , "times new roman" , serif;"><span style="background: white;">Beginning in 1997, BPM made
an intense series of acquisitions, first of the two banks that it had held a
stake for decades, namely </span>Banca Agricola
Milanese and Banca Briantea, then a significant stake in Banca Akros (1998),
Banca 2000 (1999, formerly Ina Banca), Banca di Legnano (2001), savings bank
Cassa di Risparmio di Alessandria (2004) and Banca Popolare di Mantova (2008).<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<br /></div>
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<br /></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<b><span style="font-family: "georgia" , "times new roman" , serif;">Banca
Popolare Italiana (BPI)<o:p></o:p></span></b></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<br /></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="font-family: "georgia" , "times new roman" , serif;">The holding company Banca Popolare
Italiana was the new name chosen by Banca Popolare di Lodi in 2005. But it only
existed till 2007, when it was taken over by the Banco Popolare di Verona e
Novara for EUR 8.2-billion to become the Banco Popolare group. The year 2005
for BPI was, however, more remembered for its “bancopoli” scandal. At the time,
Dutch bank ABN AMRO made a bid to acquire Italian bank Banca Antonveneta. BPI,
which already owned a small stake in Banca Antonveneta, also wanted to acquire
the bank but lacked the means to compete with ABN AMRO’s financial prowess. BPI
then secretly acquired significant stakes in Banca Antonveneta using
illegally-obtained funds, in some cases, even customer deposits at BPI. The
inside stock trading, embezzlement and stock manipulation scandal was apparently
known to and covered up by the Italian Central Bank, as Banca d’Italia Governor
Antonio Fazio had close personal ties with BPI’s Managing Director Gianpiero
Fiorani. After the scandal exploded, Antonio Fazio resigned from the Central
Bank and BPI’s Gianpiero Fiorani was arrested and charged. In the end, BPI’s illegally
purchased shares in Banca Antonveneta were confiscated and turned over to the
only legitimate offer: ABN AMRO.<o:p></o:p></span></div>
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<span style="font-family: "georgia" , "times new roman" , serif;">The major predecessor banks that became
BPI are briefly explained below.<o:p></o:p></span></div>
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<br /></div>
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<br /></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<i><span style="font-family: "georgia" , "times new roman" , serif;">Banca
Popolare di Lodi (1864 to 2007)<o:p></o:p></span></i></div>
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<br /></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="font-family: "georgia" , "times new roman" , serif;">The core predecessor of Banca Popolare
Italiana (BPI) was the Banca Popolare di Lodi, which was founded in 1864. Lodi is a province in the Italian region of
Lombardy. Like many co-operative banks, it offered banking services but also
supported local infrastructure and economic development. By the late 1980s, the
bank had expanded outside of Lombardy into Emilia Romagna, Lazio and Piedmont
with 110 branches. <o:p></o:p></span></div>
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<br /></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="font-family: "georgia" , "times new roman" , serif;">At the turn of the 21<sup>st</sup>
century, Banca Popolare di Lodi made a wave of acquisitions including three
savings banks Casse di Risparmio di Lucca, Pisa e Livorno* in 1999 (banks
followed by an asterisk * have separate descriptions below), investment bank
Efibanca - <span style="background: white;">Ente Finanziamenti Industriali<span class="apple-converted-space"> (2000), ICCRI – Istituto di Credito delle
Casse di Risparmio Italiane (2000), Cassa di Risparmio di Imola* (2000), Banca
Popolare di Crema* (2001), Banca Popolare del Trentino* (2003), Banco di Chiavari
e della Riviera Ligure* (2003) and Banca Popolare di Cremona* (2003). In 2005,
a parent company known as Banca Popolare Italiana (BPI) was formed to hold the
various banks acquired by Banca Popolare di Lodi over the past decade. <o:p></o:p></span></span></span></div>
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<br /></div>
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<br /></div>
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<span class="apple-converted-space"><i><span lang="FR" style="background: white;"><span style="font-family: "georgia" , "times new roman" , serif;">Cassa
di Risparmio di Lucca Pisa Livorno (1834/35/36 to 1999)<o:p></o:p></span></span></i></span></div>
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<br /></div>
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<span class="apple-converted-space"><span style="background: white;"><span style="font-family: "georgia" , "times new roman" , serif;">This
savings bank traces its history to three different institutions: Cassa di
Risparmio di Pisa (founded 1834), Cassa di Risparmio di Lucca (founded 1835)
and Cassa di Risparmio di Livorno (founded 1836). Like other casse di risparmio,
C.R. di Pisa, C.R. di Lucca and C.R. di Livorno in the early 1990s were
converted to joint-stock banks and separated from the charitable foundations
that held them. In 1995, these three savings banks amalgamated under a parent
company called Holding Casse del Tirreno. In 1999, Casse del Tirreno joined the
Banca Popolare di Lodi.<o:p></o:p></span></span></span></div>
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<br /></div>
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<br /></div>
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<span class="apple-converted-space"><i><span lang="FR" style="background: white;"><span style="font-family: "georgia" , "times new roman" , serif;">Cassa
di Risparmio di Imola (1855 to 2000)<o:p></o:p></span></span></i></span></div>
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<br /></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span class="apple-converted-space"><span style="background: white;"><span style="font-family: "georgia" , "times new roman" , serif;">Like
other savings banks in Italy, Cassa di Risparmio di Imola had a dual mandate to
offer banking services as well as do charitable work to support the local
economy and society. It was founded in 1855 and was taken over by Banca
Popolare di Lodi in 2000.<o:p></o:p></span></span></span></div>
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<br /></div>
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<br /></div>
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<span class="apple-converted-space"><i><span style="background: white;"><span style="font-family: "georgia" , "times new roman" , serif;">Banca Popolare di Crema (1870 to
2001)<o:p></o:p></span></span></i></span></div>
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<br /></div>
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<span class="apple-converted-space"><span style="background: white;"><span style="font-family: "georgia" , "times new roman" , serif;">Banca
Popolare Agricola di Mutuo Credito was created in 1870 in the agricultural town
of Crema. The bank was later renamed Banca Popolare di Crema. It became part of
the Banca Popolare di Lodi in 2001.<o:p></o:p></span></span></span></div>
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<br /></div>
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<br /></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<i><span style="font-family: "georgia" , "times new roman" , serif;">Banca
Popolare del Trentino (1984 to 2003)<o:p></o:p></span></i></div>
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<br /></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="font-family: "georgia" , "times new roman" , serif;">Banca Popolare del Trentino was the
youngest constituent bank to become the Banco BPM. It was only established in
1984 and in 2003, it became part of the Banca Popolare di Lodi.<o:p></o:p></span></div>
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<br /></div>
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<br /></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<i><span lang="FR"><span style="font-family: "georgia" , "times new roman" , serif;">Banco di Chiavari e della Riviera Ligure (1870 to
2003)<o:p></o:p></span></span></i></div>
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<br /></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="font-family: "georgia" , "times new roman" , serif;">In 1870, a number of businessmen founded
the Banco di Sconto del Circondario di Chiavari. The bank adopted its current
name in 1921. In 1968, it was acquired by the much larger Banca Commericale
Italiana (BCI). In 2001, BCI merged with Banca Intesa (which become today’s
Intesa Sanpaolo). Banca Intesa divested Banco di Chiavari e della Riviera
Ligure to Banca Popolare di Lodi in 2003.<o:p></o:p></span></div>
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<br /></div>
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<br /></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<i><span style="font-family: "georgia" , "times new roman" , serif;">Banca
Popolare di Cremona (1865 to 2003)<o:p></o:p></span></i></div>
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<br /></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="font-family: "georgia" , "times new roman" , serif;">The bank began life as the Società
Popolare di Mutuo Credito in Cremona in 1865. Cremona is an agriculturally-rich
region in Lombardy. In 2003, Banca Popolare di Cremona became part of the Banca
Popolare di Lodi.<o:p></o:p></span></div>
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<br /></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<br /></div>
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<b><span lang="FR"><span style="font-family: "georgia" , "times new roman" , serif;">Banco Popolare di Verona e Novara (1867 to 2007)<o:p></o:p></span></span></b></div>
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<br /></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="font-family: "georgia" , "times new roman" , serif;">Banca Mutua Popolare di Verona was
founded in 1867 in Italy’s booming northern industrial heartland. It opened its
first branch office in 1927, and expanded outside of Verona in 1933. During the
1930s economic depression, it took over rival Banca Cattolica Veronese.<o:p></o:p></span></div>
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<br /></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="font-family: "georgia" , "times new roman" , serif;">As a co-operative bank, Banca Popolare
di Verona in the post-WWII era financed the re-building effort as well as new
infrastructure such as railways, highways and canals. As explained earlier,
Italy’s banking system in the late 1980s and the entire 1990s experienced a
wave of consolidations, as the country prepared for the open-border market
under the EU framework. Banca Popolare di Verona first acquired the Banca <span style="background: white;">Popolare
di Castiglione delle Stiviere in 1988. Between 1993 and 1995 the bank merged
with the Banco S. Geminiano e S. Prospero* </span>(banks
followed by an asterisk * have separate descriptions below)<span style="background: white;"> to become
Banca Popolare di Verona – Banco S. Geminiano e S. Prospero. Then in 1997, it took
over the Credito Bergamasco*. It acquired Banca Aletti* in 2000 and in 2002, merged
with the Banca Popolare di Novara*. Following this last amalgamation, the name
of the bank was updated to Banco Popolare di Verona e Novara. In 2007, it took
over Banca Popolare Italiana (BPI) for EUR 8.2-billion to become the Banco
Popolare group.<o:p></o:p></span></span></div>
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<br /></div>
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<br /></div>
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<i><span style="background: white;"><span style="font-family: "georgia" , "times new roman" , serif;">Banco S. Geminiano e S. Prospero
(1897/99 to 1995)<o:p></o:p></span></span></i></div>
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<br /></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="font-family: "georgia" , "times new roman" , serif;">Emilia-Romagna is a region in Northern
Italy well known for its capital city of Bologna. At the close of the 19th
century, two banks that became part of the Banco BPM were established, namely
the Banco S. Geminiano in the city of Modena in 1897, and the Banco S. Prospero
in the city of Reggio Emilia in 1899. In 1932, these two banks consolidated
into the Banco S. Geminiano e S. Prospero to gain efficiency and expand their
reach. Between 1993 and 1995, Banca
Popolare di Verona and Banco S. Geminiano e S. Prospero merged to become known
as – a very long and cumbersome name – Banca Popolare di Verona – Banco S.
Geminiano e S. Prospero (BPV BSGSP).<o:p></o:p></span></div>
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<br /></div>
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<br /></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<i><span style="font-family: "georgia" , "times new roman" , serif;">Banco
San Marco (1895 to 1995)<o:p></o:p></span></i></div>
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<br /></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="font-family: "georgia" , "times new roman" , serif;">Many visitors to Venice would have come
across a Banco San Marco branch in the city’s famous Piazza San Marco. The
Venetian bank was founded in 1895. In 1995, the bank was taken over by Credito
Bergamasco, which itself was combined into Banca Popolare di Verona – Banco S.
Geminiano e S. Prospero in 1997.<o:p></o:p></span></div>
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<br /></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<br /></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<i><span style="font-family: "georgia" , "times new roman" , serif;">Credito
Bergamasco (1891 to 1997)<o:p></o:p></span></i></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<br /></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="font-family: "georgia" , "times new roman" , serif;">Credito Bergamasco was founded in
Bergamo in 1891 as Banca Piccolo Credito Bergamasco. The bank had a history of
supporting local art, culture, healthcare and science. In 1989, French bank
Crédit Lyonnais acquired a 56% stake in Credito Bergamasco, but sold it to the
Banca Popolare di Verona – Banco S. Geminiano e S. Prospero group in 1997,
which in 2002 became the Banco Popolare di Verona e Novara.<o:p></o:p></span></div>
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<br /></div>
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<br /></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<i><span style="font-family: "georgia" , "times new roman" , serif;">Banca
Aletti (1826 to 2000)<o:p></o:p></span></i></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<br /></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm; tab-stops: 76.4pt;">
<span style="font-family: "georgia" , "times new roman" , serif;">Banca Aletti began in
1826 as a bureau de change (foreign exchange dealer) in Milan. It over the
decades became a stockbroker and private bank. In the 20<sup>th</sup> century,
members of the Aletti family were prominent executives of the Milan stock
exchange. In 1992, Banca Popolare di Verona became a shareholder of Aletti
& C. Sim. In 1998, it gained the approval to offer banking service,
becoming Banca Aletti & C. In 2000, Banca Popolare di Verona took full
control of Banca Aletti, which now forms the private banking and investment
banking division of the group.<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm; tab-stops: 76.4pt;">
<br /></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm; tab-stops: 76.4pt;">
<br /></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<i><span style="font-family: "georgia" , "times new roman" , serif;">Banca
Popolare di Novara (1871 to 2002)<o:p></o:p></span></i></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<br /></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="font-family: "georgia" , "times new roman" , serif;">Banca Popolare di Novara was created in
1871 in northwestern Italy. It grew to become one of the largest co-operative
banks in Piedmont region and by the 1920s, had expanded into Milan, Genoa and
even Rome in central Italy. By 1971, its network numbered 300 branches.
Overseas offices were set up in England, France, Switzerland and Luxembourg by
the last quarter of the 20<sup>th</sup> century. In 2002, Banca Popolare di
Novara merged with the Banca Popolare di Verona – Banco S. Geminiano e S.
Prospero group. The new bank dropped the “Banco S. Geminiano e S. Prospero”
part of the name and instead became known as Banco Popolare di Verona e Novara.<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<br /></div>
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<br /></div>
<div class="MsoNormal" style="line-height: normal; margin-bottom: .0001pt; margin-bottom: 0cm;">
<span style="font-family: "georgia" , "times new roman" , serif;">Recent transactions:<o:p></o:p></span></div>
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</div>
<ul>
<li><span style="font-family: "georgia" , "times new roman" , serif;">In 2007, Banco Popolare di Verona e
Novara took over Banca Popolare Italiana (BPI) for EUR 8.2-billion (USD
$10.26-billion) and adopted a new name: Gruppo Banco Popolare. In the Italian
press, the new bank was sometimes known simply as “Banco”.</span></li>
<li><span style="font-family: "georgia" , "times new roman" , serif;">In 2016, Banca Popolare di Milano and
Banco Popolare merged to become the new Banco BPM, the new Banco BPM ranked No.
3 in Italy in some measures.</span></li>
</ul>
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<span style="font-family: "georgia" , "times new roman" , serif;"><br /></span></div>
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<span style="font-family: "georgia" , "times new roman" , serif;">Click here to return to the <a href="http://bankingmergers.blogspot.ca/2010/01/index-to-list-of-international-bank.html">Index</a> page.</span></div>
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BankingMergershttp://www.blogger.com/profile/09902839579660694793noreply@blogger.comtag:blogger.com,1999:blog-7475905699260929987.post-40898872512150053722016-09-15T23:08:00.002-04:002017-08-22T15:04:36.396-04:00Italy Bank Mergers & Acquisitions (UniCredit Page 3)<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhh-EHnNpxGI__VARn3v1jAdGSwnQrjPMQUxCWVer7Xqdl9yLSHdQkntQJB8ABqmeW2NqmooJP822I8LTpa9qUiNcSnMsKRY1sNz4-mAZhuwt9WOe-Tt64XM9o1ycwhZDnen04T_-XAQLA/s1600/P1020847core.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="320" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhh-EHnNpxGI__VARn3v1jAdGSwnQrjPMQUxCWVer7Xqdl9yLSHdQkntQJB8ABqmeW2NqmooJP822I8LTpa9qUiNcSnMsKRY1sNz4-mAZhuwt9WOe-Tt64XM9o1ycwhZDnen04T_-XAQLA/s320/P1020847core.jpg" width="213" /></a></div>
<br />
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<span style="background-color: white;"><span style="font-family: "georgia" , "times new roman" , serif;"><span style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial;">Photo: A UniCredit Banca branch
in Roma. UniCredit Banca is UniCredit SpA's retail banking unit.</span><br />
<br />
<br />
<span style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial;">Credit: Special thanks to my
dear friends Don Trynor and Rupert Pacudan for taking this photo during their
Grand Tour of France, Switzerland and Italy.</span><br />
<br />
<br />
<b>UniCredit SpA</b> <span style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial;">(formerly known as UniCredito Italiano)</span><br />
<br />
<span style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial;">Italy’s UniCredit is a banking
behemoth that came into being only in 1998 when</span> <span style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial;"><span style="color: windowtext;"><a href="http://bankingmergers.blogspot.ca/2011/06/italy-bank-mergers-acquisitions-credito.html" target="_blank">Credito Italiano SpA</a></span></span> <span style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial;">acquired</span> <span style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial;"><span style="color: windowtext;"><a href="http://bankingmergers.blogspot.ca/2012/03/italy-bank-mergers-acquisitions.html" target="_blank">UniCredito SpA</a></span></span> <span style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial;">for ITL 19.5-trillion (USD $10.96-billion) to become
UniCredito Italiano.</span><br />
<br />
<span style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial;">Between 1998 and 2003,
UniCredito Italiano consolidated four other domestic regional banks, whose
brief histories are explained below. The bank formally changed its name to
UniCredit SpA in 2008.</span><br />
<br />
<i>Glossary:</i><br />
<br />
<i>Cassa di risparmio</i><span style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial;"> (casse di risparmio in plural)
literally means "Chest/ Case of Savings," or savings banks in
English. In Italy, casse di risparmio are often small, state-owned
savings and credit institutions controlled or managed by a municipal or
regional or provincial government agency.</span><br />
<br />
<i>Monte di pietà</i> <span style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial;">(monti di pietà in plural) literally means
"mount of compassion" in English. They are usually
church-sponsored charitable pawnbrokers that provided deposit and lending
services to the poor and working class during the Renaissance period. Many of
Italy's monti di pietà can trace their origins to the mid-1500s. The
monti di pietà eventually evolved into, or were taken over by the casse di
risparmio (savings banks) in the 19th century.</span><br />
<br />
<br />
<b><i>Caritro SpA</i></b><br />
<br />
<span style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial;">Caritro can trace its lineage to
the 1841 establishment of Cassa di Risparmio di Rovereto and the 1855 founding
of Cassa di Risparmio di Trento. Rovereto and indeed the province of Trentino
at the time was part of the Austro-Hungarian Empire. During the turbulent times
of World War I, C.R. di Rovereto had to suspend operations. When peace returned
in 1919, Trentino was transferred to Italy under the Treaty of Saint-Germain.
During an economic crisis in 1934, C.R. di Trento and C.R. di Rovereto merged
to become the Cassa di Risparmio di Trento e Rovereto.</span><br />
<br />
<span style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial;">Fast forward to 1992, C.R. di
Trento e Rovereto in compliance with the Amato savings bank reform law was
split into a joint-stock bank called Caritro SpA and its holding entity
Fondazione Cassa di Risparmio di Trento e Rovereto. In 1998, the holding
foundation transferred Caritro SpA to UniCredito Italiano in exchange for a
minority stake in UniCredito Italiano.</span><br />
<br />
<br />
<b><i>CRTrieste-Banca SpA</i></b><br />
<br />
<span style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial;">In 1842, the Monte Civico e
Commerciale was founded by the Trieste municipal government and chamber of
commerce. Trieste at the time was an Italian-speaking region of the
Austro-Hungarian Empire along the present-day Italian-Slovenian border. In
1877, the institution changed its name to Cassa di Risparmio Triestina. With
the dissolution of the Austro-Hungarian Empire at the end of World War I,
Trieste was transferred to Italy.</span><br />
<br />
<span style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial;">In 1938, the savings bank
changed name once more to Cassa di Risparmio di Trieste. At the end of World
War II in 1945, the southern part of the Trieste province was transferred to
Yugoslavia (present-day Slovenia). C.R. di Trieste thus lost some its branches
and operations in the areas that were handed over to Yugoslavia.</span><br />
<br />
<span style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial;">During the 1980s, C.R. di
Trieste opened representative offices in Eastern Europe, namely in Koper,
Slovenia (also known as Capodistria in Italian), Prague and Budapest. In 1992,
C.R. di Trieste was split into joint-stock bank CRTrieste-Banca SpA and its
holding foundation.</span><br />
<br />
<span style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial;">In 1998, UniCredito Italiano
first acquired a 28% interest in CRTrieste-Banca, a prelude to its eventual
full acquisition of the regional bank.</span><br />
<br />
<br />
<b><i>Banca dell’Umbria 1462</i></b><br />
<br />
<span style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial;">In 1908, the Cassa di Risparmio
di Perugia was established. Amongst the other financial institutions it
amalgamated in the 20th century was the 1972 acquisition of Monte di Pietà di
Perugia, which was founded in 1462 and the earliest recorded monte di pietà in
Italy.</span><br />
<br />
<span style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial;">The separation of Cassa di
Risparmio di Perugia into the limited-liability bank and its holding foundation
happened in 1992. In 1999, the bank adopted the new name Banca dell’Umbria
1462, taking advantage of its remote lineage to the original Monte di Pietà in
Perugia that was established in 1462.</span><br />
<br />
<span style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial;">In 2000, UniCredito Italiano’s
Rolo Banca 1473 unit bought 71.8% of Banca dell’Umbria 1462 for Eur
315-million.</span><br />
<br />
<br />
<b><i>Cassa di Risparmio di Carpi SpA</i></b><br />
<br />
<span style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial;">In 1843, the Duke of Modena
approved the creation of the Cassa di Risparmio di Carpi as a savings bank.
Like other savings bank, C.R. di Carpi had a history of funding local
socio-economic, educational and infrastructural projects. For example, the
bank’s 1927 article of association required that 30% of the bank’s profits be
directed to chartable and public works.</span><br />
<br />
<span style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial;">In compliance with the Amato
Law, C.R. di Carpi in 1991 was split into the for-profit Cassa di Risparmio di
Carpi SpA and the holding charitable foundation Fondazione Cassa di Risparmio
di Carpi. In 2000, UniCredito Italiano (via its Rolo Banca 1473 unit) bought
73.8% of Cassa di Risparmio di Carpi for Eur 238-million. By 2003, UniCredito
Italiano had taken full control of C.R. di Carpi when the minority
shareholdings were bought out.</span><br />
<br />
<br />
<span style="background-attachment: initial; background-clip: initial; background-image: initial; background-origin: initial; background-position: initial; background-repeat: initial; background-size: initial;">Recent transactions (from 1998
onwards):</span><br />
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</div>
<ul>
<li><span style="background-color: white; font-family: "georgia" , "times new roman" , serif; line-height: 13.25pt;">In 1999,
UniCredito Italiano bought 50.1% of Poland’s No. 2 bank, Bank Pekao for Euro
1.03-billion (USD $1.0-billion).</span></li>
<li><span style="background-color: white; font-family: "georgia" , "times new roman" , serif; line-height: 13.25pt;">In 2000,
UniCredito Italiano bought 50.6% of Splitska banka d.d. for Eur 48-million.
Splitska banka was Croatia’s No. 3 bank with a network of 70 branches.
Following a Eur 10-million capital injection, UniCredito Italiano’s stake in
the Croatian bank was raised to 62.6%.</span></li>
<li><span style="background-color: white; font-family: "georgia" , "times new roman" , serif; line-height: 13.25pt;">In 2000,
UniCredito Italiano bought another 51% of Slovakia’s Pol’nobanka for Eur
30-million. Pol’nobanka had 45 branches. One of UniCredito’s predecessors,
Cassamarca, had held a 5% stake in the Slovak bank since 1995.</span></li>
<li><span style="background-color: white; font-family: "georgia" , "times new roman" , serif; line-height: 13.25pt;">In 2000,
UniCredito Italiano bought Boston-based Pioneer Group’s global investment
management division, Pioneer Global Asset Management, for ITL 2.68-trillion
(USD $1.23-billion).</span></li>
<li><span style="background-color: white; font-family: "georgia" , "times new roman" , serif; line-height: 13.25pt;">In 2000,
insurance giant Generali sold its 36.9% interest in CRTrieste-Banca to
UniCredito Italiano, which had had a 28% interest since 1998. Subsequently,
UniCredito Italiano launched an offer for the remaining shares held by the
public, raising its total stake in CRTrieste-Banca to 79%.</span></li>
<li><span style="background-color: white; font-family: "georgia" , "times new roman" , serif; line-height: 13.25pt;">In 2000,
UniCredito Italiano along with Allianz AG, bought 98% of Bulbank AD, Bulgaria’s
No. 1 bank, for Eur 360-million (USD $344-milion). UniCredito Italiano took up
93% of Bulbank, while Allianz’s share was 5%. Bulbank had 28 full branches plus
51 representative offices.</span></li>
<li><span style="background-color: white; font-family: "georgia" , "times new roman" , serif; line-height: 13.25pt;">In 2000,
UniCredito Italiano took a 10% stake of Zagrebačka banka d.d., Croatia’s No. 1
bank.</span></li>
<li><span style="background-color: white; font-family: "georgia" , "times new roman" , serif; line-height: 13.25pt;">Between
2002 and 2003, the various retail banks under the UniCredito Italiano umbrella
were merged into UniCredit Banca as part of the S3 project. The S3 project
referred to the three core segments of the group: retail banking, enterprise
banking and private banking.</span></li>
<li><span style="background-color: white; font-family: "georgia" , "times new roman" , serif; line-height: 13.25pt;">In 2002,
UniCredito Italiano bought 82.5% of Demirbank Romania, continuing its
aggressive expansion in the Central and Eastern European market.</span></li>
<li><span style="background-color: white; font-family: "georgia" , "times new roman" , serif; line-height: 13.25pt;">In 2002,
UniCredito Italiano and partner Allianz took full control of Croatia’s
Zagrebačka banka d.d. With this purchase UniCredito Italiano now controlled
Croatia’s No. 1 and No. 3 banks. In order to comply with Croatia’s
anti-monopoly regulation, the Italian lender agreed to sell its 62.6% of stake
in Splitska banka to HVB Group’s Bank Austria unit for Eur 94-million. Later in
2005 though, when UniCredito Italiano took over HVB Group and Bank Austria, it
indirectly re-acquired control of Splitska banka, and was required to sell it a
second time.</span></li>
<li><span style="background-color: white; font-family: "georgia" , "times new roman" , serif; line-height: 13.25pt;">In 2002,
UniCredito Italiano bought 50% of Turkey’s Koc Financial Services from Koc
Holding for USD $240-million. Koc Financial Services controlled the 115-branch
Kocbank.</span></li>
<li><span style="background-color: white; font-family: "georgia" , "times new roman" , serif; line-height: 13.25pt;">In 2002,
UniCredito Italiano bought 85.2% of Czech Republic’s Živnostenská banka A.S,
which operated 8 branches and 19 agencies.</span></li>
<li><span style="background-color: white; font-family: "georgia" , "times new roman" , serif; line-height: 13.25pt;">In 2005,
UniCredito Italiano’s 50% owned Turkish joint-venture Koc Financial Services
bought 57.42% of Yapi ve Kredi Bankasi A.S. for Eur 1.16-billion.</span></li>
<li><span style="background-color: white; font-family: "georgia" , "times new roman" , serif; line-height: 13.25pt;">In 2005,
UniCredito Italiano took over all of Germany’s </span><span style="background-color: white; font-family: georgia, "times new roman", serif; line-height: 13.25pt;"><a href="http://bankingmergers.blogspot.ca/2011/12/germany-bank-mergers-acquisitions.html" style="background-color: white; font-family: Georgia, "Times New Roman", serif; line-height: 13.25pt;" target="_blank"><span style="color: blue;">HVB Group</span></a> </span><span style="background-color: white; font-family: "georgia" , "times new roman" , serif; line-height: 13.25pt;">and its
77.5% owned </span><a href="http://bankingmergers.blogspot.ca/2009/08/austria-bank-mergers-acquisitions.html" style="background-color: white; font-family: Georgia, "Times New Roman", serif; line-height: 13.25pt;" target="_blank"><span style="color: blue;">Bank Austria Creditanstalt</span></a><span style="background-color: white; font-family: "georgia" , "times new roman" , serif; line-height: 13.25pt;"> and
Bank Austria Creditanstalt’s 71.2% owned Bank BPH (of Poland) for Eur
15.4-billion. UniCredito Italiano also made an offer to acquire the 22.5% of
Bank Austria Creditanstalt not yet owned by HVB Group for Eur 2.63-billion, and
the 28.8% of Bank BPH not yet owned by Bank Austria Creditanstalt for Eur
1.48-billion. The total offer for 100% of HVB Group, Bank Austria Creditanstalt
and Bank BHP was thus Eur 19.5-billion (USD $24.5-billion). The enlarged
UniCredito Italiano will have over 7,000 braches in 19 countries serving more
than 28-million clients.</span></li>
<li><span style="background-color: white; font-family: "georgia" , "times new roman" , serif; line-height: 13.25pt;">In 2006,
due to opposition from the Polish banking regulator over UniCredito Italiano’s
control over both Bank Pekao and Bank BPH (Poland’s No. 2 and No. 3 banks),
UniCredito Italiano withdrew its Eur 1.55-billion offer for 28.8% of Bank BPH,
though it still indirectly owned 71.2% of the Polish bank BPH through its
purchase of Germany’s HVB Group.</span></li>
<li><span style="background-color: white; font-family: "georgia" , "times new roman" , serif; line-height: 13.25pt;">In 2006,
UniCredito Italiano’s subsidiary Bank Austria bought Russian stockbroker ATON
for USD $424-million.</span></li>
<li><span style="background-color: white; font-family: "georgia" , "times new roman" , serif; line-height: 13.25pt;">In 2006,
UniCredito Italiano’s Bank Austria Creditanstalt unit bought 46.2% of
International Moscow Bank from other minority shareholders for USD
$810-million. Following the purchase, UniCredito Italiano’s held just over 90%
of International Moscow Bank.</span></li>
<li><span style="background-color: white; font-family: "georgia" , "times new roman" , serif; line-height: 13.25pt;">Back in
2002, UniCredito Italiano briefly owned both Zagrebačka banka, and Splitska
banka, two of Croatia’s top banks. In order to satisfy Croatia’s anti-monopoly
regulation, UniCredito Italiano sold Splitska banka to HVB Group in 2002, but
only to gain it back when it bought out HVB Group in 2005. UniCredito Italiano
was again required to sell Splitska banka in 2006, this time to France’s
Société Générale SA for Eur 1.0-billion.</span></li>
<li><span style="background-color: white; font-family: "georgia" , "times new roman" , serif; line-height: 13.25pt;">In 2006,
Turkey’s Kocbank merged with Yapi ve Kredi Bankasi, the name Kocbank was
retired. The enlarged Yapi Kredi became Turkey’s No. 4 bank with 643 branches.
