Swire Chin's List of International Banking Mergers

Welcome to Swire Chin's History of International Banks

2012-01-07T18:33:00.001-05:00

Welcome to Swire Chin’s List of International Banking Mergers & Acquisitions (M&As). Click here to go to the Index page to access all the pages published. Existing pages are updated whenever a major banking acquisition or divestment is announced. I plan to publish a new page every month or every other month. I'm working on a number of Canadian, American, British, Irish, Scandinavian, Italian, Singaporean, Chinese and Japanese banks.

Like everyone in a modern society, I’ve a love-hate relationship with banks. I do, however, enjoy chronicling the genealogy of commercial banking.Please feel free to email me if you’ve any comment. My email address can be found on my Profile page.

Canada Bank Mergers & Acquisitions (Bank of Nova Scotia)

2012-01-07T18:09:00.005-05:00

Photo: The Toronto Professional Fire Fighters Celtic Society Pipeband marches by a Scotiabank branch in Toronto during the St. Patrick's Day Parade. The name "Nova Scotia" is a Latinized form of "New Scotland."

The Bank of Nova Scotia

Halifax in the early 19th century was a busy port that handled lumber, fishery and agricultural trade. Its strategic location has made it a popular stopping point for ships sailing between North America and Europe since the 18th century. In 1832, a group of Haligonian merchants established the Bank of Nova Scotia (now often known as the Scotiabank) as an alternative to the port city’s banking monopoly, a private bank called the Halifax Banking Company. Windsor (Nova Scotia) in 1837 became the bank’s first agency outside of Halifax. More agencies had been opened in Pictou, Yarmouth, Annapolis and Liverpool, all within Nova Scotia, by 1839.

Economic fortunes in the 19th century, however, were highly volatile. Cycles of boom and bust were common and the bank remained a provincial bank during its first 42 years of existence. It was seven years after the Canadian Confederation that the Bank of Nova Scotia finally expanded outside of the province when the Saint John (New Brunswick) office opened for business in 1874. In 1882, an office was opened in Prince Edward Island’s Charlottetown. Just one year later, the bank acquired the Union Bank of Prince Edward Island, greatly expanding its operations in the province.

In 1882, the Bank of Nova Scotia joined the rush to head west when it opened a branch in Winnipeg. The city was booming at the time, fuelled by the construction of the trans-continental Canadian Pacific Railway and a cross-border railway linking Winnipeg and Minneapolis. Ironically, the boom ended spectacularly just as soon as Scotiabank arrived. After three years of struggles, the office was shut down. At this time, Minneapolis was the American Midwest centre of the wheat trade and flour industry. Scotiabank promptly relocated its Winnipeg operations to Minneapolis in 1885. However, the constantly shifting business eventually led to yet another move of the bank’s Midwestern operations from Minneapolis to Chicago in 1892.

Back in the East Coast, a severe economic downturn in Newfoundland felled both of its banks in 1894 – the Commercial Bank of Newfoundland and the Union Bank of Newfoundland. Newfoundlanders suddenly found themselves holding worthless banknotes and without any banking service. The Bank of Nova Scotia swung into action and promptly opened an office in St. John’s, beating the Bank of Montreal and the Merchant’s Bank of Halifax (now Royal Bank of Canada).

Despite Montreal’s long history as Canada’s primary financial centre, Scotiabank didn’t open a branch there until 1888. This was followed by the bank’s first Toronto branch in 1897. By the turn of the 20th century, the Canadian economy had become much better developed, and the bank once again ventured west towards the Prairie Provinces and the Pacific Coast. The Winnipeg branch was re-opened in 1899, and new branches were opened in Calgary, Edmonton and Vancouver in 1903, followed by Saskatoon and Regina in 1906 and 1907. Finally Scotiabank can now be called a national institution.

Internationally, merchants in Halifax have had a long history of trading Canadian salt fish, lumber and potatoes for Jamaican rum, spices, sugar and molasses. Seeing that Jamaica only had one bank at the time (the Colonial Bank, which was part of Britain’s Barclays Bank until the 1977), the Bank of Nova Scotia opened a branch in Kingston in 1889. The bank became so established in Jamaica subsequently that many Jamaican tourists visiting Canada are said to be amazed that a Jamaican bank should have so many branches in Canada, not knowing that Scotiabank Jamaica is actually owned by Canada’s Scotiabank! Elsewhere in the Caribbean, Scotiabank launched operations in Cuba and Trinidad & Tobago in 1906.

Recognizing the limited opportunities in the Maritimes region compared with the rapidly industrializing Ontario economy, Scotiabank moved its headquarters from Halifax to Toronto in 1900, merely three years after its first branch opened there. In quick succession, Scotiabank then acquired the Bank of New Brunswick in 1913, the Toronto-based Metropolitan Bank in 1914 and the Bank of Ottawa in 1919. The banking industry in Canada was rapidly consolidating as smaller institutions found it increasingly difficult to obtain low-cost capital, while larger institutions were eager to acquire instant new clients and branch networks.

Peace was disrupted in 1914 when World War I broke out in Europe and elsewhere. Over 600 Scotiabank employees enlisted to fight overseas. Their void was filled by the first significant hiring of women employees.