Following the merger, Koc Holding and UniCredito Italiano continued to co-own
Koc Financial Services, 82% shareholder of Yapi Kredi.</span></li>
<li><span style="background-color: white; font-family: "georgia" , "times new roman" , serif; line-height: 13.25pt;">Also in
2006, UniCredito Italiano sold 2S Banca, Italy’s No.2 securities custodian to
Société Générale SA for Eur 579-million.</span></li>
<li><span style="background-color: white; font-family: "georgia" , "times new roman" , serif; line-height: 13.25pt;">In 2007,
UniCredito Italiano settled with the Polish banking regulator’s objection over
its control of both Bank Pekao and Bank BPH and agreed to sell 200 of Bank
BPH’s 480 branches, as well as the brand Bank BPH itself to GE Money for Eur
625-million (USD $893-million). GE Money is the financial services division of
General Electric Co.</span></li>
<li><span style="background-color: white; font-family: "georgia" , "times new roman" , serif; line-height: 13.25pt;">Also in
2007, UniCredito Italiano acquired </span><a href="http://bankingmergers.blogspot.ca/2009/10/italy-bank-mergers-acquisitions.html" style="background-color: white; font-family: Georgia, "Times New Roman", serif; line-height: 13.25pt;" target="_blank"><span style="color: windowtext;">Capitalia SpA</span></a><span style="background-color: white; font-family: "georgia" , "times new roman" , serif; line-height: 13.25pt;"> Eur
21.83-billion (USD $29.47-billion). The combined Italian giant will have 9,000
branches around the world with 40 million clients. It will become the No. 2
bank in Italy and in Germany, as well as the No. 1 bank in Austria and in
Central and Eastern Europe. Capitalia is the parent company of Banca di Roma,
Banco di Sicilia, Bipop-Carire and MCC (MedioCredito Centrale).</span></li>
<li><span style="background-color: white; font-family: "georgia" , "times new roman" , serif; line-height: 13.25pt;">Also in
2007, UniCredito Italiano took full control of International Moscow Bank by
acquiring the remaining 9.97% of International Moscow Bank that it didn’t yet
own for Eur 171-million (USD $229-million).</span></li>
<li><span style="background-color: white; font-family: "georgia" , "times new roman" , serif; line-height: 13.25pt;">Also in
2007, UniCredito Italiano's Vienna-based Bank Austria Creditanstalt AG unit
agreed to buy at least 85% of Kazakhstan's No. 5 bank AO ATF Bank for Eur
1.7-billion (USD $2.27-billion). Almaty-based ATF Bank had an 11.8% market
share in Kazakhstan and operated 110 branches.</span></li>
<li><span style="background-color: white; font-family: "georgia" , "times new roman" , serif; line-height: 13.25pt;">Also in
2007, UniCredito Italiano’s Bank Austria Creditanstalt unit bought Ukraine's
Ukrsotsbank (USB) for Eur 1.61-billion (USD $2.2-billion). USB operated 497
branches.</span></li>
<li><span style="background-color: white; font-family: "georgia" , "times new roman" , serif; line-height: 13.25pt;">In 2008,
UniCredito Italiano formally changed its name to UniCredit SpA.</span></li>
<li><span style="background-color: white; font-family: "georgia" , "times new roman" , serif; line-height: 13.25pt;">Also in
2008, in accordance with an agreement with Italy's anti-monopoly authority in
the UniCredit-Capitalia merger, UniCredit sold 184 branches and their accounts
and assets to 12 rival banks for Eur 747-million (USD $1.16-billion). The major
acquiring banks were Banca Popolare di Milano, Credito Emiliano, Banca Carige,
Banca Popolare dell'Emilia Romagna and Banca Popolare dell'Etruria e del Lazio.</span></li>
<li><span style="background-color: white; font-family: "georgia" , "times new roman" , serif; line-height: 13.25pt;">In January 2016, UniCredit agreed to sell (transfer) its Ukrainian subsidiary PJSC Ukrsotsbank to Luxembourg-based, privately-held ABH Holdings (Alfa Bank Group) in exchange for a 9.9%-stake of ABH Holdings. ABH owns several banks in a few Eastern European countries. Ukraine's economy has been in tatters since its military conflicts with Russia over Crimea.</span></li>
<li><span style="background-color: white; font-family: "georgia" , "times new roman" , serif; line-height: 13.25pt;">In July 2016, UniCredit sold a 10% stake in its Polish subsidiary Bank Pekao for EUR 749-million (USD $830-million, PLN 3.3-billion). Following the sale, UniCredit still holds a 40.1% stake in the Polish bank. Italy's banking sector has been battered by the 2008 global credit crisis and the sale is part of the strategy to bolster the Italian bank's capital ratio</span></li>
<li><span style="background-color: white; font-family: "georgia" , "times new roman" , serif; line-height: 13.25pt;">In July and October 2016, UniCredit sold a total of 30% of FinecoBank SpA for EUR 880-million (USD $969-million). Following the sale, UniCredit's stake in FinecoBank was reduced to 35% from 65%. UniCredit inherited the direct bank when it took over Capitalia.</span></li>
<li><span style="background-color: white; font-family: "georgia" , "times new roman" , serif; line-height: 13.25pt;">In December 2016, UniCredit fully divested its remaining 32.8% stake in Polish bank Bank Pekao to Polish insurer PZU and a Polish development fund for PLN 10.6-billion (EUR 2.57-billion). The sale boosted ailing UniCredit's capital and at the same time, returned a major Polish bank to Polish control, which had been a new Polish government policy for some time.</span></li>
<li><span style="background-color: white; font-family: "georgia" , "times new roman" , serif; line-height: 13.25pt;">Later in December 2016, UniCredit also sold its Pioneer Investment subsidiary to France Amundi Asset Management for EUR 3.545-billion (USD $3.72-billion). Pioneer Investments had EUR 222-billion of assets under management. Amundi is on the Paris Stock Exchange but majority-owned by French bank Crédit Agricole.</span></li>
</ul>
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BankingMergershttp://www.blogger.com/profile/09902839579660694793noreply@blogger.comtag:blogger.com,1999:blog-7475905699260929987.post-32625660885699062342016-04-17T22:04:00.001-04:002020-09-21T18:12:12.975-04:00Italy Bank Mergers & Acquisitions (Banca Monte dei Paschi di Siena)<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhvq5I1DSUWknsWyOMqHQzDmRG4w6Libk4fk3yAyHrQMEJn_t_oQ7aWShQaCwIVIaaHN_E64VD1ongh0JJGcr9z711IciAnIll8X5RmRAXCi4S39sw7lWvEnPtcprSSyJ1hSZENYAsDhrE/s1600/cosenza.Banca.Monte.dei.Paschi.di.Siena.2.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="320" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhvq5I1DSUWknsWyOMqHQzDmRG4w6Libk4fk3yAyHrQMEJn_t_oQ7aWShQaCwIVIaaHN_E64VD1ongh0JJGcr9z711IciAnIll8X5RmRAXCi4S39sw7lWvEnPtcprSSyJ1hSZENYAsDhrE/s320/cosenza.Banca.Monte.dei.Paschi.di.Siena.2.jpg" width="240" /></a></div>
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<span style="font-family: "georgia" , "times new roman" , serif;"><span style="background-color: white; color: #444444; font-family: "georgia" , "times new roman" , serif; line-height: 18.2px;">Photo: a Banca Monte dei Paschi di Siena branch in the city of Cosenza, Italy.</span></span><br />
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<span style="font-family: "georgia" , "times new roman" , serif;"><span style="font-family: "georgia" , "times new roman" , serif;"><span style="background-color: white; color: #444444; font-family: "georgia" , "times new roman" , serif; line-height: 18.2px;"><br /></span></span></span></div>
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<span style="font-family: "georgia" , "times new roman" , serif;"><span style="font-family: "georgia" , "times new roman" , serif;"><span style="background-color: white; color: #444444; line-height: 18.2px;"><br /></span></span><span style="font-family: "georgia" , "times new roman" , serif;"><span style="background-color: white; color: #444444; line-height: 18.2px;">I wish to express my special thanks to my friend Rob van Kan for taking this photo and allowing me to use it. You may see more of Rob's photos via this flickr link:</span></span></span></div>
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<span style="font-family: "georgia" , "times new roman" , serif;"><span style="font-family: "georgia" , "times new roman" , serif; line-height: 18.2px;"><a href="https://www.flickr.com/photos/8980780@N07/">https://www.flickr.com/photos/8980780@N07/</a></span></span></div>
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<span style="font-family: "georgia" , "times new roman" , serif;"><span style="font-family: "georgia" , "times new roman" , serif;"><br style="background-color: white; color: #444444; line-height: 18.2px;" /></span><span style="font-family: "georgia" , "times new roman" , serif;"><br style="background-color: white; color: #444444; line-height: 18.2px;" /></span><span style="font-family: "georgia" , "times new roman" , serif;"><span style="background-color: white; color: #444444; line-height: 18.2px;">Rob also maintains a blog on world affairs (in Dutch):</span></span><span style="font-family: "georgia" , "times new roman" , serif;"><span style="background-color: white; color: #444444; line-height: 18.2px;"><br /></span></span><span style="font-family: "georgia" , "times new roman" , serif;"><span style="background-color: white; color: #444444; line-height: 18.2px;"><a href="https://edgeofeurope.wordpress.com/" style="color: #4d469c; text-decoration: none;">https://edgeofeurope.wordpress.com/</a></span></span><span style="font-family: "georgia" , "times new roman" , serif;"><br style="background-color: white; color: #444444; line-height: 18.2px;" /></span><span style="font-family: "georgia" , "times new roman" , serif;"><br style="background-color: white; color: #444444; line-height: 18.2px;" /></span><span style="font-family: "georgia" , "times new roman" , serif;"><b style="background-color: white; color: #444444; line-height: 18.2px;"><br /></b></span><span style="font-family: "georgia" , "times new roman" , serif;"><b style="background-color: white; color: #444444; line-height: 18.2px;">Banca Monte dei Paschi di Siena</b></span><span style="font-family: "georgia" , "times new roman" , serif;"><span style="background-color: white; color: #444444; line-height: 18.2px;"><br /></span></span><span style="font-family: "georgia" , "times new roman" , serif;"><br style="background-color: white; color: #444444; line-height: 18.2px;" /></span><span style="font-family: "georgia" , "times new roman" , serif;"><span style="line-height: 14.95px;">Today, we generally think of banking for the following reasons: making a deposit of “money” into an account for safekeeping; obtaining a loan in its many forms; and relying on various banking products (such as a cheque, credit card, bank card, money order, electronic fund transfer, or even Apple Pay or PayPal) to make payments to facilitate transactions. While many of these banking functions only became common and universal from the late 19<sup>th</sup> century (some if not only the 2010s!), the origins of modern banks date back to Italy in the 15<sup>th</sup> century, which after the Dark Ages and the “Black Death” plague of the late 1340s, saw a re-birth of cultural, literary, science, economic and social advancement, hence the term “Renaissance era”.</span></span></span></div>
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<span style="font-family: "georgia" , "times new roman" , serif;"><span style="font-family: "georgia" , "times new roman" , serif;"><span style="line-height: 14.95px;"><br /></span></span><span style="font-family: "georgia" , "times new roman" , serif;"><span style="line-height: 14.95px;">Commerce between city states and dukedoms in Europe was on a major upswing during this time, and the need for money exchange and payments for trade transactions led to some innovative merchants setting up temporary money-dealing benches at trade fairs to offer an early form of trade finance. It was the word “banco”, Italian for “bench,” that evolved into words such as bank (English, Dutch, German and Danish etc.), banque (French) and pankki (Finnish). However, such early banks did not have permanent offices, and really only catered to travelling merchants at trade fairs. Meanwhile, the elites of society: the Pope, the archbishops, the princes, the dukes, the aristocrats and high government officials had close ties with the goldsmiths, who acted as private bankers at the time.</span></span></span></div>
<span style="font-family: "georgia" , "times new roman" , serif;"><span style="font-family: "georgia" , "times new roman" , serif;"><span style="line-height: 14.95px;"><br /></span></span><span style="line-height: 18.2px;"><span style="line-height: 14.95px;">At the other end of society, which was the vast majority of the people, be they blacksmiths, farmers, labourers, artisans, servants or housewives, possessed far too little spare cash to attract the attention of the private bankers. Thus, most of the masses had no access to any bank and no ability to obtain a loan. This, however, began to change in the mid-1400s, when the Catholic Church and some political leaders took pity of the underclass’s grim livelihood by establishing charitable pawnshops or charitable loan agencies known as “monti di pietá” (or monte di pietá when singular, literally meaning "mount of compassion"). These monti di pietá offered low-interest-rate loans for collateral such as clothing, family heirlooms or tools.</span></span></span><br />
<span style="font-family: "georgia" , "times new roman" , serif;"><span style="font-family: "georgia" , "times new roman" , serif;"><span style="line-height: 14.95px;"><br /></span></span><span style="line-height: 18.2px;"><span style="line-height: 14.95px;">While many of Renaissance Italy’s monti di pietá were founded by the Catholic Church, some were established by political leaders, which was the case for the Republic of Siena’s Monte Pio when the city state’s Magistrate Council along with local aristocrats provided 5,000 florins in 1472 to back the charitable loan agency.</span></span></span><br />
<span style="font-family: "georgia" , "times new roman" , serif;"><span style="font-family: "georgia" , "times new roman" , serif;"><span style="line-height: 14.95px;"><br /></span></span><span style="line-height: 18.2px;"><span style="line-height: 14.95px;">The Renaissance period, despite its romantic sentiments in modern beliefs, was nevertheless a turbulent era. Between 1551 and 1559, Henry II of France fought a war against Holy Roman Emperor Charles V (ruler of the Spanish Empire) and his ally Duke Cosimo I de’ Medici of Florence, for domination of Europe and the Mediterranean Sea. For decades, the Republic of Florence and Republic of Siena had been bitter political and economic rivals. In 1555, Siena fell and was annexed by Florence, but Monte Pio was allowed to continue operation. In 1580, it gained even more prominence when it assumed the role as the collection agency for the Ufficio dell’Abbondanza (“Office of the Food Surplus”) in Siena.</span></span></span><br />
<span style="font-family: "georgia" , "times new roman" , serif;"><span style="line-height: 18.2px;"><span style="line-height: 14.95px;"><br /></span></span><span style="line-height: 18.2px;"><span style="line-height: 14.95px;">By the 1620s, demand for farming-related loans in Siena expanded at such pace that Monte Pio needed more capital. In 1624, Ferdinando II de’ Medici agreed to establish an agricultural loan agency based on the model of Monte Pio. However, the shrewd Grand Duke of Tuscany did not want to be personally liable to potential losses (and even bankruptcy, should it ever happen) of new agricultural loan agency. To indemnify himself (remove his liability risk), Ferdinando II took the unusual and genius step of entailing the revenue from the state-owned pasture land to the loan agency. In essence, this reform gave the new loan agency a steady source of income, and its depositors a de facto state guarantee backed by the revenue of the pasture land. Yet it also transferred the risk of the business to the collective agricultural economy of Tuscany. To emphasize this pasture revenue feature and modus operandi, the new loan agency was aptly named Monte dei Paschi di Siena (MPS), with the Italian word “paschi” meaning “pasture”.</span></span></span><br />
<span style="font-family: "georgia" , "times new roman" , serif;"><span style="font-family: "georgia" , "times new roman" , serif;"><span style="line-height: 14.95px;"><br /></span></span><span style="line-height: 18.2px;"><span style="line-height: 14.95px;">Monte Pio and Monte dei Paschi both continued operations during the 18<sup>th</sup> century, amidst the political instability following the end of the House of Medici in 1737. In 1784, the two Monti were amalgamated into a single entity but continued to maintain the dual mandates of charity and banking. One prime example was the financial contribution it made to help re-build Siena after a disastrous earthquake in 1798.</span></span></span><br />
<span style="font-family: "georgia" , "times new roman" , serif;"><span style="font-family: "georgia" , "times new roman" , serif;"><span style="line-height: 14.95px;"><br /></span></span><span style="line-height: 18.2px;"><span style="line-height: 14.95px;">In 1833, Monte dei Paschi underwent a major re-organization, including the establishment of a separate savings bank (known as a “cassa di risparmio”). In 1872, a new charter once again confirmed Monte dei Paschi to be an institution belonging to the city of Siena. The 1872 charter also stipulated that up to half of the bank’s profits be distributed to fund charitable or public utility works. Meanwhile, the Grand Duchy of Tuscany itself had ended back in 1859, and by 1861, it had become part of the newly-created Kingdom of Italy.</span></span></span><br />
<span style="font-family: "georgia" , "times new roman" , serif;"><span style="line-height: 18.2px;"><span style="line-height: 14.95px;"><br /></span></span><span style="line-height: 18.2px;"><span style="line-height: 14.95px;">Despite its centuries-long existence, Monte dei Paschi di Siena’s operations only expanded beyond the provinces of Siena and Grosseto in the early 1900s. It nevertheless ranked second amongst all savings banks in the country by 1910. In 1929, MPS brokered the merger of Credito Toscano and the Banca di Firenze (Bank of Florence) and acquired a stake in the resulting entity Banca Toscana. The global Depression in the 1930s hit Italy hard, but MPS struggled along relatively better than many rivals.</span></span></span><br />
<span style="font-family: "georgia" , "times new roman" , serif;"><span style="font-family: "georgia" , "times new roman" , serif;"><span style="line-height: 14.95px;"><br /></span></span><span style="line-height: 18.2px;"><span style="line-height: 14.95px;">Italy after the end of World War II was known for its slow economic growth, strict bureaucratic regulation, high unemployment and inflation, and weak currency (the Italian lira). Nevertheless, MPS expanded further into different regions of Italy and opened representative offices in major financial centres of the world: New York, London, Singapore and Frankfurt.</span></span></span><br />
<span style="font-family: "georgia" , "times new roman" , serif;"><span style="font-family: "georgia" , "times new roman" , serif;"><span style="line-height: 14.95px;"><br /></span></span><span style="line-height: 18.2px;"><span style="line-height: 14.95px;">In 1990, MPS acquired controlling stakes in a medium-term merchant bank called the Mediocredito Toscano as well as an agricultural lender called dell’INCA (Istituto Nazionale per il Credito Agrario). In 1992, MPS acquired control of another Tuscany savings bank: Cariprato -- Cassa di Risparmio di Prato. It also launched an insurance joint-venture named Monte Paschi Vita with French mutual bancassurance giant Crédit Agricole. Also in 1992, MPS bought private bank Banque Atlantis in Geneva. Then in 1994, mutual funds were offered for the first time by the newly-created Ducato Gestioni unit.</span></span></span><br />
<span style="font-family: "georgia" , "times new roman" , serif;"><span style="font-family: "georgia" , "times new roman" , serif;"><span style="line-height: 14.95px;"><br /></span></span><span style="line-height: 18.2px;"><span style="line-height: 14.95px;">Meanwhile, back in the late 1980s, the European Union began to constitute a “single-market” framework, which sought to guarantee free movement of goods, services, capital and people between all member states, to be effective in 1993. This opening of goods and services market would throw the Italian banking market wide open to competition from other EU banks. To prepare the backward and fragmented domestic banking market for the new competition, Italy proposed a remedy that centred on four goals: de-nationalization (relinquishment of state management), consolidation, modernization and strengthening. The first major reform involved the Italian government passing the Amato legislation in 1988, which required the state-administered savings banks to be converted into private-sector, for-profit joint-stock banks. In 1995, the Monte dei Paschi was formally separated into the Banca Monte dei Paschi di Siena (BMPS) SpA (SpA is the Italian term for “limited-liability company”) and the charitable organization Fondazione Monte dei Paschi di Siena. Initially, this separation was only a legal technicality, as the charitable foundation still fully owned and controlled the bank. A second stage of the banking reform was the passage of the Ciampi legislation in 1998, which stipulated that the charitable foundations must gradually spin off their holdings of the savings banks, thus ending the centuries-old tradition of state-control and non-profit nature of the Italian savings banks.</span></span></span><br />
<span style="font-family: "georgia" , "times new roman" , serif;"><span style="line-height: 18.2px;"><span style="line-height: 14.95px;"><br /></span></span><span style="line-height: 18.2px;"><span style="line-height: 14.95px;">In 1999, Banca Monte dei Paschi di Siena was partially floated on the Milan stock exchange. The stock listing not only gave BMPS access to capital from the international financial market, but much greater freedom to acquire or be acquired by other banks.</span></span></span><br />
<span style="font-family: "georgia" , "times new roman" , serif;"><span style="font-family: "georgia" , "times new roman" , serif;"><span style="line-height: 14.95px;"><br /></span></span><span style="line-height: 18.2px;"><span style="line-height: 14.95px;">Recent transactions:</span></span></span><br />
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<li><span style="line-height: 14.95px;"><span style="font-family: "georgia" , "times new roman" , serif;">In 1998, MPS bought 70% of Banca Agricola Montavana, which had 290 branches in northern Italy.</span></span></li>
<li style="border: none; margin: 0px 0px 0.25em; padding: 0.25em 0px;"><span style="line-height: 14.95px;"><span style="font-family: "georgia" , "times new roman" , serif;">In 2000, MPS bought a 94% stake in Banca del Salento and renamed it Banca 121. It took full ownership in 2005.</span></span></li>
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<li style="border: none; margin: 0px 0px 0.25em; padding: 0.25em 0px;"><span style="line-height: 14.95px;"><span style="font-family: "georgia" , "times new roman" , serif;">In 2001, MPS acquired a 4.75% stake in Banca Nazionale del Lavoro (BNL) and the two banks entered into merger talks but failed to settle on the terms.</span></span></li>
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<li style="border: none; margin: 0px 0px 0.25em; padding: 0.25em 0px;"><span style="line-height: 14.95px;"><span style="font-family: "georgia" , "times new roman" , serif;">In 2002, MPS took full control of Florence-based Banca Toscana, a bank with over 400 branches and one which MPS had had a stake in since 1929.</span></span></li>
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<li style="border: none; margin: 0px 0px 0.25em; padding: 0.25em 0px;"><span style="line-height: 14.95px;"><span style="font-family: "georgia" , "times new roman" , serif;">The wave of imprudent acquisitions in the 1990s, however, proved costly to MPS as bad loans soared. In 2003, MPS sold its 79% stake in Cariprato (acquired in 1992) to Banca Antoniana Popolare Veneta for EUR 411-million.</span></span></li>
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<li style="border: none; margin: 0px 0px 0.25em; padding: 0.25em 0px;"><span style="line-height: 14.95px;"><span style="font-family: "georgia" , "times new roman" , serif;">In 2007, MPS acquired 55% of Biverbanca, the new name for Cassa di Risparmio di Biella e Vercelli from rival Intesa Sanpaolo for EUR 399-million (USD $570-million). Biverbanca had 105 branches in north-western Italy.</span></span></li>
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<li style="border: none; margin: 0px 0px 0.25em; padding: 0.25em 0px;"><span style="line-height: 14.95px;"><span style="font-family: "georgia" , "times new roman" , serif;">Also in 2007, MPS acquired AXA SIM SpA for EUR 50-million (USD $69-million), an asset manager with EUR 1.9-billion in assets under management.</span></span></li>
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<li style="border: none; margin: 0px 0px 0.25em; padding: 0.25em 0px;"><span style="line-height: 14.95px;"><span style="font-family: "georgia" , "times new roman" , serif;">In early 2008, MPS made its boldest, yet most disastrous purchase when it spent EUR 9.0-billion (USD $13.2-billion) to buy Banca Antonveneta from Spain’s Banco Santander. Santander had only just taken control of Banca Antonveneta a few months earlier when it and Royal Bank of Scotland and Belgium’s Fortis jointly acquired Dutch banking giant ABN AMRO Holding NV for EUR 70-billion (USD $101-billion). ABN AMRO had acquired Banca Antonventa back in 2005 and was the first foreign bank to control a major Italian bank. Banca Antonveneta had 1,000 branches. This purchase made MPS one of the largest banking groups not just in Italy but in all of Europe by assets.</span></span></li>
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<li style="border: none; margin: 0px 0px 0.25em; padding: 0.25em 0px;"><span style="line-height: 14.95px;"><span style="font-family: "georgia" , "times new roman" , serif;">Shortly after that, MPS suffered devastating losses from derivative trading and careless lending made earlier in the decade.</span></span></li>
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<li style="border: none; margin: 0px 0px 0.25em; padding: 0.25em 0px;"><span style="line-height: 14.95px;"><span style="font-family: "georgia" , "times new roman" , serif;">In 2012, MPS unloaded its 60% stake in Biverbanca for EUR 205-million.</span></span></li>
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<li style="border: none; margin: 0px 0px 0.25em; padding: 0.25em 0px;"><span style="line-height: 14.95px;"><span style="font-family: "georgia" , "times new roman" , serif;">In 2013, MPS received EUR 4.1-billion of state aid from the Italian government to avoid a collapse.</span></span></li>
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<li style="border: none; margin: 0px 0px 0.25em; padding: 0.25em 0px;"><span style="line-height: 14.95px;"><span style="font-family: "georgia" , "times new roman" , serif;">In January 2016, MPS’s had non-performing loans totalling EUR 40.0-billion (USD $43.6-billion). Meanwhile, MPS shares tumbled and valued the entire bank at only EUR 2.2-billion.</span></span></li>
<li style="border: none; margin: 0px 0px 0.25em; padding: 0.25em 0px;"><span style="line-height: 14.95px;"><span style="font-family: "georgia" , "times new roman" , serif;">In December 2016, MPS failed to raise new capital from private investors.</span></span></li>
<li style="border: none; margin: 0px 0px 0.25em; padding: 0.25em 0px;"><span style="line-height: 14.95px;"><span style="font-family: "georgia" , "times new roman" , serif;">In July 2017, MPS together with the Italian government and EU agreed and approved a broad-range re-capitalization and nationalization rescue for the bank. Under the plan, the Italian state would inject EUR 5.4-billion (each EUR = USD $1.1350) into MPS, and junior bondholders of the bank would contribute another EUR 2.7-billion by converting their debentures into equity, which would make up the EUR 8.1-billion of capital required. The Italian state would control 70% of the re-capitalized MPS. Meanwhile, EUR 28.6-billion of bad loans would be removed from the bank's balance sheet into a separate "bad bank." MPS also agreed to close 600 branches, cut 5,500 jobs and cap its top executives' remuneration.</span></span></li><li style="border: none; margin: 0px 0px 0.25em; padding: 0.25em 0px;"><span style="line-height: 14.95px;"><span style="font-family: "georgia" , "times new roman" , serif;">In late 2020, the Italian government began to search for a buyer for its 68% stake in Monte dei Paschi di Siena. Under the terms of the state bailout negotiated with the EU competition authorities in 2017, Italy must sell the state holding by the end of 2021. In order to make the MPS more attractive, the bank intends to offload EUR 8.1-billion (USD $9.53-billion) of impaired loans to state-owned bad loan manager AMCO before the sale.</span></span></li>
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<span style="font-family: "georgia" , "times new roman" , serif;"><span style="background-color: white; color: #444444; line-height: 14.95px;">Click here to return to the <a href="http://bankingmergers.blogspot.ca/2010/01/index-to-list-of-international-bank.html" style="color: #4d469c; text-decoration: none;">Index</a> page.</span></span></span><br />
<span style="font-family: "georgia" , "times new roman" , serif;"><br style="background-color: white; color: #444444; line-height: 18.2px;" /></span>BankingMergershttp://www.blogger.com/profile/09902839579660694793noreply@blogger.comtag:blogger.com,1999:blog-7475905699260929987.post-58532799420125361212015-08-31T21:51:00.001-04:002018-12-31T18:23:17.283-05:00China Bank Mergers & Acquisitions (China Construction Bank)<div class="separator" style="clear: both; text-align: center;">
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<span style="font-family: Georgia, Times New Roman, serif; font-size: large;">Photo: A China Construction Bank's branch in Hong Kong.</span><br />
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<span style="font-family: Georgia, Times New Roman, serif; font-size: large;"><strong><span lang="EN-US"><span style="font-family: Georgia, Times New Roman, serif;">China Construction Bank (<o:p></o:p></span></span></strong><b><span style="background-color: white; color: #252525; line-height: 22.4px;">中國建設銀行, </span><span style="background-color: white; color: #252525; line-height: 22.4px;">中国建设银行)</span></b></span></div>
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<span lang="EN-US"><span style="font-family: Georgia, Times New Roman, serif; font-size: large;">The
modern history of China started out tumultuously when Imperial China was
overthrown in 1911 and the Republic of China was created. However, opposing ideologies soon led to a civil
war that was fought intermittently between the Kuomintang (Nationalists) and
the Communists from 1927 to 1937, when both fractions oddly joined forces to
fight the Japanese invasion, which became part of the World War II. Sadly, when China emerged as one of the
victor-nations at the end of global conflict, the civil war resumed in 1946
until 1950, when the Kuomintang government’s Republic of China retreated to
Taiwan, leaving mainland China to the Communists, who had established the
People’s Republic of China one year earlier in 1949.<o:p></o:p></span></span></div>
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<span lang="EN-US"><span style="font-family: Georgia, Times New Roman, serif; font-size: large;">As
part of the Communist China’s state economic plans, the People's Construction
Bank of China was established in 1954 as a wholly state-owned financing agency under
the direction of the Ministry of Finance to administer and disburse government
funds for the construction of infrastructure-related projects. <o:p></o:p></span></span></div>
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<span lang="EN-US"><span style="font-family: Georgia, Times New Roman, serif; font-size: large;">In
1979, under China’s new ‘open-door’ policy to modernize its economy and to promote
manufacturing and foreign trade, the People's Construction Bank of China became
a financial institution under the direction of the State Council and gradually
assumed more commercial banking functions that are typically associated with
the Western-capitalist definition of a bank.<o:p></o:p></span></span></div>
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<span lang="EN-US"><span style="font-family: Georgia, Times New Roman, serif; font-size: large;">Throughout
the 1980s, China Construction Bank gradually became a full-service bank, offering
more and more personal banking services for individuals while maintaining its
other mandate of financing state-planned infrastructure development. This finally changed in 1994 when
state-policy-driven, infrastructure-related financing functions were
transferred to the newly-created China Development Bank.<o:p></o:p></span></span></div>
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<span lang="EN-US"><span style="font-family: Georgia, Times New Roman, serif; font-size: large;">In
1996, the People’s Construction Bank of China was renamed China Construction
Bank. By this time, China had been
gradually transforming itself from a pure communist state to what it described
as the Chinese-style Socialism: basically a form of socio-political system that
is roughly half-way between the 1950s hard line communism and the Western capitalist
democracy. Under this Chinese-style socialist
market-economy is a system<a href="https://www.blogger.com/null" name="_GoBack"></a> that is still largely state-planned
and controlled, but with a semi-market-driven decision-making process; goods
and services are largely produced by state-owned enterprises yet with partial
private investment and ownership.
Increasingly, individuals are allowed and even encouraged to own
personal properties, assets and investments. Yet, unlike the Western capitalist
democratic system, universal suffrage is not allowed. <o:p></o:p></span></span></div>
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<span style="font-family: Georgia, Times New Roman, serif; font-size: large;"><span lang="EN-US">China
Construction Bank became a joint-stock commercial bank with limited liability in
September 2004 as China prepared to partially float its Big Four state-owned
commercial banks on the stock market. </span><span lang="EN-GB">To bring the bank’s Tier 1 capital level to the internationally-accepted
level of 8%, the Chinese government is said to have injected USD $22.5-billion
into China Construction Bank in 2003. Meanwhile, o</span><span lang="EN-US">wnership
of China Construction Bank and other major state-owned banks and financial
services firms was transferred to a state agency called Central Huijin Investment
Ltd.<o:p></o:p></span></span></div>
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<span lang="EN-US"><span style="font-family: Georgia, Times New Roman, serif; font-size: large;">As
China was still inexperienced in managing its own stock exchange, securities
underwriting and regulation, essentially all of China’s major state-owned enterprises
were initially floated on the Hong Kong stock exchange instead of a Chinese
stock market during the early 2000s. <o:p></o:p></span></span></div>
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<span lang="EN-US"><span style="font-family: Georgia, Times New Roman, serif; font-size: large;">Following a HKD
$71.5-billion (USD $9.2-billion) stock sale, China
Construction Bank's class ‘H’ shares were listed on Hong Kong Stock Exchange on 2015-10-27, and on 2007-09-25, the bank's class ‘A’ were
listed on Shanghai Stock Exchange, raising another CNY 58-billion (USD $7.7-billion).<o:p></o:p></span></span></div>
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<span lang="EN-US"><span style="font-family: Georgia, Times New Roman, serif; font-size: large;">Recent
transaction(s):<o:p></o:p></span></span></div>
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<ul>
<li><span style="font-family: Georgia, Times New Roman, serif; font-size: large;">In 2006, China Construction
Bank bought Bank of America's Hong Kong retail banking operations for HKD
$9.7-billion (USD $1.25-billion).</span></li>
<li><span style="font-family: Georgia, Times New Roman, serif; font-size: large;"><span style="font-family: Georgia, 'Times New Roman', serif;">In November 2014,
CCB bought 72% of Brazil’s Banco Industrial e Comercial S.A. (BicBanco) for USD
$723-million (BRL 1.62-billion).</span><span style="font-family: Georgia, 'Times New Roman', serif;">
</span><span style="font-family: Georgia, 'Times New Roman', serif;">BicBanco specialized in lending to medium-sized businesses through 38
branches in Brazil and one in the Cayman Islands.</span><span style="font-family: Georgia, 'Times New Roman', serif;"> </span><span style="font-family: Georgia, 'Times New Roman', serif;">The bank had 900 employees.</span></span></li>
</ul>
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<span style="font-family: Georgia, Times New Roman, serif; font-size: large;">Click here to return to the <a href="http://bankingmergers.blogspot.ca/2010/01/index-to-list-of-international-bank.html">Index</a> page.</span></div>
BankingMergershttp://www.blogger.com/profile/09902839579660694793noreply@blogger.comtag:blogger.com,1999:blog-7475905699260929987.post-10540530748229976292015-06-17T18:49:00.002-04:002015-06-17T21:40:40.228-04:00Sweden Bank Mergers & Acquisitions (Svenska Handelsbanken)<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEivGEtUpjvcEBJwD4ZVk1a9RIPTmdeQqpsR-lN-RMp42SceEsHII82qoS7cMSuvLYDEJf0AOmhhynrQIotEqHdEVtmlPQeLUpN0EkSeC0EDiWtdUt8gUVGDdMJgW624ZdPNIZ-sWwDmpeg/s1600/SvenskaHandelsbanken_Bengt_Wanselius.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="213" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEivGEtUpjvcEBJwD4ZVk1a9RIPTmdeQqpsR-lN-RMp42SceEsHII82qoS7cMSuvLYDEJf0AOmhhynrQIotEqHdEVtmlPQeLUpN0EkSeC0EDiWtdUt8gUVGDdMJgW624ZdPNIZ-sWwDmpeg/s320/SvenskaHandelsbanken_Bengt_Wanselius.jpg" width="320" /></a></div>
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<span lang="EN-US"><span style="font-family: Georgia, Times New Roman, serif;">Photo:
Svenska Handelsbanken's head office in Stockholm<strong>.</strong><o:p></o:p></span></span></div>
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<span lang="EN-US"><span style="font-family: Georgia, Times New Roman, serif;">Photographer:
Bengt Wanselius. S</span></span><span style="font-family: Georgia, 'Times New Roman', serif;">ource: Svenska Handelsbanken's web site, used with permission.</span></div>
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<span style="font-family: Georgia, Times New Roman, serif;"><strong><span lang="EN-US">Svenska Handelsbanken AB</span></strong><span lang="EN-US"><o:p></o:p></span></span></div>
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<span lang="EN-US"><span style="font-family: Georgia, Times New Roman, serif;">In Scandinavian, German and Dutch languages, the word
"handel" means a trade or business, as in the chemicals trade or the
forestry trade. The name Svenska Handelsbanken, hence, means the "Swedish
Commercial Bank". The bank was established in 1871 by eight former directors
from rival Stockholms Enskilda Bank who resigned to form their own bank
following a board disagreement.
Initially, the bank was called Stockholms Handelsbank, focusing on
accepting deposits and making loans to businesses in the Swedish capital. The
bank was floated on the Stockholm stock exchange in 1873. <o:p></o:p></span></span></div>
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<span lang="EN-US"><span style="font-family: Georgia, Times New Roman, serif;">The bank began to open branches in other parts of Stockholm
in 1875. During the mid-1880s, Sweden
suffered a major economic recession due to a real estate collapse. Stockholms Handelsbank suffered losses, but
survived the downturn. <o:p></o:p></span></span></div>
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<span lang="EN-US" style="background: white;"><span style="font-family: Georgia, Times New Roman, serif;">In
1893, private banker Louis Fraenckel was appointed to the bank’s managing
director position. His tenure lasted
until 1911, during which his own private banking operations were amalgamated
into Stockholms Handelsbank, allowing it to gain important corporate clients
and to expand into the foreign exchange business. During the 19<sup>th </sup>century, branch
banking was not a common practice in many countries, and instead of directly
operating a network of branches outside of Stockholm, the bank chose to partner
with local investors in establishing a number of regional banks to share risk
and to optimize local expertise.<o:p></o:p></span></span></div>
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<span lang="EN-US" style="background: white;"><span style="font-family: Georgia, Times New Roman, serif;">However,
by the early 20<sup>th</sup> century, industrialization has created large corporations
with nationwide operations and even multi-nationals that required much larger
capital, trade finance and international services. Small regional banks could no longer serve
such ever-expanding industrials. Waves
of bank mergers happened across Western Europe and America, and Sweden was no
exception. In 1914, Stockholms Handelsbank
took over Bank AB Norra Sverige. This expanded Stockholms Handelsbanken’s reach
to 36 new towns, primarily along the Norrland coast where Sweden’s forestry
industry was concentrated. <o:p></o:p></span></span></div>
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<span style="font-family: Georgia, Times New Roman, serif;"><span lang="EN-US">Then in 1917, the bank further strengthened its position in
the north by acquiring Norrlandsbanken, which had 79 branches. Before long though, the bank realized that its
loan concentration in the Swedish North and forestry industry gave it undue credit risk. The bank then opened branches in </span><span lang="EN-US" style="background: white;">Göteborg and Malmö, and in 1919 expanded to the
south by a</span><span lang="EN-US">cquiring
the 67-branch Bank AB Södra Sverige. To celebrate this nationwide expansion,
Stockholms Handelsbank adopted its current name: Svenska Handelsbanken.<o:p></o:p></span></span></div>
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<span style="font-family: Georgia, Times New Roman, serif;"><span lang="EN-US">The 1920s and 1930s was turbulent times for the world
economy, with asset prices and consumption swinging wildly, and Sweden’s export
volumes and economy rode along the roller-coaster ride. Svenska Handelsbanken on several occasions
had to take over the majority ownership of its industrial clients while their bad
debts were re-structured. A famous name
that the bank owned for a period of time was telecommunications engineering
firm LM Ericsson. Amidst the very
challenging operating environment, the bank took over </span><span lang="EN-US" style="background: white;">Mälarebanken<span class="apple-converted-space"> in 1926.<o:p></o:p></span></span></span></div>
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<span style="font-family: Georgia, Times New Roman, serif;"><span class="apple-converted-space"><span lang="EN-US" style="background: white;">The closing months of the 1930s saw the start of
World War II when Germany invaded Poland on September 1, 1939, and the
subsequent declarations of war on Germany by France and Great Britain two days
later. British Prime Minister Neville
Chamberlain had pledged support for Poland back in March 1939, when Germany’s
military hostilities became obvious. At the outbreak of conflicts, Sweden
declared its neutrality, a move that failed to prevent socio-economic hardship
as its western, southern and eastern</span></span><span class="apple-converted-space"><span style="background: white;">
neighbours</span></span><span class="apple-converted-space"><span lang="EN-US" style="background: white;"> (Norway, Denmark and Finland) all fell to Nazi German
occupation at the height of World War II.<o:p></o:p></span></span></span></div>
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<span class="apple-converted-space"><span lang="EN-US" style="background: white;"><span style="font-family: Georgia, Times New Roman, serif;">Situated at a strategic location between Great
Britain, Germany, Denmark and the Soviet Union, Sweden’s access to both the
North and Baltic Seas were severely curtailed by both the Allied Forces’ and the
Axis’ naval blockades, as both sides feared that the other powers would use the
pretense of Swedish neutrality to aid their respective war efforts. Foreign trade in and out of Sweden fell
sharply, leading to severe shortages of petroleum, rubber, foods and metal products. Notwithstanding the economic distress, Sweden
did avoid the devastating human toll and physical destruction of other European
countries that endured years of battles.<o:p></o:p></span></span></span></div>
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<span class="apple-converted-space"><span lang="EN-US" style="background: white;"><span style="font-family: Georgia, Times New Roman, serif;">Svenska Handelsbanken continued to strengthen during
the 1940s, taking over Norrkopings Folkbank in 1941 and Vänersborgsbanken in
1943. In 1955, Svenska Handelsbanken
acquired mortgage provider SIGAB, which became today’s Handelsbanken
Hypotek. During the rest of the 1950s,
it also took over Luleå Folkbank and Gotlandsbanken. <o:p></o:p></span></span></span></div>
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<span lang="EN-US"><span style="font-family: Georgia, Times New Roman, serif;">In 1963, Svenska Handelsbanken became the first Swedish bank
to launch a lease-finance and factoring services subsidiary when it established
Säljfinans, which became Svenska Finans in 1973 and Handelsbanken Finans in
1991. The 1960s also witnessed the start
of computerization to handle the burgeoning volume of transactions. Computer terminals at the individual branch
level began in 1973, allowing immediate account balance updates for the first
time. <o:p></o:p></span></span></div>
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<span style="font-family: Georgia, Times New Roman, serif;"><span lang="EN-US">The year 1973 also marked an important milestone for the
bank’s management-employee relations, as Svenska Handelsbanken launched a
profit-sharing program for its union employees. The funds allocated from the
profit-sharing were invested in the bank's shares, which eventually gave the union
foundation representation in the bank’s board of directors.</span><o:p></o:p></span></div>
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<span lang="EN-US"><span style="font-family: Georgia, Times New Roman, serif;">Svenska Handelsbanken’s mutual fund offerings began in 1971
when it acquired a sales agency that handled the “Koncentra” mutual fund series. That operation evolved into today’s asset
manager Handelsbanken Fonder ("Handelsbanken Funds").<o:p></o:p></span></span></div>
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<span lang="EN-US"><span style="font-family: Georgia, Times New Roman, serif;">The 1980s was tumultuous times in the Swedish economy and banking
industry. Tight regulations that had
been in place since World War II on interest rates, credit ceilings, foreign
exchange rate as well as the types of savings and loan products that each of
the three categories of credit institutions (savings banks, co-operative banks
and commercial banks) could provide were gradually removed. This liberalization policy led to a
proliferation of loan volumes, as players in all three credit institution
categories tried to grab market share from each other by offering easier and
easier credit. Much of the new debt fuelled speculative commercial real estate
construction activities, which went bust in 1990 when Sweden was hit by a deep
recession brought on partly by the collapse of its traditional export markets
in the disintegrating Soviet Bloc and rising interest rates. <o:p></o:p></span></span></div>
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<span lang="EN-US"><span style="font-family: Georgia, Times New Roman, serif;">Speculative corporate loans made in the late 1980s suddenly
turned sour and Sweden plunged into a severe currency and banking crisis which saw the
national government providing SEK 66-billion of state guarantees to prevent a
colossal collapse of the banking sector.
The more cautiously-run Svenska Handelsbanken, however, stood out as the
only major Swedish bank that did not request any handout from the government.
Indeed throughout the 1990s, its capital position was so strong that it
acquired ailing banks domestically and in Norway and Finland, both of which
suffered their own similar banking crises as Sweden. Outside of the Nordic region,
Svenska Handelsbanken considers Great Britain and the Netherlands as its home
markets, operating 180 branches and 22 branches respectively (accurate as of
2014). In recent years, the bank has often purposely omitted the “Svenska” part
of the formal name, marketing itself as “Handelsbanken” instead. <o:p></o:p></span></span></div>
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<ul>
<li><span style="font-family: Georgia, 'Times New Roman', serif;">In 1990, Handelsbanken acquired Malmö-based Skänska Banken,
which had 76 branches.</span></li>
<li><span style="font-family: Georgia, 'Times New Roman', serif;">Also in 1990, Handelsbanken bought
Norway's Oslo Handelsbanken.</span></li>
<li><span style="font-family: Georgia, 'Times New Roman', serif;">In 1991, Handelsbanken bought Stavanger
Bank of Norway.</span></li>
<li><span style="font-family: Georgia, 'Times New Roman', serif;">In 1995, Handelsbanken bought the healthy
parts of Finland's Skopbank.</span></li>
<li><span style="font-family: Georgia, 'Times New Roman', serif;">In 1997, Handelsbanken bought Swedish
mortgage provider Stadshypotek AB for SEK 23.0-billion (USD $3.28-billion).</span></li>
<li><span style="font-family: Georgia, 'Times New Roman', serif;">In 1998, Handelsbanken offered NOK 5.09-billion
(SEK 5.44-billion, USD $690-million) for Norway's Fokus Bank. However, within
days, Denmark's Den Danske Bank jumped into the foray. After a brief but
intense bidding war, Den Danske Bank raised its offer for Fokus to NOK
5.815-billion (SEK 6.222-billion, USD $778-million) and won the Norwegian bank.</span></li>
<li><span style="font-family: Georgia, 'Times New Roman', serif;">In 1999, Handelsbanken bought Norway's
Bergensbanken for NOK 1.55-billion (SEK 1.69-billion, USD $200-million).
Bergensbanken had 6 branches in Bergen, the second largest city in Norway.</span></li>
<li><span style="font-family: Georgia, 'Times New Roman', serif;">In 2000, Handelsbanken bought Swedish
mutual life insurer and pension fund manager SPP Livförsäkring AB and SPP
Fonder AB for SEK 7.1-billion (USD $734-million). The Swedish bank planned to
demutualize SPP as soon as feasible.</span></li>
<li><span style="font-family: Georgia, 'Times New Roman', serif;">In 2001, Handelsbanken bought Denmark's
Midtbank A/S for SEK 2.5-billion (DKK 2.05-billion, USD $245-million). Midtbank
had a strong presence in Denmark's Jutland region.</span></li>
<li><span style="font-family: Georgia, 'Times New Roman', serif;">In 2006, Handelsbanken's SPP Liv was
demutualized, and surpluses totalling SEK 2.5-billion (USD $326-million) were
distributed to the policyholders.</span></li>
<li><span style="font-family: Georgia, 'Times New Roman', serif;">In late 2007, Handelsbanken sold its
Swedish-based insurance and pensions division SPP to Norway's Storebrand
Holding AB for SEK 18.2-billion (EUR 2.6-billion, USD $2.62-billion).</span></li>
</ul>
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<span lang="EN-GB"><span style="font-family: Georgia, Times New Roman, serif;">Click here to return to the <a href="http://bankingmergers.blogspot.ca/2010/01/index-to-list-of-international-bank.html">index</a> page.</span></span></div>
BankingMergershttp://www.blogger.com/profile/09902839579660694793noreply@blogger.comtag:blogger.com,1999:blog-7475905699260929987.post-41425957441743645402014-12-25T10:42:00.003-05:002017-03-02T22:04:30.921-05:00Singapore Bank Mergers & Acquisitions (DBS Group Holdings)<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjaP-K0pU1XymBic3iZMx4cnHd7FDs15kdT4dKfKvNOWGihlZlik6bPWSpXYVbme5pDUZjjQ39IFdSIttVGEhMvQhHM-11SBnbVuWHaF7tL4riS7sa677Ak9HJLQbqjSvNvOiCqou0aKjs/s1600/DBS_HK.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="320" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjaP-K0pU1XymBic3iZMx4cnHd7FDs15kdT4dKfKvNOWGihlZlik6bPWSpXYVbme5pDUZjjQ39IFdSIttVGEhMvQhHM-11SBnbVuWHaF7tL4riS7sa677Ak9HJLQbqjSvNvOiCqou0aKjs/s1600/DBS_HK.jpg" width="240" /></a></div>
<br />
<span style="font-family: "georgia" , "times new roman" , serif;">A DBS bank branch in Hong Kong. Hong Kong is currently DBS' biggest market outside of Singapore.</span><br />
<span style="font-family: "georgia" , "times new roman" , serif;"><br /></span>
<span style="font-family: "georgia" , "times new roman" , serif;"><br /></span>
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<strong><span lang="EN-US" style="font-family: "georgia" , serif;">DBS Group Holdings Ltd.</span></strong><span lang="EN-US" style="font-family: "georgia" , serif;"><o:p></o:p></span></div>
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<strong><span lang="EN-US" style="font-family: "georgia" , serif;"><br /></span></strong></div>
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<span lang="EN-US" style="font-family: "georgia" , serif;">The Development Bank of Singapore (DBS) was established in
1968 by the government to nurture the young island nation’s fledgling
industries. The idea to establish such
a state-owned economic development bank was actually recommended by a UN report
commissioned by the Singaporean government.<o:p></o:p></span></div>
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<span lang="EN-US" style="font-family: "georgia" , serif;">Financial assistance offered by DBS included ordinary
commercial loans, equity participation (i.e. merchant banking) as well as loan
guarantees. During the 1970s, DBS also began
to engage in retail banking operations. DBS
began to seriously expand outside of Singapore in the 1990s and hope to
establish itself in neighbouring countries such as Indonesia, Thailand, Hong
Kong and the Philippines.<o:p></o:p></span></div>
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<span lang="EN-US" style="font-family: "georgia" , serif;">In 1999, the Singapore government removed restrictions of
foreign shareholdings on Singapore-incorporated banks. DBS promptly eliminated
the distinction between its “local” shares and “foreign” shares to allow foreign
investors freer access to DBS shares. For
many years, DBS had been indirectly, majority-owned by the Singaporean government,
but by 2014, over 70% of DBS is now owned by the public, with the Singaporean government
retaining the rest.<o:p></o:p></span></div>
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<span lang="EN-US" style="font-family: "georgia" , serif;">Recent transaction(s):<o:p></o:p></span></div>
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<ul>
<li><span style="font-family: "georgia" , serif;">In 1997, DBS established
a subsidiary in Indonesia.</span><span style="font-family: "georgia" , serif;"> </span><span style="font-family: "georgia" , serif;">Due to tight
control by Indonesia on foreign banks, DBS only had three branches in Indonesia
by 2004.</span></li>
<li><span style="font-family: "georgia" , serif;">In 1998, DBS bought POSbank
(formerly the Post Office Savings Bank) for SGD $1.6-billion, gaining
significant market share.</span></li>
<li><span style="font-family: "georgia" , serif;">In 1998, during the
Asian financial crisis that began in Thailand, DBS subscribed to a new share issue
of the ailing Thai Danu Bank for THB 6-billion and gained a 50.3% stake.</span><span style="font-family: "georgia" , serif;"> </span></li>
<li><span style="font-family: "georgia" , serif;">In 1998, DBS bought 60%
of the Philippines’ Bank of Southeast Asia for an immaterial amount.</span><span style="font-family: "georgia" , serif;"> </span><span style="font-family: "georgia" , serif;">The bank was renamed DBS Philippines.</span></li>
<li><span style="font-family: "georgia" , serif;">In 1999, DBS acquired a 7.4% stake in the Philippines’ Far
East Bank & Trust Company, which was being merged into the Bank of the
Philippine Islands (BPI).</span><span style="font-family: "georgia" , serif;"> </span><span style="font-family: "georgia" , serif;">Following the merger,
DBS’s stake in BPI was 2.4%.</span></li>
<li><span style="font-family: "georgia" , serif;">Later in 1999, DBS bought a further 19.7% stake in the Bank
of the Philippine Islands (BPI) for SGD $1.2-billion.</span><span style="font-family: "georgia" , serif;"> </span><span style="font-family: "georgia" , serif;">The purchase was part of DBS’s strategy to
make Singapore, Thailand, Indonesia, Hong Kong and the Philippines its core
markets.</span></li>
<li><span style="font-family: "georgia" , serif;">Also in 1999, DBS bought
Hong Kong's Kwong On Bank from several shareholders that included Japan's Fuji
Bank, for SGD $879-million. </span><span style="font-family: "georgia" , serif;"> </span><span style="font-family: "georgia" , serif;">Kwong On had
32 branches in Hong Kong.</span></li>
<li><span style="font-family: "georgia" , serif;">In 2000, DBS bought out
the 15% stake in PT Bank DBS Buana from joint-venture partner PT Bank Buana. DBS
had several years earlier already acquired 85% of PT Mitsubishi Buana Bank from
Japan’s Mitsubishi Bank.</span><span style="font-family: "georgia" , serif;"> </span><span style="font-family: "georgia" , serif;">PT Bank DBS
Buana was renamed PT Bank DBS Indonesia.</span></li>
<li><span style="font-family: "georgia" , serif;">In 2001, DBS acquired
59.5% of Singapore stockbroker Vickers Ballas Holdings for SGD $444-million.</span></li>
<li><span style="font-family: "georgia" , serif;">In 2001, DBS acquired 87.3%
of Hong Kong's Dao Heng Bank (as well as Dao Heng’s local subsidiary Oversea
Trust Bank) for HKD $41.9-billion (USD $5.40-billion) from its Malaysian parent
Guoco Group and from the public shareholders. Dao Heng operated 70 branches and
80 ATMs.</span><span style="font-family: "georgia" , serif;"> </span><span style="font-family: "georgia" , serif;">Initially known as DBS Dao Heng
Bank, the Hong Kong operations were re-branded as DBS Bank (Hong Kong)
subsequently.</span></li>
<li><span style="font-family: "georgia" , serif;">In 2001, DBS sold its
tiny DBS Philippines (chiefy the former Bank of Southeast Asia) to the Bank of
The Philippine Islands (BPI) for SGD $55-million (PHP 1.6-billion) in cash. DBS
had held 21% of the BPI since 1999.</span></li>
<li><span style="font-family: "georgia" , serif;">In 2001, DBS made a
hostile offer for Singapore rival Overseas Union Bank for SGD $9.44-billion.
However, United Overseas Bank subsequently won Overseas Union Bank with a
higher, SGD $10.2-billion and DBS withdrew its offer.</span></li>
<li><span style="font-family: "georgia" , serif;">In 2002, DBS acquired
the remaining 12.7% of DBS Dao Heng Bank for HKD $904-million (SGD
$211-million).</span><span style="font-family: "georgia" , serif;"> </span><span style="font-family: "georgia" , serif;">Following the purchase,
DBS Dao Heng became a wholly-owned subsidiary of DBS.</span></li>
<li><span style="font-family: "georgia" , serif;">In 2004, DBS Thai Danu
Bank agreed to a three-way merger with the Industrial Finance Corp. of
Thailand, and the much larger Thai Military Bank, creating the 6</span><sup style="font-family: Georgia, serif;">th</sup><span style="font-family: "georgia" , serif;">
largest bank in Thailand with 426 branches and 953 ATMs.</span><span style="font-family: "georgia" , serif;"> </span><span style="font-family: "georgia" , serif;">Prior to the merger, DBS Thai Danu had 62
branches in Thailand. Following the merger, DBS would hold 16.1% of the
enlarged Thai Military Bank.</span></li>
<li><span style="font-family: "georgia" , serif;">In 2007, another banking
crisis in Thailand necessitated further re-capitalization of the Thai Military
Bank, which private investors, including DBS, refused to subscribe to, due to
poor governance at the Thai bank and hostility of the Thai government towards
Singaporean companies.</span><span style="font-family: "georgia" , serif;"> </span><span style="font-family: "georgia" , serif;">As a result, DBS’
stake in Thai Military Bank was diluted to 7.2% from 16.1%.</span></li>
<li><span style="font-family: "georgia" , serif;">In 2008, DBS received
TWD 44.5-billion (USD $1.4-billion) in subsidy from the Taiwan government to
take over the operations of failed Bowa Commercial Bank. Bowa Commercial Bank
operated 42 branches in Taiwan.</span></li>
<li><span style="font-family: "georgia" , serif;">In April 2012, Singapore
state-owned Temasek and DBS reached an agreement under which Temasek would
transfer its 67.4% stake in Indonesia’s PT Bank Danamon to DBS in return for a
10.9% stake in DBS. Temasek already owned a 29.5% stake in DBS before the proposed
transaction.</span><span style="font-family: "georgia" , serif;"> </span><span style="font-family: "georgia" , serif;">DBS also offered to buy out
the 32.6% minority share holdings of Bank Danamon, which valued the entire bank
at IDR 66.4-trillion (SGD $9.1-billion, USD $7.2-billion). </span><span style="font-family: "georgia" , serif;"> </span><span style="font-family: "georgia" , serif;">PT Bank Danamon operated about 3,000 branches
in Indonesia.</span><span style="font-family: "georgia" , serif;"> </span><span style="font-family: "georgia" , serif;">However, the deal died in
2013 following failure to gain approval from the Indonesian government.</span></li>
<li><span style="font-family: "georgia" , serif;">In October 2012, DBS
sold a 10.4% stake of the 20.3% interest it held in the Bank of The Philippine
Islands (BPI) for SGD $757-million (PHP 25.6-billion).</span></li>
<li><span style="font-family: "georgia" , serif;">In July 2013, following over
a year of inaction from the Indonesian central bank to grant approval on the sale
of PT Bank Danamon by Temasek to DBS, the latter announced that the deal had
officially died.</span><span style="font-family: "georgia" , serif;"> </span><span style="font-family: "georgia" , serif;">Indonesia was averse to
allowing competitive and powerful foreign banks to gain significant market share
in the backward domestic banking system. The news dealt a major blow to DBS’s
long-term strategy to make Indonesia one of its core markets. Without gaining Bank Danamon, DBS' operations in Indonesia numbered only 39 branches from its DBS Bank Buana subsidiary.</span></li>
<li><span style="font-family: "georgia" , serif;">In November 2013, DBS
sold its remaining 9.9% stake in BPI for SGD $850-million (USD $681-million,
PHP 29.6-billion). With the sale, DBS abandoned an earlier plan to make the
Philippines a core market.</span></li>
<li><span style="font-family: "georgia" , serif;">In
March 2014, DBS bought Société Générale’s Asian private banking business for
USD $220-million.</span><span style="font-family: "georgia" , serif;"> </span><span style="font-family: "georgia" , serif;">The business purchased
had USD $12.6-billion of assets under management.</span></li>
<li><span style="font-family: "georgia" , serif;">In October 2016, DBS bought Australian bank ANZ's small retail and wealth management businesses in Singapore, Hong Kong, China, Taiwan and Indonesia for SGD $110-million over book value. The purchase would add SGD $17-billion of deposits, SGD $11-billion of loans and SGD $23-billion of assets under management to DBS.</span></li>
</ul>
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<span style="font-family: "georgia" , serif;">Click here to return to the <a href="http://bankingmergers.blogspot.ca/2010/01/index-to-list-of-international-bank.html">index</a> page.</span></div>
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BankingMergershttp://www.blogger.com/profile/09902839579660694793noreply@blogger.comtag:blogger.com,1999:blog-7475905699260929987.post-76399974451251083342014-10-10T22:42:00.000-04:002014-10-10T22:43:27.882-04:00Russia Bank Mergers & Acquisitions (Sberbank of Russia)<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhwz9SYen-N56c7keNfHjMgjkBaF_j_7FZCP-9vqhh_F5HogAs46Q3xgk4H3aC1nS6mCTjG8TjGS0QSAIw-QgUY66BrBfqIEY_jiihWknnq9Saj3SticT-NmMAGaNyM9h3KP7ere030UNI/s1600/Sberbank_SPIEF2014.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhwz9SYen-N56c7keNfHjMgjkBaF_j_7FZCP-9vqhh_F5HogAs46Q3xgk4H3aC1nS6mCTjG8TjGS0QSAIw-QgUY66BrBfqIEY_jiihWknnq9Saj3SticT-NmMAGaNyM9h3KP7ere030UNI/s1600/Sberbank_SPIEF2014.jpg" height="212" width="320" /></a></div>
<br />
<span style="font-family: Georgia, Times New Roman, serif;">Sberbank's promotional display at the St. Petersburg International Economic Forum (SPIEF) 2014.</span><br />
<span style="font-family: Georgia, Times New Roman, serif;"><br /></span>
<span style="font-family: Georgia, Times New Roman, serif;">Photo source: Sberbank of Russia's web site.</span><br />
<span style="font-family: Georgia, Times New Roman, serif;"><br /></span>
<span style="font-family: Georgia, Times New Roman, serif;"><br /></span>
<span style="font-family: Georgia, Times New Roman, serif;"><b>Sberbank of Russia</b></span><br />
<span style="font-family: Georgia, Times New Roman, serif;"><br /></span>
<br />
<div class="MsoNormal">
<span lang="EN-US" style="line-height: 115%;"><span style="font-family: Georgia, Times New Roman, serif;">Sberbank is Russia’s oldest
bank and the only surviving one that traces its history back to the Imperial era. The massive bank is today a state-owned
commercial bank but also a publicly-listed company. The bank’s name means “Savings Bank” in
Russian.<o:p></o:p></span></span></div>
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<span lang="EN-US" style="line-height: 115%;"><span style="font-family: Georgia, Times New Roman, serif;"><br /></span></span></div>
<div class="MsoNormal">
<span lang="EN-US" style="line-height: 115%;"><span style="font-family: Georgia, Times New Roman, serif;">In 1841, Russian Emperor
Nikolai I (known as Nicholas I in English) decreed the creation of a savings
bank with offices in Moscow and St. Petersburg to encourage the population to
save and keep safe their excess cash at a bank rather than, say, in a jar in
their homes. A royal court advisor
became the savings bank’s first customer.
Over the next 20 years, the savings bank opened another 45 offices in
nearly all of Russia’s regional capitals.
<o:p></o:p></span></span></div>
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<span lang="EN-US" style="line-height: 115%;"><span style="font-family: Georgia, Times New Roman, serif;"><br /></span></span></div>
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<span lang="EN-US" style="line-height: 115%;"><span style="font-family: Georgia, Times New Roman, serif;">The bank soon launched
an awareness program to promote its savings account. Despite the campaign, most of the savings
bank’s clients were still wealthy merchants, craftsmen, government officials
and courtiers. The average Russian peasant
or labourer simply wouldn’t possess enough free cash to be put away in a bank, a
situation that was not uncommon at the time even for a vast majority in Western
Europe.<o:p></o:p></span></span></div>
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<span lang="EN-US" style="line-height: 115%;"><span style="font-family: Georgia, Times New Roman, serif;"><br /></span></span></div>
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<span lang="EN-US" style="line-height: 115%;"><span style="font-family: Georgia, Times New Roman, serif;">In 1860, Tsar Alexander
II carried out banking reforms and established the Gosbank (The State Bank of
the Russian Empire). The state’s savings
bank was transferred to Gosbank.<o:p></o:p></span></span></div>
<div class="MsoNormal">
<span lang="EN-US" style="line-height: 115%;"><span style="font-family: Georgia, Times New Roman, serif;"><br /></span></span></div>
<div class="MsoNormal">
<span lang="EN-US" style="line-height: 115%;"><span style="font-family: Georgia, Times New Roman, serif;">Meanwhile, it wasn’t
until the 1880s, some two decades after the abolition of serfdom, that income
and money became more widespread for the vast majority of people in Russia’s
far-flung countryside. Meanwhile,
Gosbank opened a large number of savings bureau desks at customs, telegraph,
and local treasury offices in rural villages.
By 1895, over 3,800 savings bureau outlets served over two million
individual accounts, up from 47 offices and only 140,000 accounts back in 1865. In 1905, the saving bank’s outlets began to sell
insurance, offering a state-operated alternative to private insurance companies.<o:p></o:p></span></span></div>
<div class="MsoNormal">
<span lang="EN-US" style="line-height: 115%;"><span style="font-family: Georgia, Times New Roman, serif;"><br /></span></span></div>
<div class="MsoNormal">
<span lang="EN-US" style="line-height: 115%;"><span style="font-family: Georgia, Times New Roman, serif;">It is worth noting that Russia’s
savings bank operated in a rather different manner than its counterparts in
Western Europe, which tended to be local and small-scale, and whose mandates were
to make mortgage loans to local town people, or to finance local agricultural,
educational, infrastructural, heritage or charitable projects. Under the control of Gosbank, the Russian
model was state-owned, colossal, nation-wide and aimed to channel savings from millions
of “little folks” into the state coffers.
During the late 19<sup>th</sup> and early 20<sup>th</sup> centuries,
Gosbank financed massive railway construction and supported industries using
the low-cost savings amassed from the public.
The Russian government also relied on the population’s deposits in
Gosbank to finance the Russo-Japanese War (1904 to 1905), which, to the shock
of many observers, saw Russia easily and soundly defeated by Japan.<o:p></o:p></span></span></div>
<div class="MsoNormal">
<span lang="EN-US" style="line-height: 115%;"><span style="font-family: Georgia, Times New Roman, serif;"><br /></span></span></div>
<div class="MsoNormal">
<span lang="EN-US" style="line-height: 115%;"><span style="font-family: Georgia, Times New Roman, serif;">The 1910s were volatile
times around the world. The Industrial
Revolution between 1760s and 1850s transformed the European economy from
agricultural to industrial; and machines in relatively a short period of time
displaced and replaced millions of workers first from the farm, then even in
factories. By the late 19<sup>th</sup>
and early 20<sup>th</sup> centuries, millions of poor peasants and workers who
lived in filthy and over-crowded slumps would longer accept the status quo of
being controlled and suppressed by a tiny minority of ruling monarchy,
aristocracy and wealthy industrialists.
This gave rise to a anti-establishment, socialist labour movement across
Europe from Great Britain and Ireland all the way to Russia and beyond.<o:p></o:p></span></span></div>
<div class="MsoNormal">
<span lang="EN-US" style="line-height: 115%;"><span style="font-family: Georgia, Times New Roman, serif;"><br /></span></span></div>
<div class="MsoNormal">
<span lang="EN-US" style="line-height: 115%;"><span style="font-family: Georgia, Times New Roman, serif;">Meanwhile, the
conservative, feudal and imperialist old guards who had ruled large parts of Europe
for centuries were unprepared and largely still unwilling to adjust to the social,
economic and geo-political upheavals of the industrial age. In June 1914, a Serbian nationalist in Bosnia
opposed to the Austro-Hungarian Empire’s threatening influence over Serbia
assassinated Archduke Franz Ferdinand, setting off World War I one month later.
<o:p></o:p></span></span></div>
<div class="MsoNormal">
<span lang="EN-US" style="line-height: 115%;"><span style="font-family: Georgia, Times New Roman, serif;"><br /></span></span></div>
<div class="MsoNormal">
<span lang="EN-US" style="line-height: 115%;"><span style="font-family: Georgia, Times New Roman, serif;">Imperial Russia’s
failure to address and reform its archaic economic, social and political
structures gave rise to increasing discontent amongst the vast majority of
destitute people. This, combined with
the hardship and famine of World War I, finally boiled over and led to the
February Revolution in 1917, which overthrew the Tsar and created the Russian
Republic. The republic’s provisional
government didn’t last long, however, and eight months later was itself toppled by the
soviets in the Bolshevik Revolution.<o:p></o:p></span></span></div>
<div class="MsoNormal">
<span lang="EN-US" style="line-height: 115%;"><span style="font-family: Georgia, Times New Roman, serif;"><br /></span></span></div>
<div class="MsoNormal">
<span lang="EN-US" style="line-height: 115%;"><span style="font-family: Georgia, Times New Roman, serif;">The years following the
1917 revolutions were tumultuous in Russia.
The soviets aimed to transform Russia into a state-controlled society in
which private businesses were increasingly threatened. All private-sector banks were shut down and
nationalized in October 1917. Confusion
and distrust over the state’s affairs first led to a sharply reduced purchasing
power of the Russian currency, then a withdrawal of money. The Russian economy reverted back to a barter
system under which food and other basic necessities became extremely scarce,
and the volume of economic activity plummeted.<o:p></o:p></span></span></div>
<div class="MsoNormal">
<span lang="EN-US" style="line-height: 115%;"><span style="font-family: Georgia, Times New Roman, serif;"><br /></span></span></div>
<div class="MsoNormal">
<span lang="EN-US" style="line-height: 115%;"><span style="font-family: Georgia, Times New Roman, serif;">The role of Gosbank underwent
a period of chaos following the 1917 revolutions, as the Bolsheviks aimed to
abolish private ownership of properties and economic production, and to transform
Russia into a system where the state-capitalist monopoly controls and owns
everything on behalf of the people (“common ownership, hence “communism”). The new Russia was supposed to be classless,
wageless and moneyless: the state would manage the production and supply of
everything, and distribute them evenly and fairly amongst its 95 to 100 million
people. In such a society, the idea of
banking would have been absurd indeed.
In 1920, remnants of the old Gosbank were dissolved. Merely one year later, the unfeasibility of a
moneyless society became apparent, and a new Gosbank was re-established,
becoming the State Bank of the USSR in 1923.
(In 1922, Russia, Ukraine, Belarus and Transcaucasia amalgamated to form
the Union of Soviet Socialist Republics, also known as the USSR or the Soviet
Union.) <o:p></o:p></span></span></div>
<div class="MsoNormal">
<span lang="EN-US" style="line-height: 115%;"><span style="font-family: Georgia, Times New Roman, serif;"><br /></span></span></div>
<div class="MsoNormal">
<span lang="EN-US" style="line-height: 115%;"><span style="font-family: Georgia, Times New Roman, serif;">In the early 1930s, the
State Bank of the USSR was transformed into a central bank managing money
circulation and regulating short-term credit.
Meanwhile, four sector-specific banks were organized to carry out Soviet
Union’s long-term state economic plans:
Prombank (for industrial development), Sel’khozbank (for agricultural
development), Vsekobank (Co-operative Bank) and Tsekombank (for communal and
housing development).<o:p></o:p></span></span></div>
<div class="MsoNormal">
<span lang="EN-US" style="line-height: 115%;"><span style="font-family: Georgia, Times New Roman, serif;"><br /></span></span></div>
<div class="MsoNormal">
<span lang="EN-US" style="line-height: 115%;"><span style="font-family: Georgia, Times New Roman, serif;">During the next five
decades, in a typical communist state fashion, banking policies and regulations
switched course several times. Many
functions of Prombank, Sel’khozbank, Vsekobank and Tsekombank were transferred
back to the State Bank in 1959. Four
years later, the savings bank operations also joined the State Bank. By now, the State Bank held central bank functions,
but also acted as a deposit bank and a long-term economic development bank.<o:p></o:p></span></span></div>
<div class="MsoNormal">
<span lang="EN-US" style="line-height: 115%;"><span style="font-family: Georgia, Times New Roman, serif;"><br /></span></span></div>
<div class="MsoNormal">
<span lang="EN-US" style="line-height: 115%;"><span style="font-family: Georgia, Times New Roman, serif;">In the mid-1980s, reform-minded
Soviet leader Mikhail Gorbachev adopted policies of glasnost (“openness”) and
perestroika (“restructuring”), which led to the separation of functions between
the central bank (State Bank of the USSR) and those banks whose mandates are to
accept deposits and finance economic development. In other words, a model that somewhat
resembles the banking structure in the capitalist world. By 1987, five sectorial banks were (re-)established:
namely Vneshekonombank (Foreign Trade Bank), Promstroilbank (for industrial
development), Zhilsotsbank (for housing development), Agrobank (for
agriculture) and Sberbank. The newly
spun-off Sberbank (Savings Bank of the USSR) served as the umbrella institution
for the many savings banks of the Soviet Union.
<o:p></o:p></span></span></div>
<div class="MsoNormal">
<span lang="EN-US" style="line-height: 115%;"><span style="font-family: Georgia, Times New Roman, serif;"><br /></span></span></div>
<div class="MsoNormal">
<span lang="EN-US" style="line-height: 115%;"><span style="font-family: Georgia, Times New Roman, serif;">Meanwhile, a bureaucratic,
corrupt and de facto bankrupt economy led to the collapse of the Soviet Union in
1991. During the next two decades,
Russia underwent uncertain political, social and economic changes as liberal reformers
fought the ultra-conservative hardliners for control of Russia. Despite this ideological struggle, banking
reforms in Russia did continue and in 1991, Sberbank was restructured into a
joint-stock company named Sberbank of Russia, though it remains state-owned. <o:p></o:p></span></span></div>
<div class="MsoNormal">
<span lang="EN-US" style="line-height: 115%;"><span style="font-family: Georgia, Times New Roman, serif;"><br /></span></span></div>
<div class="MsoNormal">
<span lang="EN-US" style="line-height: 115%;"><span style="font-family: Georgia, Times New Roman, serif;">With its status as the
incumbent monopoly institution responsible for accepting and safekeeping personal
deposits, Sberbank held 90% of all household savings in Russia in 1990. Though Sberbank’s market share fell in
subsequent years, it has a great competitive advantage over newer, private
competitors due to its majority state ownership and the implied, unlimited
state-sponsored deposit guarantee that comes with it.<o:p></o:p></span></span></div>
<div class="MsoNormal">
<span lang="EN-US" style="line-height: 115%;"><span style="font-family: Georgia, Times New Roman, serif;"><br /></span></span></div>
<div class="MsoNormal">
<span lang="EN-US" style="line-height: 115%;"><span style="font-family: Georgia, Times New Roman, serif;">Compared with Western
banking systems, Russia’s banks remained rudimentary and backward well into the
1990s. Sberbank, for example, only
installed its first ATMs in 1993; other financial products such as credit cards
were also introduced some two to three decades after its Western counterparts.<o:p></o:p></span></span></div>
<div class="MsoNormal">
<span lang="EN-US" style="line-height: 115%;"><span style="font-family: Georgia, Times New Roman, serif;"><br /></span></span></div>
<div class="MsoNormal">
<span lang="EN-US" style="line-height: 115%;"><span style="font-family: Georgia, Times New Roman, serif;">As a major step to
transform Sberbank into a market-driven company, shares of Sberbank were
floated on the Moscow stock exchange in 1996.<o:p></o:p></span></span></div>
<div class="MsoNormal">
<span lang="EN-US" style="line-height: 115%;"><span style="font-family: Georgia, Times New Roman, serif;"><br /></span></span></div>
<div class="MsoNormal">
<span lang="EN-US" style="line-height: 115%;"><span style="font-family: Georgia, Times New Roman, serif;">As of 2014, Bank of
Russia (the central bank) holds 50% plus one share of Sberbank. Sberbank today serves over 100-million
clients through 18,400 branches, 68,000 bank machines and self-serve terminals,
and on-line apps. It operates internationally in Kazakhstan, Ukraine
and Belarus, nine other countries in Central and Eastern Europe, and Turkey.<o:p></o:p></span></span></div>
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<span lang="EN-US" style="line-height: 115%;"><span style="font-family: Georgia, Times New Roman, serif;"><br /></span></span></div>
<div class="MsoNormal">
<span lang="EN-US" style="line-height: 115%;"><span style="font-family: Georgia, Times New Roman, serif;">Recent transaction(s):<o:p></o:p></span></span></div>
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<span lang="EN-US" style="line-height: 115%;"><span style="font-family: Georgia, Times New Roman, serif;"><br /></span></span></div>
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</div>
<ul>
<li><span style="font-family: Georgia, 'Times New Roman', serif; line-height: 115%;">In 2007, Sberbank bought
NRB-Ukraine from another Russian bank for USD $15o-million.</span></li>
<li><span style="font-family: Georgia, 'Times New Roman', serif; line-height: 115%;">In 2009, Sberbank bought
93% of BPS Bank (originally Belpromstroilbank) in Belarus, renaming it BPS-Sberbank
subsequently.</span></li>
<li><span style="font-family: Georgia, 'Times New Roman', serif; line-height: 115%;">In 2011, Sberbank
acquired Volksbank International AG excluding Volksbank Romania for between Eur
585 million to Eur 645 million (amount dependent on a number of future factors)</span><a href="https://www.blogger.com/null" name="_GoBack" style="font-family: Georgia, 'Times New Roman', serif; line-height: 115%;"></a><span style="font-family: Georgia, 'Times New Roman', serif; line-height: 115%;">.</span><span style="font-family: Georgia, 'Times New Roman', serif; line-height: 115%;"> </span><span style="font-family: Georgia, 'Times New Roman', serif; line-height: 115%;">The sellers were Austria’s
Österreichische Volksbanken, German co-operative bank group DZ Bank, another
German bank WGZ Bank, and France’s co-operative bank group BPCE.</span><span style="font-family: Georgia, 'Times New Roman', serif; line-height: 115%;"> </span><span style="font-family: Georgia, 'Times New Roman', serif; line-height: 115%;">The operations that Sberbank purchased
(excluding the Romanian operations) had 291 branches and over 600,000 clients
in Bosnia and Herzegovina, Croatia, Czech Republic, Hungary, Serbia, Slovakia and
Slovenia.</span><span style="font-family: Georgia, 'Times New Roman', serif; line-height: 115%;"> </span><span style="font-family: Georgia, 'Times New Roman', serif; line-height: 115%;">This was Sberbank’s first
expansion outside of the Commonwealth of Independent States.</span></li>
<li><span style="font-family: Georgia, 'Times New Roman', serif; line-height: 115%;">In
2012, Sberbank acquired 99.85% of Turkey’s DenizBank from Belgium’s Dexia group
for TRY 6.47 billion (Eur 2.82-billion, USD $3.50-billion). DenizBank had 592
branches across Turkey and 15 overseas.</span></li>
</ul>
<br />
<span lang="EN-US" style="line-height: 115%;"><span style="font-family: Georgia, Times New Roman, serif;"><br /></span></span>
<span lang="EN-US" style="line-height: 115%;"><span style="font-family: Georgia, Times New Roman, serif;"><br /></span></span>
<span lang="EN-US" style="line-height: 115%;"><span style="font-family: Georgia, Times New Roman, serif;">Click here to return to the <a href="http://bankingmergers.blogspot.ca/2010/01/index-to-list-of-international-bank.html">index</a> page.</span></span>BankingMergershttp://www.blogger.com/profile/09902839579660694793noreply@blogger.comtag:blogger.com,1999:blog-7475905699260929987.post-40631840565108076182014-04-17T21:51:00.001-04:002018-05-24T10:20:09.751-04:00United States Bank Mergers & Acquisitions (Fifth Third Bancorp)<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiIeuPQ9ZqoTdXeI33XtcPOtf6UlkOJhzPvusFpWz9KHLIOdnTdki29dIzhWdn1to93Qh7XcXZKEliEwzVO0TnJ9UGosGYc4DXedl-bD1t3XU9FxraeqCRNugnSMu4E5-Gy6EEUDt1KbI4/s1600/FifthThirdBankSandusky.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="320" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiIeuPQ9ZqoTdXeI33XtcPOtf6UlkOJhzPvusFpWz9KHLIOdnTdki29dIzhWdn1to93Qh7XcXZKEliEwzVO0TnJ9UGosGYc4DXedl-bD1t3XU9FxraeqCRNugnSMu4E5-Gy6EEUDt1KbI4/s1600/FifthThirdBankSandusky.jpg" width="240" /></a></div>
<br />
<span style="font-family: "georgia" , "times new roman" , serif;">Photo: A Fifth Third Bank branch in Sandusky, Ohio.</span><br />
<span style="font-family: "georgia" , "times new roman" , serif;"><br /></span>
<span style="font-family: "georgia" , "times new roman" , serif;"><br /></span>
<span style="font-family: "georgia" , "times new roman" , serif;"><b>Fifth Third Bancorp</b></span><br />
<span style="font-family: "georgia" , "times new roman" , serif;"><br /></span>
<br />
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<strong><span lang="EN-US" style="font-weight: normal; mso-bidi-font-weight: bold;"><span style="font-family: "georgia" , "times new roman" , serif;">The history of the U.S. banking system has been one
of instability. It is indeed ironic that
the world’s most productive and innovative economy also has a banking system
that has seen periodic booms and busts, and a regulatory environment that has
swung from extreme liberalism to extreme regulation. For much of the 18<sup>th</sup> and 19<sup>th</sup>
centuries, no nationwide regulation even existed; each state had its own
(however loose) laws governing the state’s banking system. In the late 19<sup>th</sup> century, well
over 1,000 banks across the U.S. issued their own banknotes, each backed by various
degree of capital reserves. Due to this
lack of regulation, many unscrupulous fraudsters would establish what was known
as “wildcat banks,” quickly issuing as many banknotes as possible and using
this money to purchase goods, other hard assets, or exchanging their own notes
for other more reliable banknotes, then suddenly disappearing with the loots.
As a matter of fact, during the first half of the 19<sup>th</sup> century, half
of all U.S. banks would fail periodically, to be replaced by other equally
unreliable new banks.<o:p></o:p></span></span></strong></div>
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<strong><span lang="EN-US" style="font-weight: normal; mso-bidi-font-weight: bold;"><span style="font-family: "georgia" , "times new roman" , serif;">This finally changed in 1863, when the Congress
passed the National Banking Act, creating for the first time a national banking
registration and regulatory framework.
This federal bank act created the distinction between
nationally-chartered and regulated banks and banks authorized and chartered at
the state level. Under the 1863 Act,
only national banks subject to a strict capital reserve requirement were
permitted to issue banknotes. This legal
change not only prompted many former state banks to re-organize and apply for a
national charter, but also the establishments of many new national banks. However, many banks also opted to keep their
state charters without switching to a national charter. Further complicating things, national banks
are still subject to many state bank regulations at the local level.<o:p></o:p></span></span></strong></div>
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<strong><span lang="EN-US" style="font-weight: normal; mso-bidi-font-weight: bold;"><span style="font-family: "georgia" , "times new roman" , serif;">It should be noted that the term “national bank” in
this context refers to a “bank with a national charter,” and does not suggest a
bank with a nationwide branch network.
Quite the contrary, the United States for a very long time heavily
regulated where their banks could or could not operate. Many states allowed their state banks to
offer service from just the head office (i.e. “branching” was forbidden)
whereas some states permitted branch banking. Meanwhile, the nationally-chartered
banks were not allowed to offer branch banking at all.<o:p></o:p></span></span></strong></div>
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<strong><span lang="EN-US" style="font-weight: normal; mso-bidi-font-weight: bold;"><span style="font-family: "georgia" , "times new roman" , serif;">In order to be fair to both state banks and national
banks, the U.S. Congress in 1927 passed the McFadden Act, which basically
accorded the same “branching rights” to national banks as to state banks. As state-chartered banks were not permitted
to operate outside of their home states, the McFadden Act forbade national
banks based in one state from branching out into another state. This restriction is why the 1927 McFadden Act
is known as the law that banned “inter-state banking.”<o:p></o:p></span></span></strong></div>
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<strong><span lang="EN-US" style="font-weight: normal; mso-bidi-font-weight: bold;"><span style="font-family: "georgia" , "times new roman" , serif;">It is under such a complex environment that in 1863,
the Third National Bank of Cincinnati was founded, the name was adopted because
there existed already the First National Bank of Cincinnati and the Second
National Bank of Cincinnati. In 1871,
the Third National Bank acquired the Bank of the Ohio Valley (founded 1858) and
became the largest bank in the state of Ohio.<o:p></o:p></span></span></strong></div>
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<strong><span lang="EN-US" style="font-weight: normal; mso-bidi-font-weight: bold;"><span style="font-family: "georgia" , "times new roman" , serif;">Meanwhile, in 1888, the Queen City National Bank,
founded six years earlier, underwent a re-organization and somehow condescended
to the new name of The Fifth National Bank of Cincinnati.<o:p></o:p></span></span></strong></div>
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<strong><span lang="EN-US" style="font-weight: normal; mso-bidi-font-weight: bold;"><span style="font-family: "georgia" , "times new roman" , serif;">In 1907, a widespread credit and confidence crisis
in the U.S. led to nationwide bank runs; the weakened Fifth National Bank of
Cincinnati in 1908 agreed to combine with the Third National Bank of Cincinnati
to form the Fifth Third National Bank of Cincinnati. Then in 1919, Fifth Third National became
affiliated with an Ohio state-chartered financial firm called the Union Savings
Bank & Trust Company, which was renamed the Union Trust Company in 1923. Fifth
Third National’s affiliation with the state-chartered firm gave it the ability
to circumvent (as a national bank) the restriction against having branches, and
the bank acquired a number of smaller banks around the city of Cincinnati
during the 1920s.<o:p></o:p></span></span></strong></div>
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<strong><span lang="EN-US" style="font-weight: normal; mso-bidi-font-weight: bold;"><span style="font-family: "georgia" , "times new roman" , serif;">In 1927, Fifth Third National and Union Trust
finally fully consolidated, and adopted the name Fifth Third Union Trust
Company. As one of the stronger banks in
Ohio, the bank took over three insolvent banks between 1930 and 1933, in the
midst of the Great Depression.<o:p></o:p></span></span></strong></div>
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<strong><span lang="EN-US" style="font-weight: normal; mso-bidi-font-weight: bold;"><span style="font-family: "georgia" , "times new roman" , serif;">The rest of the 1930s and 1940s saw few significant changes
for Fifth Third Union Trust. During the 1950s and 1960s, the bank consolidated a
number of small banks within the state of Ohio.
The rapid growth in consumerism saw the gradual shift from commercial
banking to personal banking for the bank.
In 1969, Fifth Third Union Trust adopted a simplified name: Fifth Third
Bank. Five years later, a holding company called the Fifth Third Bancorp was
created. Still, despite a history of
consolidations over a century, Fifth Third as recent as in 1976 only had 37
branches around the Cincinnati county.<o:p></o:p></span></span></strong></div>
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<strong><span lang="EN-US" style="font-weight: normal; mso-bidi-font-weight: bold;"><span style="font-family: "georgia" , "times new roman" , serif;">State and federal restrictions on branch banking
finally relaxed in the 1980s, first allowing Ohio banks to open branches
outside of their home counties, then certain states within the same region
began to permit each other’s banks to cross state borders. In 1985, Fifth Third Bank acquired the
American National Bank of Newport, just across the Ohio-Kentucky state line. Even though Newport is part of the
Metropolitan Cincinnati area, as it is in the state of Kentucky, Fifth Third
was now allowed to operate there until the legislation change of 1985. Suddenly
liberated from the branching restrictions, Fifth Third quickly acquired more
banks in northern Ohio, Kentucky and Indiana (the state to the west of Ohio).<o:p></o:p></span></span></strong></div>
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<strong><span lang="EN-US" style="font-weight: normal; mso-bidi-font-weight: bold;"><span style="font-family: "georgia" , "times new roman" , serif;">The decade from 1985 to 1996, however, was otherwise
very turbulent times in the American banking system. A sudden sharp rise in interest rates due to
soaring inflation caught the savings and loans (S&Ls, as banking
co-operatives are known in the U.S.) off-guard, as their business model relied
on using personal deposits as the source of capital, then lending it as mortgage
loans to borrowers. As personal deposits are often short-term and open in
nature, but the mortgage loans are of longer and fixed-terms, as interest rates
spiralled in the early 1980s, the S&Ls found their cost of capital
(interest rates paid to personal deposits) rising high above the rate of returns
(mortgage loan rates that were fixed before the sudden interest rate jumps). Before long, the S&Ls were suffering from
severe losses from the asset-liability mis-match. At the same time, the credit
crisis led to a sharp drop in real estate prices and the overall economy, and
mortgage defaults skyrocketed. As
capital was depleted, many S&Ls became insolvent. The situation became so dire that even the
government-run deposit insurance schemes at quite a few states went bankrupt.<o:p></o:p></span></span></strong></div>
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<strong><span lang="EN-US" style="font-weight: normal; mso-bidi-font-weight: bold;"><span style="font-family: "georgia" , "times new roman" , serif;">Fifth Third, being a more cautiously-run bank, took
advantage of the crisis and absorbed many smaller rivals in financial trouble
throughout the late 1980s and early 1990s, and slowly but surely expanded its
branch network and market share. Then in
1992, Fifth Third held private talks to merge with Ohio rival Star Banc Corp.,
which traces its history to the First National Bank of Cincinnati. However, the discussion failed to result in a
deal. (Star Banc Corp. eventually became
U.S. Bancorp.)<o:p></o:p></span></span></strong></div>
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<strong><span lang="EN-US" style="font-weight: normal; mso-bidi-font-weight: bold;"><span style="font-family: "georgia" , "times new roman" , serif;">In 1994, Fifth Third made two acquisitions. First, it bought the Cumberland Federal
Bancorporation for USD $149-million, gaining 43 branches across Kentucky. Later in the same year, it bought Falls
Financial for USD $76-million. Falls
Financial was a small bank based in northeastern Ohio. Then in 1995, Fifth Third bought a small bank
in Florida called the Bank of Naples, which had three branches.<o:p></o:p></span></span></strong></div>
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<strong><span lang="EN-US" style="font-weight: normal; mso-bidi-font-weight: bold;"><span style="font-family: "georgia" , "times new roman" , serif;">Throughout the rest of the 1990s, the bank made
numerous bank acquisitions in its core market of Ohio, Kentucky and Indiana,
each time gaining no more than a dozen branches or so. Fifth Third, as such, was still a regional
bank with meaningful operations only in three conjoining Midwest states at this
time.<o:p></o:p></span></span></strong></div>
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<br /></div>
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<span lang="EN-US"><span style="font-family: "georgia" , "times new roman" , serif;">Recent transaction(s):</span></span></div>
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</div>
<ul>
<li><span style="font-family: "georgia" , "times new roman" , serif;">In 1998, Fifth Third (branded as “5/3”)
bought another Ohio rival CitFed Bancorp of Dayton for USD $727-million, whose
subsidiary Citizens Federal Bank had 36 branches.</span></li>
<li><span style="font-family: "georgia" , "times new roman" , serif;">Also in 1998, 5/3 purchased State
Savings Co. for USD $918-million. The deal added 43 branches in the Columbus (Ohio)
area and ten in Arizona to 5/3’s network, though the small Arizona network was
disposed of later. By now Fifth Third had over 450 branches across Ohio,
Kentucky, Indiana and Florida.</span></li>
<li><span style="font-family: "georgia" , "times new roman" , serif;">Also in 1998, 5/3 bough two other financial
services firms, namely the Ohio Company, a full-service broker-dealer and investment
manager; and W. Lyman Case & Co., a commercial mortgage financier.</span></li>
<li><span style="font-family: "georgia" , "times new roman" , serif;">In 1998 and 1999, 5/3 acquired
several smaller banks in Ohio, Kentucky and Florida.</span></li>
<li><span style="font-family: "georgia" , "times new roman" , serif;">In 1999, 5/3 made its biggest
acquisition to date when it bought CNB Bancshares of Indiana for USD $2.3-billion.
CNB’s subsidiary Civitas Bank had 145 branches and 200 ATMs mostly in Indiana,
but also a small presence in Kentucky, Illinois and Michigan.</span></li>
<li><span style="font-family: "georgia" , "times new roman" , serif;">Also in 1999, 5/3 bought Peoples
Bank Corp. of Indianapolis for USD $228-million. Peoples Bank & Trust had
nine branches.</span></li>
<li><span style="font-family: "georgia" , "times new roman" , serif;">In 2000, 5/3 bought Ottawa
Financial Corp. for USD $168-million.</span><span style="font-family: "georgia" , "times new roman" , serif;">
</span><span style="font-family: "georgia" , "times new roman" , serif;">Ottawa Financial had 27 branches in Michigan.</span></li>
<li><span style="font-family: "georgia" , "times new roman" , serif;">Also in 2000, 5/3 bought Capital
Holdings of Ohio for USD $244-million.</span></li>
<li><span style="font-family: "georgia" , "times new roman" , serif;">In 2001, 5/3 acquired Old Kent
Financial Corp. for USD $4.92-billion.</span><span style="font-family: "georgia" , "times new roman" , serif;">
</span><span style="font-family: "georgia" , "times new roman" , serif;">Old Kent had 340 branches in Michigan, Illinois and Indiana. The deal
made Fifth Third one of the top five banks in Michigan and the Chicago area.</span></li>
<li><span style="font-family: "georgia" , "times new roman" , serif;">In 2004, 5/3
bought First National Bancshares of Florida, Inc., for USD $1.58-billion. First
National Bank of Florida operated 77 branches mainly in Southwest and Central
Florida.</span></li>
<li><span style="font-family: "georgia" , "times new roman" , serif;">In 2007, 5/3
agreed to purchase R-G Crown Bank from Puerto Rico's R & G Financial Corp.
for USD $288-million. R-G Crown Bank operated 30 branches in Florida and 3 in
Georgia.</span></li>
<li><span style="font-family: "georgia" , "times new roman" , serif;">In 2007, 5/3 bought
First Charter Corp. of Charlotte, North Carolina, for USD $1.09-billion. First
Charter Bank operated 61 branches in North Carolina and another 2 in Georgia.</span></li>
<li><span style="font-family: "georgia" , "times new roman" , serif;">By 2014, 5/3 operates over 1,300 branches
across 12 contiguous Midwest states of Ohio, Kentucky, Indiana, Illinois,
Michigan, Missouri, Georgia, North Carolina, Pennsylvania, West Virginia,
Tennessee and Florida.</span></li>
<li><span style="font-family: "georgia" , "times new roman" , serif;">In May 2018, 5/3 agreed to acquire Chicago-based MB Financial for USD $4.7-billion. MB Financial Bank's 91 branches will join Fifth Third's existing 148 branches in the city, though as many as 50 branches will be shut following the consolidation. The purchase will expand Fifth Third's deposit base in the Chicago area from $11-billion to $25-billion, making it one of the top four banks in the market.</span></li>
</ul>
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<span lang="EN-GB"><span style="font-family: "georgia" , "times new roman" , serif;"><br /></span></span></div>
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BankingMergershttp://www.blogger.com/profile/09902839579660694793noreply@blogger.comtag:blogger.com,1999:blog-7475905699260929987.post-18697069784864419062014-01-02T20:40:00.002-05:002014-01-10T13:30:24.796-05:00Italy Bank Mergers & Acquisitions (Sanpaolo IMI)<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiYEZ5WnfXe2XssBN3YYFgqUQg24Nm7vUWpkdIBcvXAqSs-qECiO-JyzX7NLV6k7rk4fEoteUr2Afj9BixZgL7XdjuHPYHMx79DfqocAz5C5_FI12Wj60O_msCPk5MHkAGxIzCCDoKhWFc/s1600/AIMG_9978.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiYEZ5WnfXe2XssBN3YYFgqUQg24Nm7vUWpkdIBcvXAqSs-qECiO-JyzX7NLV6k7rk4fEoteUr2Afj9BixZgL7XdjuHPYHMx79DfqocAz5C5_FI12Wj60O_msCPk5MHkAGxIzCCDoKhWFc/s320/AIMG_9978.jpg" height="213" width="320" /></a></div>
<span style="font-family: Georgia, Times New Roman, serif;"><br /></span>
<span style="font-family: Georgia, Times New Roman, serif;">Photo: A quasi-banknote that was issued by Istituto Bancario San Paolo di Torino in the 1970s.</span><br />
<span style="font-family: Georgia, Times New Roman, serif;"><br /></span>
<span style="font-family: Georgia, Times New Roman, serif;"><br /></span>
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<div style="margin: 0cm 18.75pt 0cm 0cm;">
<strong><span lang="EN-US"><span style="font-family: Georgia, Times New Roman, serif;">Sanpaolo
IMI SpA<o:p></o:p></span></span></strong></div>
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<br /></div>
<div style="margin: 0cm 18.75pt 0cm 0cm;">
<strong><span lang="EN-US" style="font-weight: normal;"><span style="font-family: Georgia, Times New Roman, serif;">As a banking holding company, Sanpaolo
IMI had a very brief existence. It was
created in 1998 and in 2007, it merged with Banca Intesa to form <a href="http://bankingmergers.blogspot.ca/2010/07/italy-bank-mergers-acquisitions-intesa.html">Intesa Sanpaolo</a>. However, like many Italian
banks, some predecessors of Sanpaolo IMI can trace their histories back over
four centuries to the Italian Renaissance period. Sanpaolo IMI was formed from
four regional banking groups: Istituto Bancario San Paolo di Torino, Istituto
Mobiliare Italiano, Cardine Banca and Banco di Napoli.<o:p></o:p></span></span></strong></div>
<div style="margin: 0cm 18.75pt 0cm 0cm;">
<strong><span lang="EN-US" style="font-weight: normal;"><span style="font-family: Georgia, Times New Roman, serif;"><br /></span></span></strong></div>
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<br /></div>
<div style="margin: 0cm 18.75pt 0cm 0cm;">
<strong><span lang="EN-US"><span style="font-family: Georgia, Times New Roman, serif;">A
Few Words about Italian Banks’ Renaissance Origins<o:p></o:p></span></span></strong></div>
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<br /></div>
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<span lang="EN-US"><span style="font-family: Georgia, Times New Roman, serif;">Many Italian banks can trace their
histories to as far back as the 15<sup>th</sup> century when local municipalities
or the Roman Catholic Church established individual monti di pietà (“mounts of
pity”, or “mounts of compassion”) as charitable foundations that granted small
loans to the poor in return for collateral. The goals of the monti di pietà are
to fight usury and poverty, to encourage savings and improve the social
conditions of the poor, as well as to stimulate economic development. In many
cases, the monti di pietà also accepted deposits and re-lent the funds to
borrowers.<o:p></o:p></span></span></div>
<div style="margin: 0cm;">
<br /></div>
<div style="margin: 0cm;">
<span lang="EN-US"><span style="font-family: Georgia, Times New Roman, serif;">Over the centuries, many of these
charity lenders became casse di risparmio (savings banks) but maintained their
original social mandates of charity for the poor, as well as to
promote art, education, health, scientific research; to conserve cultural and
religious heritage; or to develop public utilities. The unique dual objectives of Italy’s savings
banks, while honourable, created a banking system that was backward,
fragmented, bureaucratic, unprofitable and uncompetitive.<o:p></o:p></span></span></div>
<div style="margin: 0cm;">
<br /></div>
<div style="margin: 0cm;">
<span lang="EN-US"><span style="font-family: Georgia, Times New Roman, serif;">As the European Union prepared to
break down trade barriers based on national borders in the 1990s, it was clear
to the Italian government that its fragmented banking system would be taken
over by the much larger and efficient banks from Great Britain, France and
Germany. A series of banking reform
acts, most notably the Amato Act of 1990 and the Ciampi Act of 1998, were
implemented to privatize the state-owned or public-law banks and to foster
amalgamation of the regional banks into much larger national banks.<o:p></o:p></span></span></div>
<div style="margin: 0cm;">
<span lang="EN-US"><span style="font-family: Georgia, Times New Roman, serif;"><br /></span></span></div>
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<span style="font-family: Georgia, Times New Roman, serif;"><strong><i><span lang="EN-US">Istituto Bancario San Paolo di Torino SpA</span></i></strong><span lang="EN-US" style="color: #b9b9b9;"><o:p></o:p></span></span></div>
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<br /></div>
<div style="margin: 0cm 18.75pt 0cm 0cm;">
<span lang="EN-US"><span style="font-family: Georgia, Times New Roman, serif;">The Sanpaolo side of Sanpaolo IMI is one of the oldest credit
providers in the world. In 1563, a
brotherhood known as the Compagnia della Fede Cattolica sotto l’Invocazione di
San Paolo was established in Torino (Turin). A few years later, the charity
founded a Monte di Pietà (singular of monti di pietà) to provide charitable
loans at low-interest rates to the poor on the pledge of personal belongings as
explained earlier.<o:p></o:p></span></span></div>
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<br /></div>
<div style="margin: 0cm 18.75pt 0cm 0cm;">
<span lang="EN-US"><span style="font-family: Georgia, Times New Roman, serif;">The Monte di Pietà di San Paolo provided an alternative to usury,
particularly for Turin’s tradesmen and artisans, and marked the beginning of
San Paolo’s long history as a credit provider.
During the Renaissance period, Turin was a major trading centre in
Europe, and San Paolo grew in importance such that by the second half of the 17<sup>th</sup>
century, it was granted the administratorship of the public debt for the Savoy
region. <o:p></o:p></span></span></div>
<div style="margin: 0cm 18.75pt 0cm 0cm;">
<br /></div>
<div style="margin: 0cm 18.75pt 0cm 0cm;">
<span lang="EN-US"><span style="font-family: Georgia, Times New Roman, serif;">By the 19<sup>th</sup> century, San Paolo had evolved into a
lender in the modern banking sense. It
rode on Northern Italy’s rapid transformation into an industrial economy and became
a leading bank.<o:p></o:p></span></span></div>
<div style="margin: 0cm 18.75pt 0cm 0cm;">
<br /></div>
<div style="margin: 0cm 18.75pt 0cm 0cm;">
<span lang="EN-US"><span style="font-family: Georgia, Times New Roman, serif;">The 20<sup>th</sup> century was a turbulent one for Italy: in
1911, the Italo-Turkish War broke out, to be followed by World War I, both of
which depleted Italy’s coffers. In 1921,
when a major industrial-financial conglomerate (Ansaldo Group-Banca Italiana di
Sconto) failed, the Italian state intervened and rescued the group, commencing
the country’s long history of injecting state funds to rescue failing
industries. Then in 1922, Benito
Mussolini took over the country and began his fascist dictatorship. By the 1930s, poor administration combined
with the international economic depression led to the failures of many Italian
enterprises. In 1933, the government stepped in and created IRI (Istituto per la
Ricostruzione Industriale) to take over several major ailing banks. The 1936 Banking Act then set strict
regulations on the banks’ operations.
Stunningly, about 80% of Italy’s banking sector was directly or
indirectly run by, or relied upon the government for capital, and this practice
only ended in the 1990s. <o:p></o:p></span></span></div>
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<br /></div>
<div style="margin: 0cm 18.75pt 0cm 0cm;">
<span lang="EN-US"><span style="font-family: Georgia, Times New Roman, serif;">During the 1930s, Istituto Bancario San Paolo di Torino itself
became a public-law bank, which means that it had no outstanding share capital
and relied on customer deposit as its sole capital base. Technically the Italian Treasury was the
resort should additional capital be required, but in reality all Italian
state-controlled or public-law banks had little access to capital for decades
until they were privatized in the 1990s.<o:p></o:p></span></span></div>
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<br /></div>
<div style="margin: 0cm 18.75pt 0cm 0cm;">
<span lang="EN-US"><span style="font-family: Georgia, Times New Roman, serif;">Fascist Italy suffered further setbacks when it joined Nazi
Germany in declaring war on France, Great Britain and the United States in 1940.
Mussolini financed the war machine by
basically revving up the money-printing machines, which led to hyperinflation
and a collapse of the Italian lira.
Following the war, Italy continued to suffer from high inflation, slow
economic growth, a weak currency, and perpetual budget deficits. The
government’s response was to impose more restrictions on money supply, lending
and foreign exchange. Over time,
Sanpaolo di Torino nevertheless became the leading retail bank in northwestern
Italy.<o:p></o:p></span></span></div>
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<br /></div>
<div style="margin: 0cm 18.75pt 0cm 0cm;">
<span style="font-family: Georgia, Times New Roman, serif;"><span lang="EN-US">Reforms were finally brought in in 1982 when the IRI began to
raise funds by issuing bonds to re-capitalize its state-owned banks. In 1990,
in preparation of a “single-market” economy within the European Community,
further changes were introduced when Italian banks were required to restructure
into the joint-stock company model (with limited liabilities) from their
public-law status. In 1992, San Paolo di Torino officially became Istituto
Bancario San Paolo di Torino SpA, and 21% of the shares were floated publicly.</span><span lang="EN-US" style="color: #b9b9b9;"><o:p></o:p></span></span></div>
<div style="margin: 0cm 18.75pt 0cm 0cm;">
<span style="font-family: Georgia, Times New Roman, serif;"><span lang="EN-US"><br /></span></span></div>
<div style="margin: 0cm 18.75pt 0cm 0cm;">
<span style="font-family: Georgia, Times New Roman, serif;"><span lang="EN-US" style="color: #d0d0d0;">.</span><span lang="EN-US" style="color: #b9b9b9;"><o:p></o:p></span></span></div>
<div style="margin: 0cm 18.75pt 0cm 0cm;">
<span style="font-family: Georgia, Times New Roman, serif;"><strong><i><span lang="EN-US">Istituto Mobiliare Italiano SpA (IMI)</span></i></strong><span lang="EN-US" style="color: #b9b9b9;"><o:p></o:p></span></span></div>
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<br /></div>
<div style="margin: 0cm 18.75pt 0cm 0cm;">
<span lang="EN-US"><span style="font-family: Georgia, Times New Roman, serif;">Compared to other Intesa Sanpaolo constituents, Istituto Mobiliare
Italiano's establishment in 1931 was decidedly contemporary. As mentioned earlier, Italy’s large commercial
banks became insolvent in the late 1920s as the economy faltered. New government regulations then forbade the
commercial banks from making medium- and long-term loans to Italy’s enterprises. The government then created the Istituto
Mobiliare Italiano to provide medium- to long-term financing to Italy's struggling
industries. In 1947, IMI took on the additional responsibility of managing and
coordinating foreign aid in rebuilding Italy following World War II. <o:p></o:p></span></span></div>
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<br /></div>
<div style="margin: 0cm 18.75pt 0cm 0cm;">
<span lang="EN-US"><span style="font-family: Georgia, Times New Roman, serif;">Over time, IMI became a state-owned merchant and investment bank:
making long-term loans, subscribing to equity stakes, and underwriting
securities for corporate Italy.<o:p></o:p></span></span></div>
<div style="margin: 0cm 18.75pt 0cm 0cm;">
<br /></div>
<div style="margin: 0cm 18.75pt 0cm 0cm;">
<span lang="EN-US"><span style="font-family: Georgia, Times New Roman, serif;">In 1991, like other state-owned or public-law financial
institutions, IMI was converted to the joint-stock form and became Istituto
Mobiliare Italiano SpA. In 1994, IMI was
listed on the stock exchange as a final step towards a full private-sector bank.<o:p></o:p></span></span></div>
<div style="margin: 0cm 18.75pt 0cm 0cm;">
<span lang="EN-US"><span style="font-family: Georgia, Times New Roman, serif;"><br /></span></span></div>
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<br /></div>
<div style="margin: 0cm 18.75pt 0cm 0cm;">
<b><span lang="EN-US"><span style="font-family: Georgia, Times New Roman, serif;"> <i>Holding Cardine Banca SpA</i><o:p></o:p></span></span></b></div>
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<br /></div>
<div style="margin: 0cm 18.75pt 0cm 0cm;">
<span lang="EN-US"><span style="font-family: Georgia, Times New Roman, serif;">The components that eventually became Cardine Banca are too numerous
and small to be explained in details in this publication, and only a brief
summary of the bank’s genealogy will be provided. In 1822, savings banks Cassa di Risparmio di
Padova and Cassa di Risparmio di Rovigo were established in the
Italian-speaking Veneto region of the Habsburg Empire. In 1928, they consolidated into the Cassa di
Risparmio di Padova e Rovigo. In 1994,
C.R. di Padova e Rovigo joined forces with Cassa di Risparmio di Venezia
(founded 1822) and Banca Agricola di Cerea to become the Casse Venete group. In 1998, yet two more savings bank, C.R. di
Gorizia and C.R. di Udine e Pordenone, joined the Casse Venete group, which by
now is a major regional bank in the northeast corner of Italy.<o:p></o:p></span></span></div>
<div style="margin: 0cm 18.75pt 0cm 0cm;">
<br /></div>
<div style="margin: 0cm 18.75pt 0cm 0cm;">
<span lang="EN-US"><span style="font-family: Georgia, Times New Roman, serif;">Meanwhile, along Italy’s Adriatic Sea coast, the Banca Popolare
Pesarese was established in 1875. It in
1989 merged with Cooperativa di Bagnacavallo to form the Banca Popolare
Pesarese e Ravennate. In 1994, Banca
Popolare Pesarese e Ravennate combined with Banca Popolare Abruzzese
Marchigiana and took up the new name of Banca dell’Adriatico. In 1997, Banca dell’Adriatico became an “SpA”
when it obtained joint-stock status.<o:p></o:p></span></span></div>
<div style="margin: 0cm 18.75pt 0cm 0cm;">
<br /></div>
<div style="margin: 0cm 18.75pt 0cm 0cm;">
<span lang="EN-US"><span style="font-family: Georgia, Times New Roman, serif;">In the Emilia-Romagna region, influential civic leaders with the
support of the Catholic Church founded the Cassa di Risparmio in Bologna in
1837. To comply with the Amato Act, C.R.
in Bologna became a joint-stock company and a parent company known as Gruppo
Bancario Casse Emiliano Romagnole SpA (or CAER for short) was formed in the
early 1990s. In 1997, a frenzy of
regional bank mergers saw CAER acquiring Banca dell’Adriatico.<o:p></o:p></span></span></div>
<div style="margin: 0cm 18.75pt 0cm 0cm;">
<br /></div>
<div style="margin: 0cm 18.75pt 0cm 0cm;">
<span lang="EN-US"><span style="font-family: Georgia, Times New Roman, serif;">In 2000, the Casse Venete group merged with the CAER group and
adopted the new name Holding Cardine Banca SpA.
The bank’s network spanned the entire northern Italy.<o:p></o:p></span></span></div>
<div style="margin: 0cm 18.75pt 0cm 0cm;">
<span lang="EN-US"><span style="font-family: Georgia, Times New Roman, serif;"><br /></span></span></div>
<div style="margin: 0cm 18.75pt 0cm 0cm;">
<br /></div>
<div style="margin: 0cm 18.75pt 0cm 0cm;">
<b><span lang="EN-US"><span style="font-family: Georgia, Times New Roman, serif;"><i>Banco di Napoli
SpA</i><o:p></o:p></span></span></b></div>
<div style="margin: 0cm 18.75pt 0cm 0cm;">
<br /></div>
<div style="margin: 0cm 18.75pt 0cm 0cm;">
<span lang="EN-US"><span style="font-family: Georgia, Times New Roman, serif;">Banco di Napoli can loosely trace its history back to the 1539
founding of a Monte di Pietà in Naples as a philanthropic pawnbroker. Between 1587 and 1640, another seven credit
institutions were established in southern Italy, and these eight banks eventually
became Banco Nazionale di Napoli in 1794.
During the 19<sup>th</sup> century, military conflicts in the Italian
peninsula led to the bank’s shutdown and reorganization under a different name. When the various warring city states were
unified into the Kingdom of Italy in 1861, the modern Banco di Napoli was
reborn. <o:p></o:p></span></span></div>
<div style="margin: 0cm 18.75pt 0cm 0cm;">
<br /></div>
<div style="margin: 0cm 18.75pt 0cm 0cm;">
<span lang="EN-US"><span style="font-family: Georgia, Times New Roman, serif;">In 1926, the bank was turned into a public-law institution
following the decade-long economic crisis.
In 1929, it consolidated several other ailing banks, becoming the largest
bank in southern Italy.<o:p></o:p></span></span></div>
<div style="margin: 0cm 18.75pt 0cm 0cm;">
<br /></div>
<div style="margin: 0cm 18.75pt 0cm 0cm;">
<span lang="EN-US"><span style="font-family: Georgia, Times New Roman, serif;">During the early 1990s, the bank’s poor governance and another
prolonged economic slump once again made Banco di Napoli financially unstable
just ahead of the launch of EU’s “single-market” model and dismantling of trade
and economic protection based on national borders. A series of reforms was carried out, starting
with the 1991 conversion of Banco di Napoli into the “SpA” joint-stock
format. The Italian government then
stripped out the bank’s bad loans into a “bad bank,” to be managed and wound
down gradually. Meanwhile, the Treasury
injected billions of new capital into the bank and transferred its
administration and ownership to the newly-privatized insurer Istituto Nazionale
delle Assicurazioni (INA, for 51%) and Banca Nazionale del Lavoro (BNL, for 49%).<o:p></o:p></span></span></div>
<div style="margin: 0cm 18.75pt 0cm 0cm;">
<br /></div>
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<span style="font-family: Georgia, Times New Roman, serif;"><span lang="EN-US">Recent transaction(s):</span><span lang="EN-US" style="color: #b9b9b9;"><o:p></o:p></span></span></div>
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<li><span style="font-family: Georgia, 'Times New Roman', serif;">In 1998, Istituto Bancario
San Paolo di Torino SpA acquired Istituto Mobiliare Italiano (IMI) SpA to form
Sanpaolo IMI SpA, becoming the largest bank in Italy at the time.</span></li>
<li><span style="font-family: Georgia, 'Times New Roman', serif;">In 1999, Sanpaolo IMI
launched a hostile offer for Banca di Roma SpA for Eur 7.5-billion (USD
$8.2-billion) but Sanpaolo IMI's bid failed.</span></li>
<li><span lang="EN-GB" style="font-family: Georgia, 'Times New Roman', serif;">In 2000, Italian insurance
giant Assicurazioni Generali SpA launched a Eur 12.2-billion (USD $13.0-billion)
hostile bid to acquire rival Istituto Nazionale delle Assicurazioni SpA (INA). Sanpaolo IMI had previously pursued a
friendly combination proposal with INA to create a bancassurance giant. Eventually, Sanpaolo IMI agreed to let INA
merge with Generali, in return for acquiring INA’s 51% stake in Banco di Napoli</span><span lang="EN-GB" style="font-family: Georgia, 'Times New Roman', serif;">. Sanpaolo IMI subsequently launched an offer to acquire
the 49% of Banco di Napoli held by Banca Nazionale del Lavoro.</span></li>
<li><span style="font-family: Georgia, 'Times New Roman', serif;">In 2001, Sanpaolo IMI bought a 10.9%
stake in Holding Cardine Banca</span><span style="font-family: Georgia, 'Times New Roman', serif;"> for ITL 1-trillion (USD
$450-million). Cardine was the result of the merger between Casse Venete and
Casse Emiliano Romagnole (CAER).</span></li>
<li><span lang="EN-GB" style="font-family: Georgia, 'Times New Roman', serif;">In 2002, Sanpaolo IMI bought
the remaining stake in Cardine Banca for USD </span><span lang="EN-GB" style="font-family: Georgia, 'Times New Roman', serif;">$5.4-billion.</span></li>
<li><span style="font-family: Georgia, 'Times New Roman', serif;">Between 2000 and 2005, Sanpaolo IMI acquired
a controlling stake in Cassa dei Risparmi di Forlì.</span></li>
<li><span style="font-family: Georgia, 'Times New Roman', serif;">In 2006, Sanpaolo IMI</span><span style="font-family: Georgia, 'Times New Roman', serif;"> bought 87% of Panonska Banka from the Serbian government
for Eur 122-million. Panonska Banka had 65 branches.</span></li>
<li><span style="font-family: Georgia, 'Times New Roman', serif;">In 2006, Sanpaolo IMI bought
80% of Egypt’s Bank of Alexandria from the Egyptian government for USD
$1.6-billion. Bank of Alexandria had 188 branches and a 6.8% market share in
the country.</span></li>
<li><span style="font-family: Georgia, 'Times New Roman', serif;">In
2007, Sanpaolo IMI was taken over by Banca Intesa for Eur 31.5-billion (USD
$40.0-billion).</span><span style="font-family: Georgia, 'Times New Roman', serif;"> </span><span style="font-family: Georgia, 'Times New Roman', serif;">The new company became
known as <a href="http://bankingmergers.blogspot.ca/2010/07/italy-bank-mergers-acquisitions-intesa.html">Intesa Sanpaolo</a>.</span></li>
</ul>
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BankingMergershttp://www.blogger.com/profile/09902839579660694793noreply@blogger.comtag:blogger.com,1999:blog-7475905699260929987.post-62658735273636052552013-10-18T22:08:00.000-04:002013-10-18T23:21:00.228-04:00Ireland Bank Mergers & Acquisitions (Bank of Ireland)<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg9c2DthSkEbMZcUakIlhpcY3X5yeoans5JoJkFfN2EUZA5Iev8ChJTo-C95cVtLdaQwNBDOfRzumdvcphKJZhzNzZsIei0kWNhTRcomJVVsHRKnVCZTM1eZoT_dYY52VzJmkwsOrxU1xc/s1600/AIMG_0824.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="213" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg9c2DthSkEbMZcUakIlhpcY3X5yeoans5JoJkFfN2EUZA5Iev8ChJTo-C95cVtLdaQwNBDOfRzumdvcphKJZhzNzZsIei0kWNhTRcomJVVsHRKnVCZTM1eZoT_dYY52VzJmkwsOrxU1xc/s320/AIMG_0824.jpg" width="320" /></a></div>
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<span style="font-family: Georgia, Times New Roman, serif;">Photo: Bank of Ireland College Green. Following the dissolution of the Irish Parliament in 1801, the Bank of Ireland bought the former Parliament House in 1803 for £40,000. Photo taken during my trip to Ireland in May 2013.</span><br />
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<span lang="EN-GB"><span style="font-family: Georgia, Times New Roman, serif;"><b>The
Governor and Company of the Bank of Ireland</b><o:p></o:p></span></span></div>
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<span lang="EN-GB"><span style="font-family: Georgia, Times New Roman, serif;">In
1783, a Royal Charter was granted to a group of prominent Dublin merchants and
aristocrats led by the La Touche family to establish the Bank of Ireland, which
was based on the joint-stock model of the Bank of England (founded 1694) and the
Bank of Scotland (founded 1695). The La
Touches were Huguenots (French Protestants) who fled to Holland in the 1680s in
search of religious freedom. A certain David
Digues (also spelt Digges) La Touche joined the army of English King William of
Orange and fought in the Battle of the Boyne in Ireland against Catholic King
James II. Following William of Orange ’s
victory, David Digues La Touche decided to stay in Ireland and launched a fabric
weaving business, which became very successful and the family was elevated to the
Anglo-Irish Protestant establishment in Ireland.<o:p></o:p></span></span></div>
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<span lang="EN-GB"><span style="font-family: Georgia, Times New Roman, serif;">In
1713, the family founded private bank David La Touche & Son. and it immediately
became a trusted banking firm because of its strong financial backing and the La
Touche name. The family’s expertise in
finance was so well regarded that another David La Touche, a grandson of David
Digues La Touche, was elected the first governor of the Bank of Ireland in
1783. In addition, a few other La Touche
family members were amongst the biggest subscribers to the new bank’s shares.<o:p></o:p></span></span></div>
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<span lang="EN-GB"><span style="font-family: Georgia, Times New Roman, serif;">Emulating
the Bank of England and Bank of Scotland model, the Bank of Ireland was
appointed the banker to the Irish government and Irish Treasury. A major function of the bank was the issuance
of the Irish Pound and Guinea banknotes.
Another main activity of the bank at the time was to discount trade
bills of exchange for importers and exporters.
In the areas of banknote issue, the bank was allowed a special monopoly
status in Ireland by the British parliament until 1821, after which other
join-stock banks could issue their own notes provided that they not maintain
any offices or branches within a 50-mile radius from Dublin, the most important
market in the nation. It wasn’t until
1845 that all monopoly powers of the Bank of Ireland were removed and other note-issuing
banks could compete in Dublin. As only
the most wealthy families had bank accounts at the time, accepting deposits from
ordinary citizens was not an important business of the bank during the first 75
years of the bank’s history.<o:p></o:p></span></span></div>
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<span lang="EN-GB"><span style="font-family: Georgia, Times New Roman, serif;">Ireland
at the time was a British colony but with a sort of “home rule” (i.e. governed
by a local Dublin parliament that was controlled by the Anglo-Protestant ruling
class known as the Protestant Ascendancy).
The decades following the bank’s founding were turbulent times in
Ireland. After over a century of harsh
oppression by the English administration, the Irish rebelled in 1798. Even though Britain quickly suppressed the
unrest, it was spooked by the uprising and the wave of revolutions in the
United States (1776) and France (1789 – 1799).
In 1801, the Parliament of Ireland was dissolved, and Ireland became
part of the United Kingdom of Great Britain and Ireland. From this point on until 1922, Ireland was
governed directly by the British Parliament.
In 1803, the government sold the now vacant Parliament House in Dublin’s
College Green to the Bank of Ireland for £40,000 (GBP). Today, this Bank of Ireland College Green is
a major landmark and has become a tourist attraction in Dublin.<o:p></o:p></span></span></div>
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<span lang="EN-GB"><span style="font-family: Georgia, Times New Roman, serif;">In
1825, Bank of Ireland’s first offices outside of Dublin opened in Cork,
Waterford, Clonmel, Newry, Belfast, Londonderry (now also known as Derry) and
Westport. By 1830, the bank’s network
had expanded to Armagh, Limerick, Sligo, Wexford and Galway.<o:p></o:p></span></span></div>
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<span lang="EN-GB"><span style="font-family: Georgia, Times New Roman, serif;">The
Irish people suffered greatly during the infamous Great Potato Famine between
1845 and 1849, when blight (fungus) decimated the potato crop -- pretty much
the sole food source for a vast majority of the Catholic tenant-farmers. Unable to grow their cash crop and food, the destitute
farmers were evicted from their rented farms.
A million people died of starvation and illness during the famine, and
another one million fled Ireland for Britain, the United States, Canada,
Australia and New Zealand. Ironically, as primarily the government banker
and the bank for the wealthy Protestant landowners, Bank of Ireland didn’t
suffer much from the otherwise devastating famine.<o:p></o:p></span></span></div>
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<span lang="EN-GB"><span style="font-family: Georgia, Times New Roman, serif;">In
1860, a special act prohibiting the Bank of Ireland from lending money on the pledge
of land (i.e. to make mortgage loans) was repealed, and the bank launched a new
line of business. In 1864, the bank
began to pay interest on deposits for the first time in its history, in order
to attract more capital in the form of deposits. By 1883, the bank had 58 branches across
Ireland.<o:p></o:p></span></span></div>
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<span lang="EN-GB"><span style="font-family: Georgia, Times New Roman, serif;">The
second half of the 19<sup>th</sup> century was turbulent times for
Ireland. A massive increase in the supply
of wheat, corn and meat from the U.S., Canada, Argentina, Australia and New
Zealand beginning in the 1870s caused global grain and livestock prices to
tumble, and agriculture became much less profitable for both the Irish farmers
and the landowners. A grass-root
movement by the tenant farmers to withhold rent payments and to boycott their
landowners by refusing to work for them and deal with them in any manner became
known as the “Land War,” which was surprisingly effective in hurting the
fortunes of the Protestant landowners.<o:p></o:p></span></span></div>
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<span lang="EN-GB"><span style="font-family: Georgia, Times New Roman, serif;">Then
in 1885, Munster Bank, a major bank based in Cork in southern Ireland, suffered
a devastating bank run following allegations of frauds committed by its
directors. Munster Bank’s collapse caused
panics across Ireland. As a
quasi-central bank, the Bank of Ireland advanced emergency funds to some of
banks in distress. Munster Bank itself
was re-structured into the Munster and Leinster Bank, which in 1966 became part
of the Allied Irish Banks.<o:p></o:p></span></span></div>
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<span lang="EN-GB"><span style="font-family: Georgia, Times New Roman, serif;">The
English had had a long history of oppressive rule against the Irish Catholics. In the 1650s, the English confiscated a vast
majority of the arable land in Ireland from the Catholics for themselves; in
the 1720s, the Catholics lost their rights to buy land, to vote in elections
and to hold public office in local town councils and in the Irish Parliament; during
the 18<sup>th</sup> century, Britain erected trade barriers on Irish exports; in
the 1840s, Britain turned a blind eye to the starving Catholic farmers during
the Potato Famine. Even though various
Emancipation Acts eventually restored the Catholics’ rights to buy land, to vote
and to stand as Members of Parliament (MP) by 1829, the Catholics were too poor
to buy the land back from the Protestant landed gentry, plus the dissolution of
the Irish Parliament back in 1801 ensured that it’s the British parliament,
dominated by the majority English and Scottish MPs, that would determine the
governance and affairs of Ireland, not the Irish MPs.<o:p></o:p></span></span></div>
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<span lang="EN-GB"><span style="font-family: Georgia, Times New Roman, serif;">It
was under such context that throughout the 19<sup>th</sup> century, Irish
nationalism swelled and political parties and socialist labour groups were
formed with the initial aim to press for Home Rule (i.e. to re-establish an
independent Parliament in Ireland). But
as the British Parliament and House of Lords kept rejecting or delaying
successive Home Rule Acts between 1886 and 1914, the nationalists became
increasingly militant. Their goal was no
longer just Home Rule, but full independence from Britain. The result was first
the Easter Rising in 1916, then the Anglo-Irish War (1919 to 1922).<o:p></o:p></span></span></div>
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<span lang="EN-GB"><span style="font-family: Georgia, Times New Roman, serif;">In
December 1921, following two-and-a-half years of terror, violence and
destruction in Ireland, the nationalists and the British government agreed to a
truce and signed the Anglo-Irish Treaty, which in December 1922 officially
partitioned Ireland into the Irish Free State (gaining independence from
Britain) and Northern Ireland, which opted to remain part of the United
Kingdom. Bank of Ireland was immediately
appointed as the banker to the new Irish Free State government.<o:p></o:p></span></span></div>
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<span lang="EN-GB"><span style="font-family: Georgia, Times New Roman, serif;">Earlier,
in the midst of the Anglo-Irish War, the provisional Irish parliament (known as
the Dáil) had founded the National Land Bank in 1919 whose mandate was to offer
state-sponsored mortgage loans to the Catholic tenant farmers to acquire land
from the gentry landowners. In 1923,
this land purchase scheme was transferred to the Irish Land Commission,
removing the primary function of the National Land Bank. In 1926, Bank of Ireland acquired the
remnants of National Land Bank and renamed its National City Bank Ltd.<o:p></o:p></span></span></div>
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<span lang="EN-GB"><span style="font-family: Georgia, Times New Roman, serif;">Ireland
very controversially opted to stay neutral during World War II. Had Ireland
gone to the European battlefront, it almost certainly would have come under the
command of British army. After finally
gaining independence from centuries of harsh British rule, the Irish simply
weren’t willing to listen to London so soon again. Its escape from the war devastation, however,
didn’t mean Ireland had an easy time in the 1950s. On the contrary, Ireland’s protectionist,
agricultural-based economy fared poorly in the post-war industrial and
consumerism recovery. Its economy was in
such poor state that many disheartened young people left the country, and Ireland’s
population suffered a net loss during the decade. Amidst this decade of doom and gloom, the Bank
of Ireland in 1958 took over the Hibernian Bank, which was founded in 1825 with
backing from the Catholic community.<o:p></o:p></span></span></div>
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<span lang="EN-GB"><span style="font-family: Georgia, Times New Roman, serif;">The
1960s were somewhat kinder to Ireland, as its economy finally became more
competitive after years of economic reform.
As for the Bank of Ireland, it gained significant market share when it
acquired the Irish operations of National Bank Ltd. in 1966. National Bank started
out as the London-based National Bank of Ireland in 1836, and counted Daniel O’Connell,
the first Irish Catholic to ever win a seat in the British House of Commons, as
one of the bank’s founders. In 1856,
National Bank of Ireland was renamed National Bank Ltd. and by then had
established a significant presence in England also in addition to its core
Irish business. By the 1960s, it became
increasingly politically unacceptable for a major Irish bank to be based in and
controlled from London, and the decision was made to split up the bank. National Bank’s Irish operations were sold to
the Bank of Ireland, whereas its British operations were sold to the National
Commercial Bank of Scotland.<o:p></o:p></span></span></div>
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<span lang="EN-GB"><span style="font-family: Georgia, Times New Roman, serif;">In
1966, the Bank of Ireland established an asset management subsidiary as well as
an investment bank division. Meanwhile,
to streamline its operations and governance, all three sister banks Bank of
Ireland, National Bank of Ireland and Hibernian Bank were consolidated into the
Bank of Ireland Group in 1969.<o:p></o:p></span></span></div>
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<span lang="EN-GB"><span style="font-family: Georgia, Times New Roman, serif;">The
bank then set out to provide overseas support for its clients in the 1970s,
opening an office in New York in 1971, then in London in 1972, and
Frankfurt in 1974. The bank also
established offshore banking subsidiaries in Jersey, the Isle of Man and the
Cayman Islands.<o:p></o:p></span></span></div>
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<span lang="EN-GB"><span style="font-family: Georgia, Times New Roman, serif;">Banking
automation came rather late for the Irish banking sector, and Bank of Ireland’s
first PASS ATM machines were only installed in 1980. <o:p></o:p></span></span></div>
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<span lang="EN-GB"><span style="font-family: Georgia, Times New Roman, serif;">Bank
of Ireland began aggressive expansion into other financial services in the
1980s, beginning with its 1984 acquisition of the investment shares of ICS Building
Society (a mutually-owned mortgage lender), and the 1987 establishment of
Lifetime, a life insurance subsidiary. Also
in 1987, it acquired a small British bank and transformed it into the Bank of Ireland Home
Mortgages Ltd., launching the bank’s mortgage loan business in Britain.<o:p></o:p></span></span></div>
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<span lang="EN-GB"><span style="font-family: Georgia, Times New Roman, serif;">Then
in 1988, Bank of Ireland bravely entered the U.S. retail market when it bought
the First NH Banks Inc. (of New Hampshire) for USD $370-million, gaining over
50 branches. The bank’s expansion in the
New England region continued when in 1991, it acquired the bankrupt Amoskeag
Bankshares and the BankEast Corporation, both of New Hampshire, with a combined
network of 56 branches. The two banks
had become insolvent due to heavy real estate loan losses and had been taken
over by the FDIC. In 1994, the bank’s
U.S. unit First NH, by now the largest bank in New Hampshire, bought Great Bay
Bankshares for USD $53-million.<o:p></o:p></span></span></div>
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<span lang="EN-GB"><span style="font-family: Georgia, Times New Roman, serif;">Between
1988 and 2006, Bank of Ireland also owned a majority stake in Davy
Stockbrokers, Ireland’s largest securities underwriter and asset manager.<o:p></o:p></span></span></div>
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<ul>
<li><span style="font-family: Georgia, 'Times New Roman', serif;">In
1996, Bank of Ireland merged its U.S. unit First NH Banks of New Hampshire into
the Royal Bank of Scotland’s Citizens Financial Group in exchange for a 23.5%
stake of the enlarged Citizens Financial.</span></li>
<li><span style="font-family: Georgia, 'Times New Roman', serif;">In
1997, Bank of Ireland acquired the freshly de-mutualized Bristol & West
Building Society of Bristol, southwest England.</span><span style="font-family: Georgia, 'Times New Roman', serif;">
</span><span style="font-family: Georgia, 'Times New Roman', serif;">South-western England historically and culturally has close ties with
Ireland.</span></li>
<li><span style="font-family: Georgia, 'Times New Roman', serif;">In
1999, Bank of Ireland briefly held talks to acquire British bank Alliance &
Leicester plc for Eur 8-billion (USD $8.34-billion).</span><span style="font-family: Georgia, 'Times New Roman', serif;"> </span><span style="font-family: Georgia, 'Times New Roman', serif;">However, the talks ended without a deal.</span></li>
<li><span style="font-family: Georgia, 'Times New Roman', serif;">Also
in 1999, Bank of Ireland sold its 23.5% stake in Citizens Financial Group back
to the Royal Bank of Scotland for USD $763-million.</span><span style="font-family: Georgia, 'Times New Roman', serif;"> </span><span style="font-family: Georgia, 'Times New Roman', serif;">The sale marked the exit of Bank of Ireland
from the U.S. retail market.</span></li>
<li><span style="font-family: Georgia, 'Times New Roman', serif;">In
2005, Bank of Ireland’s British retail bank Bristol & West sold its savings
and investment business, as well as its branch network to Britannia Building
Society.</span><span style="font-family: Georgia, 'Times New Roman', serif;"> </span><span style="font-family: Georgia, 'Times New Roman', serif;">Bank of Ireland retained Bristol
& West’s mortgage lending business.</span></li>
<li><span style="font-family: Georgia, 'Times New Roman', serif;">Following the Irish (and global) housing market bust and
credit crisis that started in 2008, the Irish government in February 2009 injected
Eur 3.5-billion (USD $4.92-billion, GBP 3.26-billion) into Bank of Ireland’s
perpetual preference shares with an annual yield of 8%. The government gained
voting rights of 25% of the bank. Bank of Ireland planned to raise Eur 1.5
billion from a rights issue to redeem part of the government’s holdings,
limiting the state holding to 15%.</span></li>
<li><span style="font-family: Georgia, 'Times New Roman', serif;">In July 2011, Bank of Ireland completed a Eur 5.2 billion
capital increase.</span><span style="font-family: Georgia, 'Times New Roman', serif;"> </span><span style="font-family: Georgia, 'Times New Roman', serif;">The Irish state’s
stake in the bank fell to 15% from 35%.</span><span style="font-family: Georgia, 'Times New Roman', serif;">
</span><span style="font-family: Georgia, 'Times New Roman', serif;">A consortium led by Canadian re-insurer Fairfax Financial and American
investor Wilbur Russ injected Eur 1.05 billion into the bank. </span><span style="font-family: Georgia, 'Times New Roman', serif;"> </span><span style="font-family: Georgia, 'Times New Roman', serif;">After the capital increase, the old
shareholders were left with 31% of the bank, the bondholders owned 19%, the
Irish state, 15%, and the new consortium, a 35% stake.</span></li>
</ul>
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BankingMergershttp://www.blogger.com/profile/09902839579660694793noreply@blogger.comtag:blogger.com,1999:blog-7475905699260929987.post-52259343265259278082013-09-15T13:12:00.001-04:002014-03-27T21:54:18.739-04:00United States Bank Mergers & Acquisitions (International Banking Corp. and European American Bank)<div class="separator" style="clear: both; text-align: center;">
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<span style="font-family: Georgia, Times New Roman, serif;">Photo: The International Banking Corp. (IBC) was the first American bank with an extensive international branch nextwork. Founded in 1901 in Connecticut, IBC became a major foreign bank in China, and issued part of China's banknotes until 1927. IBC became part of the National City Bank of New York (today's Citigroup) in 1915.</span></div>
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<span style="font-family: Georgia, Times New Roman, serif;">Photo: European American Bank started out as Belgian bank Banque Belge pour l'Etranger's New York branch. This is an old cheque from the bank from 1927.</span><br />
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<span style="font-family: Georgia, 'Times New Roman', serif;">Two of the banks that became part of
Citigroup are of special interest to me.
One is the International Banking Corporation (IBC), founded in 1902 in
Connecticut as the first American bank permitted, and with the specific mandate, to operate foreign branches. IBC was
acquired by Citigroup (then the National City Bank of New York) in 1915.</span><br />
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<span lang="EN-US"><span style="font-family: Georgia, Times New Roman, serif;">The other bank of interest is the
European-American Bank (EAB), which started out as the New York branch of a
Belgian bank. It would become a sizeable
retail bank in the state of New York in the 1970s. Citigroup bought EAB in 2001.<o:p></o:p></span></span></div>
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<i><span lang="EN-US"><span style="font-family: Georgia, Times New Roman, serif;"><b>International Banking Corporation (IBC)</b><o:p></o:p></span></span></i></div>
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<span lang="EN-US"><span style="font-family: Georgia, Times New Roman, serif;">Before
1914, banks chartered in the New York state or chartered federally were
forbidden to have branches outside of the United States. To provide international money transfer
services, New York banks such as National City Bank could only do so by
developing correspondent payment clearing agreements with foreign banks. In this regard, American banks were very backward
when compared with their British, French, German and Belgian counterparts,
which had by the late 19<sup>th</sup> century opened offices outside of their
home markets, though mainly in their overseas colonies or territories.<o:p></o:p></span></span></div>
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<span lang="EN-US"><span style="font-family: Georgia, Times New Roman, serif;">Interestingly,
American trust companies, which were not legally-defined as banks but
nevertheless operated like full-service banks except in names, were free to
open foreign branches. Also, as each
state has its own banking regulations, certain states did permit their
state-chartered banks to operate outside of the United States. In particular, Connecticut was one such state
and in 1901, the International Banking Corporation (IBC) was established in that
state with the specific mandate to engage in overseas banking.<o:p></o:p></span></span></div>
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<span lang="EN-US"><span style="font-family: Georgia, Times New Roman, serif;">Almost
immediately, the International Banking Corporation opened its first overseas
branches in a market with a very under-developed banking sector and a weak
central government that relied on foreign banks: China. By 1902, IBC had opened branches in Britain,
China, Hong Kong, India, Japan, Philippines and Singapore; and domestically in
San Francisco – America’s gateway to the Orient. From at least as early as 1905 until 1927,
IBC, like a large number of local Chinese, foreign and Sino-foreign
joint-venture banks, issued China’s banknotes.<o:p></o:p></span></span></div>
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<span lang="EN-US"><span style="font-family: Georgia, Times New Roman, serif;">Asia,
however, was not IBC’s sole focus, for it opened an office in Mexico in 1903;
Panama and the Straits Settlement of Penang (part of today’s Malaysia) in 1904
and Canton (now Guangzhou) in 1906.<o:p></o:p></span></span></div>
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<span lang="EN-US"><span style="font-family: Georgia, Times New Roman, serif;">Banking
regulations in the U.S. were changed in 1914, finally allowing American banks
to manage direct branches overseas. Very
quickly, IBC probably lost its niche and status as the only meaningful American
overseas bank. In 1915, National City
Bank of New York (now <a href="http://bankingmergers.blogspot.ca/2009/08/united-states-bank-mergers-acquisitions_23.html">Citigroup</a>) acquired control of IBC. For at least another decade, IBC under
National City’s control continued to expand under its own right, opening an
office in Colombia in 1916; Dominican Republic in 1917; Java (Indonesia) in 1918,
and Burma and France in 1919. In 1921,
National City transferred its Madrid and Barcelona branches to IBC. Eventually, IBC was integrated into Citibank
(then National City Bank of New York).<o:p></o:p></span></span></div>
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<span style="font-family: Georgia, Times New Roman, serif;"><i><span lang="EN-US"><b>European American Bank (EAB)</b></span></i></span></div>
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<span style="font-family: Georgia, 'Times New Roman', serif;">European American Bank (EAB), for
several decades one of the top 10 bank in New York state and a market leader in
Long Island, had an interesting history.</span><span style="font-family: Georgia, 'Times New Roman', serif;">
</span><span style="font-family: Georgia, 'Times New Roman', serif;">EAB dates back to the 1921 establishment of Banque Belge pour l'Etranger’s
New York branch, which itself was founded in 1902 by Belgium's Société Générale
de Banque (which eventually became part of <a href="http://bankingmergers.blogspot.ca/2009/08/belgium-bank-mergers-acquisitions.html">Fortis S.A./NV</a>). </span><span style="font-family: Georgia, 'Times New Roman', serif;"> </span><span style="font-family: Georgia, 'Times New Roman', serif;">The bank dropped its French name in favour of
the name Belgian-American Banking Corp. in 1950 and obtained a state charter in
New York.</span><br />
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</span></span><span lang="EN-US"><span style="font-family: Georgia, Times New Roman, serif;">In the 1960's, several European
banks longed to expand into the U.S. market, but found themselves too small to
introduce meaningful and profitable operations in the huge U.S. market. In
1968, Société Générale de Banque (Belgium), AMRO Bank (Netherlands), Deutsche
Bank (Germany) and Midland Bank (Great Britain) became joint shareholders of
Belgian-American Banking Corp. and renamed it European-American Bank &
Trust. In 1971, two more European banks Creditanstalt-Bankverein from Austria,
and France's Société Générale also became shareholders of the New York bank.</span></span><br />
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<span lang="EN-US" style="line-height: 115%;"><span style="font-family: Georgia, Times New Roman, serif;"><span style="font-size: small;">In
1974, Euopean-American Bank & Trust bought part of the bankrupt Franklin National
Bank, a rural bank in the New York state. By the late 1970s, the bank became
one of New York's 10 largest retail banks and was the market leader in the Long
Island region. In 1984, the bank’s name
was shortened to European American Bank (EAB).
</span>As can be expected, the European banking consortium that collectively
owned EAB eventually began to disagree on the future of their American
subsidiary so that by 1991, ABN AMRO Holding NV became EAB’s sole owner.
Subsequently, even ABN AMRO decided to exit the New York retail banking market
when it sold EAB (with 97 branches mostly in Long Island) to <a href="http://bankingmergers.blogspot.ca/2009/08/united-states-bank-mergers-acquisitions_23.html">Citigroup</a> in 2001
for USD $1.6-billion.</span></span></div>
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BankingMergershttp://www.blogger.com/profile/09902839579660694793noreply@blogger.comtag:blogger.com,1999:blog-7475905699260929987.post-46976679617464520352013-07-22T20:42:00.002-04:002022-01-05T11:31:36.823-05:00United States Bank Mergers & Acquisitions (U.S. Bancorp)<div class="separator" style="clear: both; text-align: center;">
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<span style="font-size: medium;"><span style="font-family: Georgia, "Times New Roman", serif;">Photo: A U.S. Bank branch on 1st Avenue in downtown Seattle.</span><br />
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<strong><span style="font-family: Georgia, "Times New Roman", serif;">U.S. Bancorp</span></strong><br />
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<span style="font-family: Georgia, "Times New Roman", serif;"><em>First Bank System Inc.</em></span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">In April 1929, dozens of small banks located in the Ninth Federal Reserve District (the states of Minnesota, Montana, the Dakotas, northwestern Wisconsin and the Upper Peninsula of Michigan) formed a loose confederation called First Bank Stock Investment Corp. The purpose of the confederation was to provide mutual financial support during difficult economic times, as the Federal Deposit Insurance Corp. (FDIC) had not been created at the time. Of those that came into the First Bank federation, the two leading ones were the First National Bank of Minneapolis and the First National Bank of St. Paul, both of which were founded in 1864.</span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">The timing of the banking confederation’s creation was fortunate, as barely six months later, the Great Stock Market Crash hit Wall Street and led to the decade-long Great Depression. In 1933, amidst a widespread panic, U.S. president Franklin Roosevelt passed an emergency act to shut down all American banks to prevent a nationwide bank run, which could easily have ruined the entire banking system. Financial inspections were carried out on all U.S. banks during the 10-day closure, and only the financially viable banks were permitted to re-open. As a testimony to their conservative management, all of First Bank Stock Investment’s subsidiary banks were found to be financially sound.</span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">However, despite their common ownership, the First Bank banks operated independently and each bank had its own management. In the Twin Cities of Minneapolis and St. Paul, member banks actually fought fiercely and counter-productively with each other for business.</span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">In 1954, the passing of the new Bank Holding Company Act prohibited a bank holding company headquartered in one state from acquiring out-of-state banks. However, existing multi-state banks such as First Bank were exempted from the new restriction. First Bank at the time already had operations in Montana, South Dakota, North Dakota and Minnesota. </span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">In 1968, First Bank Stock Investment Corp. adopted the new name First Bank System. Throughout much of the latter half of the 20th century, the group’s member banks continued to fight for business individually without coordinating with each other, collectively offering hundreds of different saving and loan products, each with its own interest rate terms and features. The group’s disorganization also led to dozens of antiquated data processing systems.</span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">Meaningful restructuring finally was carried out in the early 1990s, when major upgrades and streamlining of the computer systems and product lineup were carried out to improved efficiency, as well as to finally integrate all member banks into one network.</span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;"><em>Firstar Corp.</em></span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">Firstar traces its history to 1853 when the Farmers and Millers Bank was established in Milwaukee, Wisconsin. In 1863, the bank obtained a national charter and changed its name to First National Bank of Milwaukee. In 1919, First National merged with Wisconsin National Bank to become First Wisconsin National Bank of Milwaukee. During the Great Depression, both First Wisconsin and its holding company Wisconsin Bankshares Corp. experienced severe financial difficulties but survived following a series of reorganizations. In 1960, the bank holding company was renamed First Wisconsin Bancshares Corp.</span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">First Wisconsin’s first expansion outside of the state only became possible when legislation changes allowing inter-state banking within regional zones were passed in 1987. The new law permitted banks within the eight Midwestern states of Wisconsin, Illinois, Minnesota, Ohio, Michigan, Iowa, Indiana, Missouri and Kentucky to acquire or be acquired each other. First Wisconsin then promptly bought a bank in Illinois, followed by other purchases in Iowa and Minnesota. In 1989, to remove the impression that it is a Wisconsin-only bank, First Wisconsin renamed itself Firstar Corp.</span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;"><em>U.S. Bancorp</em></span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">In 1891, a group of businessmen in Oregon organized the United States National Bank of Portland. U.S. National, as the bank became commonly known, acquired rival Oregon bank Ainsworth National in 1902, then another venerable Portland bank Ladd and Tilton in 1925. </span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">Still, by 1965, U.S. National remained a single-state bank with all 100 branches in Oregon. In 1968, reflecting new banking legislation, a holding company called U.S. Bancorp was created. U.S. Bancorp’s expansion outside of Oregon began in the 1980s when it acquired banks in Wisconsin, Utah, Colorado and Washington. In the 1990s, California became a new market for U.S. Bank when several small banks were purchased.</span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">Recent transaction(s):</span><br />
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</span><ul>
<li><span style="font-family: Georgia, "Times New Roman", serif; font-size: medium;">In 1993, First Bank System purchased Colorado National Bancshares Inc. </span></li>
<li><span style="font-family: Georgia, "Times New Roman", serif; font-size: medium;">In 1994, First Bank System bought Metropolitan Financial Corp. of North Dakota for USD $863-million. Metropolitan was a multi-state bank holding company with 211 offices across the Midwest. Following the purchase, First Bank sold 60 of Metropolitan’s branches that didn’t fit the expansion plan.</span></li>
<li><span style="font-family: Georgia, "Times New Roman", serif; font-size: medium;">In May 1995, U.S. Bank acquired West One Bancorp of Idaho for USD $1.6-billion.</span></li>
<li><span style="font-family: Georgia, "Times New Roman", serif; font-size: medium;">In 1995, First Bank System acquired FirsTier Financial Inc. of Omaha, Nebraska for USD $700-million. Firstier had 63 offices in Nebraska and Iowa. It was First Bank’s 3rd purchase in Nebraska in the year; earlier in 1995, it had bought Southwest Bank and First Bank of Omaha.</span></li>
<li><span style="font-family: Georgia, "Times New Roman", serif; font-size: medium;">In 1996, First Bank System offered to buy Los Angeles-based First Interstate Bancorporation for USD $10-billion. But First Interstate later accepted a USD $12.3-billion offer from Wells Fargo & Co. As part of the agreement, Wells Fargo paid a USD $200-million break fee to First Bank System.</span></li>
<li><span style="font-family: Georgia, "Times New Roman", serif; font-size: medium;">In 1997, First Bank System of Minneapolis purchased U.S. Bancorp Inc. of Portland, Oregon, for USD $8.4-billion. First Bank System adopted the U.S. Bank name. First Bank was said to have been anxious to shed its First Bank name as the U.S. is awash with hundreds of banks with similar “First” names.</span></li>
<li><span style="font-family: Georgia, "Times New Roman", serif; font-size: medium;">In 1998, the new U.S. Bancorp bought investment bank Piper Jaffray Cos. Inc. for USD $730-million. But in 2003, Piper Jaffray was spun off, becoming an independent, listed company again.</span></li>
<li><span style="font-family: Georgia, "Times New Roman", serif; font-size: medium;">In 1998, Star Banc Corp. of Cincinnati bought Firstar Corp. of Milwaukee for USD $7.2-billion. The name Firstar was retained. Star Banc was a successor bank of the First National Bank of Cincinnati (founded in 1863). Interestingly, it’s this First National Bank of Cincinnati’s banking charter that was retained by the future U.S. Bank, and these days U.S. Bank considers its founding year to be 1863.</span></li>
<li><span style="font-family: Georgia, "Times New Roman", serif; font-size: medium;">In 1999, the new Firstar Corp. acquired Mercantile Bancorporation of St. Louis, Missouri, for USD $9.9-billion. Mercantile Bank had USD $36-billion in assets and operated 500 branches in Missouri, Iowa, Kansas, Illinois, Arkansas and Kentucky.</span></li>
<li><span style="font-family: Georgia, "Times New Roman", serif; font-size: medium;">In 2000, Firstar Corp. of Wisconsin bought U.S. Bancorp for USD $21.2-billion but decided to retain the U.S. Bancorp/ U.S. Bank names. Before the merger, First Star had 1,200 branches in 13 states and U.S. Bancorp had 1,000 branches in 16 states.</span></li>
<li><span style="font-family: Georgia, "Times New Roman", serif; font-size: medium;">In March 2008, U.S. Bank acquired Mellon 1st Business Bank from the Bank of New York Mellon for an undisclosed amount. Mellon 1st Business Bank had 7 branches in California with USD $2.9-billion in assets and USD $2.7-billion in deposits.</span></li>
<li><span style="font-family: Georgia, "Times New Roman", serif; font-size: medium;">During the Credit Crisis of 2008, U.S. Bancorp received USD $6.6-billion of TARP fund from the Federal Reserve, which was fully repaid during the summer of 2009.</span></li>
<li><span style="font-family: Georgia, "Times New Roman", serif; font-size: medium;">In September 2009, U.S. Bank acquired Citibank’s Diners Club Card merchant-location portfolio in Western Europe representing 75,000 merchants. U.S. Bank also gained Diners Club card’s processing and customer support business for merchants in the UK, Ireland, France, Benelux, Switzerland and Germany through a separate agreement with Discover’s Diners Club International Ltd. </span></li>
<li><span style="font-family: Georgia, "Times New Roman", serif; font-size: medium;">In October 2009, U.S. Bank acquired USD $850-million in deposits and 14 branches of BB&T Bank’s Nevada operations.</span></li>
<li><span style="font-family: Georgia, "Times New Roman", serif; font-size: medium;">In October 2009, U.S. bank acquired nine different banks that were part of the FBOP Corp. of Illinois from an FDIC-brokered transaction. U.S. Bank gained USD $18.0-billion in assets, USD $15.4-billion in deposits, and 150 branches in California, Illinois, Arizona and Texas. The nine banks acquired included: BankUSA, California National Bank, Citizens National Bank, Madisonville State Bank, North Houston Bank, Pacific National Bank, Park National Bank, San Diego National Bank and Community Bank of Lemont.</span></li>
<li><span style="font-family: Georgia, "Times New Roman", serif; font-size: medium;">In January 2011, U.S. Bank acquired the banking operations of First Community Bank, a subsidiary of New Mexico’s First State Bancorporation from the FDIC. The purchase included USD $2.1-billion of assets, USD $1.8-billion of deposits and 38 branches in New Mexico and Arizona.</span></li>
<li><span style="font-family: Georgia, "Times New Roman", serif; font-size: medium;">In January 2012, U.S. Bank acquired the operations of BankEast Corp. of Tennessee through an FDIC-brokered deal. U.S. Bank gained USD $272-million of assets, USD $268-million of deposits and ten branches.</span></li>
<li><span style="font-family: Georgia, "Times New Roman", serif; font-size: medium;">In March 2013, U.S. Bank acquired the municipal bond trustee business of Deutsche Bank. Terms of the deal were not disclosed, but U.S. Bank would add USD $57-billion of assets to the USD $3-trillion already under administration in the corporate trust division.</span></li><li><span style="font-family: Georgia, "Times New Roman", serif; font-size: medium;">In September 2021, U.S. Bank announced that it would acquire MUFG Union Bank from Japan's Mitsubishi UFJ Financial Group for USD $8.0 billion, consisting of USD $5.5-billion in cash and 44-million shares of U.S. Bancorp common shares worth about USD $2.5-billion. After the transaction, Mitsubishi UFJ Financial Group would hold a 2.9% minority stake in U.S. Bancorp. U.S. Bank would gain MUFG Union Bank's more than 1 million loyal consumer customers and about 190,000 small business customers on the West Coast in addition to approximately $58 billion in loans and $90 billion in deposits. MUFG Union had 305 branches -- a vast majority in California, but also in Washington and Oregon states. The bank also operated commercial banking offices in in Texas, Illinois, New York, and Georgia.</span></li></ul><span style="font-size: medium;">
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<br />BankingMergershttp://www.blogger.com/profile/09902839579660694793noreply@blogger.comtag:blogger.com,1999:blog-7475905699260929987.post-91243823743883560412013-06-24T23:16:00.000-04:002015-02-27T15:56:54.608-05:00Japan Bank Mergers & Acquisitions (Mizuho Financial Group)<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiJdI1XUmIZT-qj9YV-x6Fp1l9cuH1YPTqBWUCeOUbQl5GxAqn3E4RKZS6glT8JkGd19iRc1-SGej0eP39VEwb-7KljbYfhBbyF9rko15nUnT7yTrkZN9bom2ZdX1na8ckqfQy5O5e99rY/s1600/ADonnyMizuho4A.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiJdI1XUmIZT-qj9YV-x6Fp1l9cuH1YPTqBWUCeOUbQl5GxAqn3E4RKZS6glT8JkGd19iRc1-SGej0eP39VEwb-7KljbYfhBbyF9rko15nUnT7yTrkZN9bom2ZdX1na8ckqfQy5O5e99rY/s320/ADonnyMizuho4A.jpg" height="244" width="320" xya="true" /></a></div>
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<span style="font-family: Georgia, "Times New Roman", serif;">Photo: A Mizuho Bank branch in Tokyo, Japan. With special thanks to my friends Rupert and Don for taking this photo and allowing me to use it.</span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;"><strong>Mizuho Financial Group</strong></span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">Mizuho Financial Group was formed in 2000 by the consolidation of three major Japanese banks in deep financial distress brought on by the country’s decade-long economic slump.</span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;"><em>Dai-Ichi Kangyo Bank</em></span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">The oldest predecessor of Mizuho Bank was the Dai-Ichi Kokuritsu Ginko (“First National Bank”). It was founded in 1873 as the country’s first modern commercial bank. Like other nationally-chartered banks, Dai-Ichi Kokuritsu Ginko had a dual mandate of conducting banking business as well as issuing currency on behalf of the Japanese treasury. Its creation was part of the drive to modernize Japan’s economy after over two centuries of shunning the outside world and banning foreign trade. Merely five years before the bank’s founding, Japan had undergone a political revolution called the Meiji Restoration, and had just opened up its ports for the first time since the 1630s. </span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">In 1896, Dai-Ichi Kokuritsu Ginko’s notes-issuing right was terminated with the passing of a new currency act in Japan. The bank was then re-incorporated as an ordinary commercial bank named Dai-Ichi Bank.</span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">Meanwhile, the Nippon Kangyo Bank was created in 1897 to finance long-term agricultural and rural development by issuing debentures. Throughout the early 20th century, Nippon Kangyo focused mostly on the rural and agricultural regions across the country, whereas Dai-Ichi’s operations concentrated within metropolitan Tokyo and Osaka. Both banks had no connection with the historic zaibatsu conglomerates of Mitsubishi, Mitsui, Sumitomo and Yasuda, each of whom controlled their own bank to provide preferential-rate financing to companies within their own cliques.</span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">Ironically, merely 50 years after opening up itself to foreign trade, Japan by the late 19th century had shifted towards an imperialist foreign policy. Korea, which had historically been a protectorate of China, became the focus of Japan’s attention. The brief but “game-changing” First Sino-Japanese War between 1894 and 1895 saw the embarrassing defeat for China and Japan gaining increasing political control over the Korean Peninsula. In addition, China also ceded the island of Taiwan to Japan.</span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">Japan’s ambitions to conquer its neighbours once again came to head in 1904, when it engaged in the Russo-Japanese War over Manchuria and complete control of Korea. To many experts’ surprise, Japan defeated Russia in 1905 and quashed Russia’s ambitions in China and the Far East. More importantly, Japan firmly established its military might 0n the world stage.</span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">Gaining the control of the Korean Peninsula, however, did not mark the end of Japan’s imperialistic expansionism. From 1931 onward, Japan began to invoke China, leading to intermittent border skirmishes. Then in 1937, a full invasion of China was launched, which following Japan’s surprise attack on Pearl Harbor, became part of greater World War II. In total, more than 33 million people died as a result of the military conflicts between the start of the Second Sino-Japanese War and the end of World War II.</span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">During World War II, the Japanese government had forced a merger between Dai-Ichi Bank and Mitsui Bank to create the Teikoku Bank in 1943. Nippon Kangyo, however, maintained its autonomy throughout the war. After the end of the war in 1945, the American-led occupation authority broke up the old powerful zaibatsu cliques based on the belief that such powerful industrial conglomerates facilitated the armament of the military regime. Hence in 1948, the old Dai-Ichi Bank was spun off from Teikoku Bank.</span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">Starting in the 1960s, Japan began to transform itself into an export-led economy, which took off in the 1970s as the country became a powerhouse in the manufacturing of textiles, electronics, machinery and automobiles. Both Nippon Kangyo and Dai-Ichi rode this wave of great economic expansion, and in the process became closely associated with a group of emerging industrials including Shiseido (cosmetics), Nippon Express (logistics), Seibu (department store), Hitachi (electronics), Kawasaki (heavy industries) and C. Itoh & Co. (import & export, raw materials, manufacturing and investment conglomerate).</span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">As these businesses grew to become some of the world’s largest in their respective industries, the demand for larger corporate loans also increased, which called for larger banks with a stronger capital base. In 1969, a proposal to combine the Mitsubishi Bank and Dai-Ichi Bank was put forward, but the shareholders of Dai-Ichi balked at the idea, fearing that the much larger Mitsubishi Bank (as part of the historic zaibatsu Mitsubishi conglomerate) would simply take Dai-Ichi’s capital, then discriminate against Dai-Ichi’s clients, some of which were rising competitors to the Mitsubishi group companies.</span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">Soon after walking away from Mitsubishi Bank, Dai-Ichi Bank agreed to merge with Nippon Kangyo Bank in 1970, adopting a new name Dai-Ichi Kangyo Bank. It immediately became one of Japan’s largest banks. The new bank now had 300 branches across the country, with a strong market share particularly in Tokyo and Osaka. However, in the Japanese corporate culture, maximizing efficiency and profits is often not the primary goal, instead, corporate cronyism that aims to maintain harmony amongst long-standing clients takes precedence over ensuring a reasonable return on investment. When Nippon Kangyo and Dai-Ichi were combined, integrating the two management teams and client lists proved challenging, as officials from both banks wanted to continue favouring their old clients over “the other side’s” clients. The in-fighting took years to smooth out.</span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">In due course though, Dai-Ichi Kangyo Bank expanded rapidly, benefiting from Japan’s soaring exports in the 1970s and 1980s. Internationally, the bank launched the Dai-Ichi Kangyo Trust Co. in the U.S. to engage in the investment banking business, something that deposit banks were forbidden to do domestically under Japanese banking regulations.</span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">Meanwhile, the U.S. government adopted a long-running low-dollar policy in the 1980s, which pushed up the value of the Japanese yen, just as Japan was amassing huge trading surpluses from its export machine. Awash with excess capital and a strong currency, Japan's banks made easy credit to their clients, leading to a period of extreme domestic real estate and stock price inflation. The ever rising prices led to more complacent lending by the banks, creating a vicious speculative cycle, which eventually pushed prices to unsustainable levels. Corporate Japan also made a number of high-profile overseas "trophy" purchases in the late 1980s, including New York City's Rockefeller Center and Columbia Pictures. The "speculation party" ended abruptly in the early 1990s, when Japan finally raised interest rates to cool the speculation.</span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">The asset price collapse hit Japan's economy and banks extremely hard and total loan losses across all banks are said to have amounted to USD $500-billion. </span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;"><em>Fuji Bank</em></span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">Fuji Bank can trace its history to Zenjiro Yasuda, a young entrepreneur who in 1866 launched a business dealing with silver, gold and copper. As a supporter of the Meiji Restoration movement, he was rewarded when the Tokugawa Shogunate government was overthrown in 1868 as one of the fiscal agents for the Ministry of Justice. Mr. Yasuda also participated in the creation of the Third National Bank in 1876. In 1880, Mr. Yasuda launched Yasuda Bank and Yasuda Mutual Life Insurance Co. Then in 1893, Zenjiro Yasuda acquired the ailing Tokyo Fire Insurance and transformed it into the Yasuda Fire & Marine Insurance Co. eventually.</span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">In 1923, the area surrounding Tokyo, known as Kanto, suffered a devastating earthquake that killed as many as 140,000 people. In addition to the loss of countless lives, the destruction of the capital region wiped out the properties and livelihood of those who survived. The resulting economic recession led to many bank failures, but Yasuda Bank was able to take over and integrate many of the weaker competitors into its own fold during the 1920s. </span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">As mentioned earlier, the 1930s saw the rapid rise of Japan’s militarism and agenda to dominate the Far East. Throughout the 1930s into 1945, Yasuda Bank helped fund Japan’s military spending and invasion of China (1937) and attack on Pearl Harbor (1941). Following World War II, the American-led Supreme Commander for the Allied Powers broke up the Yasuda financial group (like it did to other powerful Japanese businesses and banks). In 1948, Yasuda Bank was reformed into the new Fuji Bank.</span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">Laws restricting how corporate Japan could conduct business were relaxed in 1952, and several former Yasuda companies reverted to their pre-war names. Though Fuji Bank decided to keep its new name, it restored cross-shareholdings with Yasuda Mutual Life and Yasuda Fire & Marine Insurance.</span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">During the 1960s and 1970s, Fuji Bank built up a list of corporate clients that were amongst the most famous and powerful names. To better serve its clients’ foreign operations, Fuji opened offices in Australia, Switzerland, Hong Kong and Singapore in the early 1970s. As Japan’s banking regulations forbade city banks such as Fuji from engaging in the investment banking business within Japan, Fuji Bank established a number of securities brokerages in the United States in the 1970s. The OPEC oil crisis in 1973 initially shook Japan’s economy, as the country relied 100% on foreign oil. However, Japan’s auto makers benefited greatly from the skyrocketing global demand for fuel-efficient cars. </span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">Continuing its overseas expansion, Fuji in 1983 spent USD $425-million to buy the commercial lending division of Walter E. Heller International Corp., quickly gaining a significant loan portfolio.</span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">In 1988, Fuji acquired a 24.9% stake in Kleinwort Benson Government Securities, a Chicago-based dealer of U.S. treasuries for USD $14.5-million. At the time that was the maximum stake allowed for a foreign entity of a U.S. government securities dealer. However, just one year later, the law was changed to permit Fuji to fully acquire the remaining 75.1% of Kleinwort Benson Government Securities, which it promptly did for USD $44-million.</span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;"><em>Industrial Bank of Japan (IBJ)</em></span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">The Industrial Bank of Japan was created in 1902 by the Japanese government to promote the country’s industries. Just less than a decade earlier, Japan had surprised the world by defeating China, historically the dominant power in the Far East, during the Sino-Japanese War. Encouraged by this victory, Japan was even more determined to develop its manufacturing and heavy industries to catch up with the European and American powers. </span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">Following another victory against Russia in the Russo-Japanese War (1904 to 1905), Japan ramped up its development of steel mills, shipyards and chemicals plants during the 1920s and 1930s. When the government policy turned increasingly imperialistic, corporate Japan received funding from the IBJ and benefited from the sharply increased military spending. During World War II, IBJ’s responsibility expanded to occupied territories throughout Asia to finance industrial and mining activities that supported Japan’s war machine.</span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">After World War II ended in 1945, IBJ retreated to Japan and joined the post-war rebuilding effort. In 1950, under the direction of the occupying Allied Powers, IBJ was removed from government control and sold to private investors. Despite this, IBJ continued to play its role as the middleman between the government and Japan’s highly cronyism-influenced private sector.</span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">As a major long-term credit lender, IBJ held tremendous power through its massive shareholdings and debenture holdings in many Japanese corporations. However, even though IBJ grew rapidly along with Japan’s export-oriented economy during the 1980s, it lacked a domestic branch network to enter the personal banking market. Instead, the bank sought further growth outside of Japan, establishing subsidiaries in Britain, Switzerland and the United States to provide institutional investor and investment banking services.</span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">As mentioned earlier, Japan’s real estate market spiralled into a speculative bubble towards the late 1980s as the red-hot economy fed into ever rising domestic asset (stock and real estate) prices. Competing banks trying to gain market share loosened up loan approval conditions as land prices kept rising, giving lenders and borrowers alike the false sense that real estate was a sure bet. </span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">Needless to say, the bubble subsequently burst in 1990 and the massive loan losses and asset price depreciation pummelled Japan into decades of economic stagnation and dis-inflation or even deflation. </span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">After closing at an all-time high of 38,915 points on 1989-12-29, the Nikkei 225 stock benchmark fell by 63% by 1995 (indeed at one point in 2008, the index was down 82% from its 1989 all-time high). Due to Japan’s weak and ambiguous accounting rules, banks were allowed to cover up their loan losses by either extending non-performing loans, or by keeping the value of their repossessed (i.e. foreclosed) properties at the pre-crash levels. It was estimated that Japan’s banks lost some USD $500-billion from the collapse. Their failure to face up and address the depleted capital only clouded the true severity of the banking crisis and prolonged the uncertainty. Even with a reported USD $400-billion bailout from the government, Japan’s banking sector remained wounded and unable to heal. One may argue that Japan has never recovered from this credit crisis after the bubble burst in 1990 even as this article was written in 2013.</span><br />
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</span><span style="font-family: Georgia, "Times New Roman", serif;">Recent transaction(s):</span>
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<li><span style="font-family: Georgia, "Times New Roman", serif;">In 1999, three of the recession-ravaged banks: Dai-Ichi Kangyo Bank, Industrial Bank of Japan and Fuji Bank agreed to merge to form the present-day Mizuho Financial. Like other Japanese megabank mergers in the late 1990s, the value of the Fuji-Dai-Ichi Kangyo combination was not clearly-defined. While later reports placed the value at USD $40.1-billion, the figure appeared improbably high for two ailing banks. </span></li>
<li><span style="font-family: Georgia, "Times New Roman", serif;">In 2002, the merger was formally completed and under the parent company Mizuho Holdings were Mizuho Bank (retail banking) and Mizuho Corporate Bank (for enterprise banking).</span></li>
<li><span style="font-family: Georgia, "Times New Roman", serif;">In 2005, Mizuho Holdings was renamed Mizuho Financial Group.</span></li>
<li><span style="font-family: Georgia, "Times New Roman", serif;">In September 2011, Mizuho took a 15% stake in the Joint Stock Commercial Bank for Foreign Trade, also known as Vietcombank, for USD $567-million (JPY 43.5-billion). Vietcombank had a network of 377 branches at the time. Mizuho would become the Vietnamese bank's second largest shareholder after the Vietnam government.</span></li>
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<span style="font-family: Georgia;">Click here to return to the <a href="http://bankingmergers.blogspot.ca/2010/01/index-to-list-of-international-bank.html">Index</a> page.</span><br />
<br />BankingMergershttp://www.blogger.com/profile/09902839579660694793noreply@blogger.comtag:blogger.com,1999:blog-7475905699260929987.post-7541683886090766962013-03-09T21:28:00.002-05:002013-03-12T13:27:55.299-04:00South Africa Bank Mergers & Acquisitions (Nedbank Group)<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEivP3_WFLzfdjtQBsy7zcGM9hzpAgqJh-8gmN6DfpP4NxdegA5JbXabbBP7upqHd3eD_w10RczrU-vtvScHPorlAOaWpAJgJvtcMhkjtaLnduDwdIPvOyVTNRKAi9j22t3gudJ2UPbkUNE/s1600/NedbankIMG_0413.JPG" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="213" jsa="true" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEivP3_WFLzfdjtQBsy7zcGM9hzpAgqJh-8gmN6DfpP4NxdegA5JbXabbBP7upqHd3eD_w10RczrU-vtvScHPorlAOaWpAJgJvtcMhkjtaLnduDwdIPvOyVTNRKAi9j22t3gudJ2UPbkUNE/s320/NedbankIMG_0413.JPG" width="320" /></a></div>
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<span style="font-family: Georgia, "Times New Roman", serif;">Photo: Nedbank Group Ltd.'s headquarters complex in Johannesburg.</span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">With special thanks to my friend Marius Neethling, who took and gave me permission to use this photo. Dankje!</span><br />
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<strong><span style="font-family: Georgia, "Times New Roman", serif;">Nedbank Group Ltd.</span></strong><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">Nedbank Group is one of South Africa’s Big Four banks and gained prominence particularly in the early 2000s when it took over the BoE banking group. Nedbank’s direct lineage goes back to the 1888 establishment of the Nederlandsche Bank en Credietvereeniging voor Zuid-Afrika (NBCV) in Amsterdam, Holland. The bank’s name means “Dutch Bank and Credit Society for South Africa.”</span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">The final decade of the 19th century was a turbulent one in South Africa, as the Second Boer War was fought by the British Empire against the Dutch, Germanic and French settlers of the Orange Free State and the Transvaal Republic between 1899 and 1902. Even though Britain won the bloody and deadly war in the end, the military campaign was very controversial towards the end, with many criticizing the brutal tactics of the British forces. Following Britain’s victory, the two Boer republics became British colonies. In 1903, NBCV dropped the Credietvereeniging part of its long name and became known as Nederlandsche Bank voor Zuid-Afrika (NBZA). </span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">In 1910, the Union of South Africa was formed by the confederation of four British colonies: Cape of Good Hope, Orange River, Transvaal and Natal. When World War I broke out in 1914, South Africa was drawn into the European conflict with clashing ideologies. As part of the British Empire, the government supported Britain’s position against Germany and thus sent troops to attack the German Protectorate of South-West Africa (present-day Namibia). Yet many Afrikaners descended from the Dutch and Germanic settlers felt no hostility towards Germany. If anything, it’s the Afrikaners who suffered greatly under British hands during the two Boer Wars at the turn of the century. Supporters of the creation of a Boer South African Republic led a revolt known as the Maritz Rebellion against the British-led Union of South Africa. The rebellion was quickly suppressed, however, and South Africa successfully conquered South-West Africa in 1915 from Germany.</span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">In 1925, the Nederlandsche Bank voor Zuid-Afrika took over the Transvaalsche Bank en Handelsvereeniging (“Transvaal Bank and Commerce Society”), which was founded in 1892. At the onset of World War II, the “anti-British, pro-Afrikaner” National Party opposed joining Britain to declare war on Nazi Germany, preferring to keep the country neutral. Those anti-British sentiments quickly dissipated, however, and South Africa joined the Allies forces against the Axis enemies.</span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">By the end of the deadly and lengthy war, South Africa’s economic and political development had reached a point where having the NBZA being registered and controlled in the Netherlands no longer made sense. In 1951, NBZA Anglicized its name to the Netherlands Bank of South Africa (NBSA) and was re-registered in South Africa as a local banking company. The choice of name reflected the bank’s desire to become more local, but not to let go too much of its Dutch and white-dominated heritage.</span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">In 1964, the computer age arrived when NBSA installed South Africa’s first computerized banking record system. Through a licensing agreement with American Express, the bank introduced the American Express Gold card in South Africa in 1969. In the same year, all remaining shareholding of NBSA was finally transferred to South Africa from the Netherlands.</span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">The 1970s were a transformative decade for the bank. First, in 1971, the Netherlands Bank of South Africa changed name to Nedbank Ltd., further reducing the direct reference to the Netherlands, even though “Ned” is actually a short form of Nederland, the Afrikaans spelling of “the Netherlands.” In 1973, the umbrella organization Nedbank Group Ltd. was created when Nedbank merged with trust company Syfrets South Africa and merchant bank Union Acceptance Ltd. One of Syfrets SA’s constituents, the South African Association for the Administration and Settlement of Estates (SAAASE), was founded in 1834 and billed itself as one of the world’s first trust companies. Syfrets Trust and SAAASE merged in 1967. Union Acceptance Ltd., meanwhile, was established in 1955 as South Africa’s first merchant bank.</span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">The year 1973 also saw Old Mutual, a historic mutual insurer in South Africa, taking a stake in Nedbank Group Ltd., thus commencing the long and complex association between the two financial services firms. During the decade, Nedbank also established Nedfin Bank by consolidating the Credit Corporation of South Africa Ltd. (founded in 1946) and the Lease Plan International Ltd. (founded in 1955).</span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">The second half of the 20th century was turbulent times in South Africa as the anti-apartheid protest gathered steam. While racial segregation had been in existence since the Dutch settlement and British colonial days, sadly it was further institutionalized in the 20th century, starting with the 1913 Natives’ Land Act, which in contrast to its name, severely restricted income-producing property ownership by the native black population. In 1948, the ruling National Party formally adopted and legislated a white supremacy policy. For the next 46 years, the white minority elite ruled South Africa by apartheid, keeping the black majority population in poverty by barring them from education, property ownership, well-paying jobs, law-making and voting rights, or entering professions such as becoming medical doctors, lawyers or accountants.</span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">Throughout the 1970s and 1980s, clashes between the native protesters and the military grew increasingly violent and deadly. As the anti-apartheid movement gained attention and sympathy outside of South Africa, Christian, grass-root and academic organizations particularly in the U.S. and Britain began to pressure their governments to condemn apartheid. Other African nations also isolated their southern neighbour diplomatically. By the mid-1980s, the push to get American multi-national corporations to divest from South Africa gained traction, though British and European governments and businesses were much slower to follow.</span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">While the anti-apartheid movement was encouraged by the increased economic isolation, the sanctions were not without pain to South Africa’s ordinary native black population: unemployment amongst the already low-income labourers soared, inflation worsened, the rand tumbled against foreign currencies, and economy growth all but disappeared. The rising racial violence, social chaos and economic recession also led to an exodus of the white minority in the 1980s and 1990s.</span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">Amidst this chaos, several important events happened to Nedbank in 1986. First, Old Mutual, the South African Mutual Life Assurance Society that had owned a stake in Nedbank Group Ltd. since 1973, raised its stake in the bank to 53% just as many foreign institutional investors were divesting their South African holdings. In the same year, Nedbank acquired Finansbank Ltd. (a merchant bank founded in 1970) and created the Nedbank Investment Bank. Finally, the Cape of Good Hope Bank (CGHB) also joined the Nedbank Group in 1986. CGHB was established in 1831 and was the country’s oldest bank. CGHB had just over 10 branches and was a niche bank offering wealth management for higher net-worth individuals, financing for commercial and industrial real estate developers, insurance broking and treasury services.</span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">In 1988, the South African Permanent Building Society, which began as the Kimberley Permanent Mutual Building and Investment Society in 1841, was taken over by Nedbank. Just before the close of the decade, Nedbank Group Ltd. adopted the new name Nedcor Ltd. in 1989 as the holding company for Nedbank, Nedbank Investment Bank, Nedfin Bank and Permanent Bank (the new name for the South African Permanent Building Society).</span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">The end of apartheid in 1994 heralded a new era for South Africa, when anti-apartheid activist Nelson Mandela was elected as the President of South Africa. In an optimistic rush to open up banking access to the native black people, Nedcor’s Permanent Bank spun off a division called the Peoples Bank to cater to the low-income, formerly “under-banked” black population.</span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">Unfortunately, the beginning of native black rule and the dismantling of racial segregation laws did little to improve the lives of the masses. The lack of funding and infrastructure to provide education, employment, healthcare, welfare, and public transportation continued to afflict most South Africans. Unemployment remained discouragingly high and income remained suppressed. The AIDS epidemic also devastated the social fabric of the country. Even with the best policies and perfect execution under the most desirable conditions, it could take one or several generations for South Africa’s living standards to improve.</span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">In 1997, trust company Syfrets SA and UAL Merchant Bank (formerly Union Acceptance Ltd.), both part of Nedcor since 1973, were consolidated into Nedbank Investment Bank, which at the same time was renamed Nedcor Investment Bank (NIB). NIB was partially floated on the Johannesburg stock exchange in 1999.</span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">Meanwhile also in 1999, the policyholders of Old Mutual, or formally the South African Mutual Life Assurance Society, voted to de-mutualize itself, moved its jurisdiction of registration to England, and legally adopting the name Old Mutual plc. Old Mutual plc’s shares were then listed on the London, Johannesburg, Zimbabwe, Malawi and Namibia stock exchanges. The insurer and fund manager continued to hold 53% of Nedcor Ltd.</span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">By the early 2000s, the post-apartheid economic recession, which was not helped by the multi-decade low precious metals prices, combined with the revelation of widespread accounting frauds amongst South Africa’s smaller financial institutions led to the collapse of several second-tier banks. </span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;"> </span><span style="font-family: Georgia, "Times New Roman", serif;">Recent transaction(s):</span><br />
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<li><span style="font-family: Georgia, "Times New Roman", serif;">In 2000, the ailing FBC Fidelity Bank was rescued by the government and subsequently transferred to Nedcor. Nedcor integrated FBC Fidelity into its Peoples Bank unit, which caters to the low-income black population and is also a designated black economic empowerment (BEE) bank. By 2002, Nedcor had transferred 30% of Peoples Bank to a BEE consortium to reduce concentration of ownership by the old wealth and the white minority.</span></li>
<li><span style="font-family: Georgia, "Times New Roman", serif;">Also in 2000, Nedcor Ltd. sought approval to combine with Standard Bank Investment Corp. Ltd. (“Stanbic”), the parent company of Standard Bank of South Africa. However, the South African Ministry of Finance vetoed the proposal.</span></li>
<li><span style="font-family: Georgia, "Times New Roman", serif;">In 2001, Nedcor’s secondary retail banking brand, Permanent Bank, was combined with Old Mutual plc’s Old Mutual Bank with no cash changing hands. Nedcor and Old Mutual plc each owned 50% of the new Old Mutual Banking Services.</span></li>
<li><span style="font-family: Georgia, "Times New Roman", serif;">Also in 2001, Nedcor acquired 50.1% of Imperial Bank, a vehicle finance firm founded by Imperial Holdings in 1996.</span></li>
<li><span style="font-family: Georgia, "Times New Roman", serif;">Also in 2001, Nedcor bought Fleming Offshore Banking from JPMorgan Chase for ZAR 594-million (GBP 51-million). Fleming Offshore was based in the Isle of Man and Jersey. At the same time, Nedcor’s majority owner Old Mutual plc transferred its own Guernsey-based fiduciary business into Fleming Offshore, which was then re-named Gerrard Private Bank. When all transactions completed, Nedcor held 74.5% of Gerrard Private Bank, with Old Mutual plc holding the rest.</span></li>
<li><span style="font-family: Georgia, "Times New Roman", serif;">Another major constituent that became part of Nedcor was the BoE Ltd., which traces its history to the 1838 establishment of a Cape Town trust company called the Board of Executors (as in the executor of a will and testament). In 1998, BoE took over NBS - Natal Building Society (established in 1882) and Boland PKS (established in 1900). The acquisitions proved ill-timed, as rising mortgage impairments severely undermined BoE NBS’ capital ratio. In 2002, a confidence crisis sent panicky depositors rushing to withdraw their money from the bank. Soon after the bank run, BoE Ltd. agreed to a buyout offer from Nedcor Ltd. worth ZAR 7.7-billion (GBP 485-million). By acquiring the No. 6 bank BoE, Nedcor became South Africa’s largest bank based on deposit.</span></li>
<li><span style="font-family: Georgia, "Times New Roman", serif;">In October 2002, Nedcor Investment Bank bought the 50% stake of Franklin Templeton Nedcor Investment Bank Asset Management Ltd. it didn’t already own for ZAR 180-million (GBP 11-million).</span></li>
<li><span style="font-family: Georgia, "Times New Roman", serif;">Also in 2002, Nedcor Ltd. acquired the 16% of Nedcor Investment Bank that it didn’t own from the public and Old Mutual plc for ZAR 685-million (GBP 43-million).</span></li>
<li><span style="font-family: Georgia, "Times New Roman", serif;">In 2005, Nedcor Ltd. went back to its old name Nedbank Group Ltd.</span></li>
<li><span style="font-family: Georgia, "Times New Roman", serif;">In 2007, Nedbank bought out its parent Old Mutual plc’s 50% interest in Old Mutual Banking Services. The now wholly-owned Old Mutual Bank would provide banking services to Old Mutual plc’s life insurance clients.</span></li>
<li><span style="font-family: Georgia, "Times New Roman", serif;">In 2008, Nedbank and Ecobank Transnational Inc. announced an alliance to improve client and business relationships. Ecobank is a Togo-based, pan-African bank that operated over 600 branches across dozens of countries in middle Africa. </span></li>
<li><span style="font-family: Georgia, "Times New Roman", serif;">In 2009, Nedbank bought the 49.9% of vehicle financier Imperial Bank that it didn’t already own from partner Imperial Holdings for ZAR 1.77-billion (USD $226-million).</span></li>
<li><span style="font-family: Georgia, "Times New Roman", serif;">In August 2010, Anglo-Hong Kong banking giant HSBC Holdings plc announced that it was in talks to acquire 70% of Nedbank Group Ltd., including the entire 52% stake held by Anglo-South African insurer Old Mutual plc, for USD $7.3-billion. However, the talks ended two months later without a deal.</span></li>
<li><span style="font-family: Georgia, "Times New Roman", serif;">In December 2011, Nedbank provided a three-year, USD $285-million facility to Ecobank Transnational Inc. with a call option that allowed Nedbank to subscribe to 20% of Ecobank between the 24th and 36th month after the closing of the transaction. The facility enabled Ecobank to acquire Oceanic Bank of Nigeria. By the end of 2011, Ecobank served over 8 million clients through over 1,100 branches.</span></li>
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<span style="font-family: Georgia, "Times New Roman", serif;">Click here to return to the </span><a href="http://bankingmergers.blogspot.ca/2010/01/index-to-list-of-international-bank.html"><span style="font-family: Georgia, "Times New Roman", serif;">Index</span></a><span style="font-family: Georgia, "Times New Roman", serif;"> page.</span>BankingMergershttp://www.blogger.com/profile/09902839579660694793noreply@blogger.comtag:blogger.com,1999:blog-7475905699260929987.post-6591951957851688442012-09-11T20:13:00.001-04:002018-12-31T18:15:46.260-05:00China Bank Mergers & Acquisitions (Agricultural Bank of China)<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhadF-zVaNigfbshe6v6C5gK5VZzTBKhFGUKn5XpvEiMveaOiD-ovz0usmK8vXXaBaH_O6g0-lT0nWrTTv44il9AMMpimIs5fWE4jA2sGVJTGF3Bufz4KM4EtXhNXhXDUD8vyPoiwK1dNs/s1600/AP1130326.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" hea="true" height="240" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhadF-zVaNigfbshe6v6C5gK5VZzTBKhFGUKn5XpvEiMveaOiD-ovz0usmK8vXXaBaH_O6g0-lT0nWrTTv44il9AMMpimIs5fWE4jA2sGVJTGF3Bufz4KM4EtXhNXhXDUD8vyPoiwK1dNs/s320/AP1130326.jpg" width="320" /></a></div>
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<span style="font-family: Georgia, Times New Roman, serif; font-size: large;">An Agricultural Bank of China branch in the town of Chencun (陳村鎮), province of Guangdong (Canton), China.</span><br />
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<strong><span style="font-family: Georgia, "Times New Roman", serif;">Agricultural Bank of China (農業銀行, 农业银行)</span></strong></span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">Agricultural Bank of China (known as “ABC” in China, AgBank outside), along with the Bank of China, China Construction Bank and the Industrial and Commercial Bank of China, are the country’s Big Four state-owned commercial banks. The current Agricultural Bank of China was established only in 1979, though it refers to its earliest founding to 1951, when the People’s Republic of China (the Communist China that was established in 1949) nationalized and consolidated the Farmers Bank of China with the Co-operation Bank to create the Agricultural Co-operation Bank. Merely one year later, however, the Communist government integrated the Agricultural Co-operation Bank into People’s Bank of China, the country’s central bank.</span></span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">In 1955, the government established the Agricultural Bank of China but it too was merged into the People’s Bank in 1957. The whole process of creating an Agricultural Bank only to integrate it into the People’s Bank repeated once again between 1963 and 1965.</span></span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">Finally in 1979, under China’s newly-adopted “economic reform and open-door” policy, the Agricultural Bank of China was re-established once more to serve China’s rural communities. The bank’s mandate was to accept deposits as well as to finance agricultural development in China’s vast countryside.</span></span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">In 1984, the bank obtained its first ever World Bank loan to promote agricultural reform. In 1994, the goal of official economic development in rural China was separated and transferred to a new bank named the Agricultural Development Bank of China (ADBC), which was launched with over CNY 259-billion in agricultural loans (assets) transferred from the Agricultural Bank of China and the Industrial and Commercial Bank of China (ICBC).</span></span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">For many years, AgBank also held responsibilities of supervising the country’s rural credit co-operatives (RCC), a vast network of credit unions in the countryside. In 1996, however, the People’s Bank of China took over those responsibilities.</span></span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">Under Communist China’s state-control, bureaucracy and corruption was common in all Chinese banks until the 1990s, when regulatory and managerial reform began to slowly transform them towards more market-driven and risk-conscious enterprises. In 1997, AgBank accelerated the abolishment of its policy-based lending practices. No longer would the bank offer credit based largely on the State Council’s agri-economic policies, rather, it would make lending decisions based on market conditions and expected rate of return like other commercial banks.</span></span><br />
<span style="font-family: Georgia, Times New Roman, serif; font-size: large;"><span style="font-family: Georgia, "Times New Roman", serif;"><br /></span>
<span style="font-family: Georgia, "Times New Roman", serif;">However, despite a decade of reforms, AgBank’s multiple billions of non-performing loans remained a major obstacle to the bank’s profitability. While three of the other Big Four state-owned banks floated their shares publicly in Hong Kong and Shanghai between 2005 and 2006, an initial public offering for AgBank had to be delayed until the bank’s capital level was more acceptable.</span></span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">In late 2007, the Chinese government took over CNY 816-billion (USD $116-billion) of bad loans from AgBank at face value to improve the bank’s capital reserve. Then in October 2008, China’s sovereign investment fund China Investment Corp. further injected CNY 130-billion (USD $19-billion) into the heavily-indebted AgBank. The funding was provided by a CIC subsidiary called Central Huijin Investment Co. Ltd. Following the capital infusion, AgBank became jointly-owned by Central Huijin and the Chinese Ministry of Finance.</span></span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">In 2009, the bank was formally converted into a joint-stock company with limited liability and adopted the name Agricultural Bank of China Ltd.</span></span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">Following the multi-year long preparation, in July 2010, various state agencies of the Chinese government floated a 16.3% stake (47.65-billion shares) of the Agricultural Bank of China in Hong Kong and Shanghai that raised HKD $152.5-billion (CNY 127.7-billion, USD $19.23-billion). Between late July and August 2010, the bank was able to sell its overallotment shares in both Hong Kong and Shanghai, raising an additional HKD $12.17-billion (USD $1.57-billion) in Hong Kong and CNY 8.95-billion (USD $1.31-billion) in Shanghai, bringing the total IPO to a new world record of HKD $171.0-billion (CNY 151.2-billion, USD $22.1-billion).</span></span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">As of 2010, Agricultural Bank’s 24,000 branches, 30,000 ATMs, 440,000 employees served more than 350-million customers.</span></span><br />
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<span style="font-family: Georgia, Times New Roman, serif; font-size: large;">Click here to return to the <a href="http://bankingmergers.blogspot.ca/2010/01/index-to-list-of-international-bank.html" target="_blank">Index</a> page.</span><br />
<span style="font-family: "georgia" , "times new roman" , serif;"><br /></span>BankingMergershttp://www.blogger.com/profile/09902839579660694793noreply@blogger.comtag:blogger.com,1999:blog-7475905699260929987.post-59242895932861113712012-07-09T20:52:00.000-04:002012-07-10T14:39:11.788-04:00Sweden Bank Mergers & Acquisitions (Swedbank)<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj2j4B5IGNKa1JzJOlfK0oC07jQrva1Z8L2wSokKztGEAm9sMl-A3WXlts8tdz17JxJXCtALNzB-VpOvut6VlNNtKSjahJj7ifW_Z1ZlvhqdSnb0890DixeieE-hlWoAgjALoipT_UteOw/s1600/Swedbank2.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="213" sca="true" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj2j4B5IGNKa1JzJOlfK0oC07jQrva1Z8L2wSokKztGEAm9sMl-A3WXlts8tdz17JxJXCtALNzB-VpOvut6VlNNtKSjahJj7ifW_Z1ZlvhqdSnb0890DixeieE-hlWoAgjALoipT_UteOw/s320/Swedbank2.jpg" width="320" /></a></div>
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<span style="font-family: Georgia, "Times New Roman", serif;">Photo: The sign of a Swedbank branch. The oak tree logo has been in use by one of Swedbank's predecessor savings banks since at least 1928 to signify the benefits of long-term savings and growth.</span><br />
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</font><span style="font-family: Georgia, "Times New Roman", serif;">Photo source: Swedbank's corporate press web page.</span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;"><strong>Swedbank AB (formerly FöreningsSparbanken AB)</strong></span><br />
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<span style="color: #3d85c6; font-family: Georgia, "Times New Roman", serif;"><em>Sparbanken Sverige AB (Swedbank)</em></span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">Throughout the Renaissance period to the early 19th century, depositing or borrowing money at a bank was reserved only for the aristocrats and wealthy merchants with access to private banks. The average person at the time would not have had the surplus money to save, the credibility to borrow, or access to a bank.</span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">Then in 1810, a clergyman named Henry Duncan founded the Ruthwell Parish Bank in the Scottish village of Ruthwell. The new bank permitted low-income villagers to open accounts with minimal balances. The idea is to encourage saving for a rainy day and for old age security. Rev. Duncan used the bank’s surplus to run a charity for the poor, as well as to build a parish school for the local children.</span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">The concept under which bank profits are channeled to promote charitable causes and social welfare soon spread like wildfires across Britain and Europe, prompting the Swedish government to launch a study of the Scottish savings bank movement. In 1820, a German merchant named Eduard Ludendorff established Sweden’s first savings bank in Göteborg (Gothenburg) with the aim to encourage long-term savings for the average citizens, to offer small loans to individuals and small businesses, and to finance local and regional projects.</span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">By the 1870s, more than 300 savings banks had sprung up across Sweden. Interestingly, the savings banks operated for decades without any regulatory legislation until 1892, when the first Savings Bank Act became law. In 1900, the Swedish Savings Bank Association was established to facilitate collaboration between the member banks. This led to the creation of Sparbankernas Bank (literally, the "Savings Banks’ Bank," which also used a second brand name “Swedbank”) in 1942 to handle international settlement of fund transfers and foreign exchange for its members.</span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">In the 1970s, banking reforms in Sweden largely eliminated the legal distinction between the commercial banks, savings banks and co-operative banks. Throughout the booming 1980s, the savings banks and co-operative banks exploited the de-regulation and snatched market share from the commercial banks by aggressively lending to less credit-worthy clients. The engagement of this fierce competition led to a systematic disregard of default risk by the entire banking sector. The resulting massive increase in money supply inflated a speculative real estate bubble in the late 1980s.</span><br />
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<span style="color: #3d85c6; font-family: Georgia, "Times New Roman", serif;"><em>Föreningsbanken AB</em></span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">In 1915, the Swedish parliament passed legislation for the creation of the agricultural co-operative credit society (banking) system. The co-operative banking system was based on the “one member, one vote” principle, under which the credit society is owned collectively and mutually by its member-clients and not by shareholders who can buy and sell shares at will. The mandate of the agricultural credit co-op was chiefly to promote agriculture and provide loans and savings accounts for small-scale farm owners, not to maximize profits.</span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">Sweden’s first agricultural credit co-op opened for business in 1915 in Västerhaninge, south of Stockholm. Under the co-operative structure, each member was required to work in the bank based on the size of his farm. By the 1930s, the numerous agricultural banking co-ops had almost 800 offices.</span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">In 1956, significant changes to the agricultural co-operative bank legislation eliminated the members’ personal responsibility for the banks’ operations, and also relaxed restrictions that previously only offered loans to property title holders. In 1958, the various agricultural credit co-ops (known as “jordbrukskassan” in Swedish) established a “central bank” named Jordbrukets Bank ("Bank of Agriculture"), whose function was similar to the savings bank sector’s “central bank” Sparbankernas Bank. Subsequently, Jordbrukets Bank was renamed Föreningsbankernas Bank ("Union Bank’s Bank").</span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">Following Sweden’s banking reforms in the 1970s, the savings banks and the agricultural co-operative banks were no longer restricted to taking small personal deposits only, and they began to compete with the limited-liability commercial banks. In 1974, the various agricultural co-op banks formally adopted the Föreningsbanken (“Union Bank”) brand.</span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;"><strong>The Swedish Economic and Banking Crisis in the Early 1990s</strong></span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">Towards the late 1980s, Sweden and the rest of Scandinavia suffered a major economic and banking crisis. Loose lending practices earlier in the decade had brought about a speculative real estate bubble. By 1987, Sweden’s inflation rate began to rise noticeably, which caused interest rates to rise starting in 1988. Meanwhile, the Collapse of Communism in the Soviet Bloc in 1989 led to economic chaos in many of Sweden’s exports markets. As exports and demand for goods and services slumped, unemployment rose. Consumer confidence tumbled and the real estate bubble burst. To use an oxymoron, it was an economic “perfect storm.” </span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">As borrowers defaulted on their loans en masse, the over-leveraged banking sector saw its losses skyrocket. In October 1991, Sweden’s largest savings bank Första Sparbanken’s equity capital was wiped out by losses. Unfortunately, the liquidity crisis was not unique to Första, and soon the entire panic-stricken Swedish banking sector was on the verge of collapse.</span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">By September 1992, the Swedish government had to pledge unlimited state loan guarantees for the banking sector to avoid a cross-the-board bank run, covering 114 banks. The only bank that did not require the state guarantee was Svenska Handelsbanken, Sweden’s dominant private-sector bank.</span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">The crisis culminated in the collapse of confidence in the Swedish economy and currency in September 1992. As international investors dumped the Swedish krona (SEK) in the foreign exchange market, the central bank Sveriges Riksbank raised the overnight interest rate to 500 per cent per annum in a desperate but futile attempt to stem capital outflow, and to maintain its currency peg with the European Currency Unit (ECU) as part of the European Exchange Rate Mechanism (ERM). </span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">In November, 1992, Sweden conceded defeat and gave up attempts to maintain the krona’s peg with the ECU. Sweden has since opted to keep its own currency rather than adopting the Euro.</span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">The economic and banking crisis accelerated the pace of reform for the savings banks and the agricultural co-operative credit societies in Sweden. In the savings bank sector, the business operations and management were separated from the socio-economic mandates of the savings banks. The goal was to achieve greater strategic and management freedom away from loan approvals made based on the socio-economic mandates. Far more disciplined risk management controls were also implemented as part of the reform. </span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">A central piece of the restructuring was to convert the savings banks’ former public-sector (i.e. regional government-owned) status into the joint-stock (public limited-liability status, or “Aktiebolag” and “AB” in Swedish) format. The regional foundations initially still held 100% of the joint-stock savings banks. However, as the individual savings banks were far too small to engage in major lending activities without exposing themselves to excessive risks, the foundations began to merge their individual savings banks into a much bigger banking group.</span><br />
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<span style="font-family: Georgia, "Times New Roman", serif;">Recent transaction(s):</span><br />
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<li><span style="font-family: Georgia, "Times New Roman", serif;">In 1991, 12 regional agricultural co-operative banks merged with their central bank unit Föreningsbankernas Bank to form the new Föreningsbanken AB.</span></li>
<li><span style="font-family: Georgia, "Times New Roman", serif;">In 1992, 10 savings banks joined forces with the Sparbankernas Bank (also known as Swedbank, the savings banks’ central bank unit), to form the Sparbanksgruppen AB ("The Savings Banks Group"). Like the former Sparbankernas Bank, the holding company Sparbanksgruppen had no bank licence of its own, as the 10 regional savings banks continued to operate as separate legal entities. The regional foundations that used to own the individual banks now collectively owned 100% of the parent company Sparbanksgruppen, which was also known as Swedbank.</span></li>
<li><span style="font-family: Georgia, "Times New Roman", serif;">Later in 1992, as a second step of the industry restructuring, Sparbanksgruppen AB (Swedbank) merged with the ailing Sparbanken Första to form Sparbanken Sverige AB (“Savings Bank Sweden," also known as Swedbank).</span></li>
<li><span style="font-family: Georgia, "Times New Roman", serif;">In 1994, Föreningsbanken AB was listed on the Stockholm stock exchange.</span></li>
<li><span style="font-family: Georgia, "Times New Roman", serif;">In 1995, the foundations holding 100% of Sparbanken Sverige/ Swedbank floated part of their stake in the bank on the Stockholm stock exchange.</span></li>
<li><span style="font-family: Georgia, "Times New Roman", serif;">In 1997, Sparbanken Sverige/ Swedbank merged with Föreningsbanken to form FöreningsSparbanken AB. The deal was valued at USD $1.6-billion according to some reports. The new FöreningsSparbanken/ Swedbank became Sweden's No. 2 bank at the time.</span></li>
<li><span style="font-family: Georgia, "Times New Roman", serif;">In 1999, FöreningsSparbanken/ Swedbank raised its holding in Estonian-based Hansabank to more than 50%. Founded in 1991 in Estonia, Hansabank also operated in Latvia and Lithuania.</span></li>
<li><span style="font-family: Georgia, "Times New Roman", serif;">In 2001, FöreningsSparbanken and rival SEB agreed to merge and form SEB Swedbank. However, in September, the European Union’s anti-competition authority blocked the merger, citing a significant loss of competition if the merger was allowed to proceed. The merger proposal was subsequently terminated.</span></li>
<li><span style="font-family: Georgia, "Times New Roman", serif;">In 2004, Swedbank’s majority-owned Hansabank bought Russia’s Kvest Bank.</span></li>
<li><span style="font-family: Georgia, "Times New Roman", serif;">In 2005, FöreningsSparbanken bought the 40% of Hansabank not already owned for Eur 1.73-billion.</span></li>
<li><span style="font-family: Georgia, "Times New Roman", serif;">In 2006, FöreningsSparbanken officially changed its name to Swedbank AB.</span></li>
<li><span style="font-family: Georgia, "Times New Roman", serif;">In 2007, Swedbank bought Ukraine's TAS-Kommerzbank for USD $735-million (Eur 536-million). TAS-Kommerzbank operated 170 branches and had a staff of 2,300. It was the country's 13th largest bank.</span></li>
<li><span style="font-family: Georgia, "Times New Roman", serif;">In October 2008, Swedbank raised SEK 12.4-billion (USD $1.5-billion) in a preferred securities rights issue during the global credit crisis.</span></li>
<li><span style="font-family: Georgia, "Times New Roman", serif;">In October 2009, Swedbank raised another SEK 15.1-billion (Eur 1.47-billion, USD $2.1-billion) in new capital from a fully-subscribed rights issue. Swedbank opted to raise capital from its own shareholders rather than to seek more state guarantees from the Swedish government. The bank was experiencing a sharp rise in loan defaults in its Baltic operations.</span></li>
</ul>
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