Peace and boom times returned for the bank in at end of the Great War but the Roaring Twenties came to an abrupt end when the stock market in New York crashed in 1929, triggering the decade-long Great Depression. Canada did not escape the economic train wreck and its unemployment soared as spending and industrial output tumbled. Due to the difficult economic conditions, the bank shut down a number of branches during the 1930s.

When World War II broke out in 1939, Canada, being part of the British Empire, immediately sent its soldiers across the Atlantic to join the front line. Over 900 Scotiabank employees fought overseas and suffered a heavy toll. By the time peace finally returned in 1945, much of Europe and the Orient had been devastated and millions of people had been killed, injured or displaced.

The post-war 1950s was a boom time for Canada and the U.S. as demand for Canadian and American natural resources, food staples and manufactured products from the war-torn Europe soared. An influx of new immigrants mainly from Europe also stroked demand for domestic consumption, housing and all sorts of infrastructure construction. In addition, major oil and natural gas fields were discovered in Alberta, turning Canada into a major energy exporter. In 1954, the passing of the National Housing Act and a change in the Bank Act permitted banks to offer residential mortgage loans for the first time, and Scotiabank promptly established its mortgage department. In 1957, the bank became the first in Canada to install Post-Tronics machines built by NCR to automate the posting of customers’ accounts.

Scotiabank launched a unique gold certificate product in 1958. The gold certificate is a negotiable receipt representing gold bullion held for safekeeping in the bank’s vaults. The new product made gold trading much easier and less expensive as investors no longer needed to worry about the delivery and storage of physical gold.

In 1961, Cuba’s Castro government nationalized the banking sector and Scotiabank lost its operations there. Elsewhere in the region, new branches were opened in Jamaica, Trinidad & Tobago and Barbados. Between 1975 and 1977, Scotiabank acquired 94% of Banco Mercantil de Puerto Rico. It’s obvious that by this time the bank had already had a pattern of focusing its international expansion in the Caribbean and Latin America.

Back in Canada, the rise of the auto culture and the massive suburbanization across Canada saw Scotiabank following its clients’ migration to the suburbs in the 1960s and 1970s. The “Big Bang” financial industry de-regulation in 1986 removed the ban on commercial banks from undertaking trust business and securities trading. Scotiabank in 1988 acquired securities dealer McLeod, Young & Weir Co., which was renamed ScotiaMcLeod Inc.

Recent transaction(s):

In 1990, Scotiabank bought 24% of Chile’s Banco Sud Americano. In 1993, Scotiabank further

raised its stake in Banco Sud Americano to 30%. The total investment for both purchases was USD $22-million.

In 1992, Scotiabank bought an 8.5% stake in Mexico’s Grupo Financiero Inverlat for CAD $155 million. The move was in anticipation of the signing of the North American Free Trade Agreement (NAFTA) between Canada, the U.S. and Mexico in 1994. The foray into Mexico coincided with the bank’s long-term expansion in the Hispanic market.

In 1994, Scotiabank bought Montreal Trustco (Montreal Trust) for CAD $290-million.

In 1995, Scotiabank lost its stake in Grupo Financiero Inverlat as the Mexican bank was nationalized following the Mexican Peso Crisis of 1994.

Also in 1995, Scotiabank bought 25% of Argentina’s Banco Quilmes for USD $57-million.

Also in 1995, Scotiabank bought 80% of Corporacion Mercaban of Costa Rica, the holding company of Banco Mercantil de Costa Rica. By 2000, Scotiabank had privatized the entire bank now with over 40 branches.

In 1996, Scotiabank re-purchased 10% of Grupo Financiero Inverlat for USD $31-million from Mexico’s state bank rescue agency Fobaproa, becoming the first foreign bank to re-enter the Mexican market after the 1994 economic crisis. Scotiabank also bought USD $144-million of debentures convertible into 45% of the Mexican bank in 2000.

Also in 1996, Scotiabank bought 52.85% of El Salvador’s Banco Ahorromet.

In 1997, Scotiabank bought the 75% of Argentina’s Banco Quilmes that it didn’t already own for USD $260-million.

Also in 1997, Scotiabank bought 25% of Peru’s Banco Sudamericano for USD $14 million.

Also in 1997, Scotiabank bought Canada’s National Trustco (National Trust) for CAD $1.25-billion. National Trust’s 175 branches gave Scotiabank a boost in Ontario, which was historically a weak spot for Scotiabank.

Also in 1997, Scotiabank bought London bullion dealer Mocatta from Britain's Standard Chartered Bank for USD 26-million to form ScotiaMocatta. Mocatta is one of the world's biggest bullion dealers, and can trace its history to 1671.

In 1999, Scotiabank increased its stake in Chile’s Banco Sud Americano to 60.6% for USD $116-million.

In 2000, Scotiabank acquired the 39.4% of Chile’s Banco Sud Americano that it didn’t already own for USD $114-million.

Also in 2000, Scotiabank increased its stake in El Salvador's Banco Ahorromet to 98%.

In 2002, Scotiabank bought discount broker Charles Schwab Canada Co.

Also in 2002, during the Argentine economic crisis, Scotiabank opted to give up its Argentine operations Scotiabank Quilmes rather than to inject more capital into it. The 91-branch Scotiabank Quilmes was transferred to local banks Banco Comafi and Banco Bansud. Scotiabank took a CAD $540-million charge for the loss of Scotiabank Quilmes.

In 2003, Scotiabank bought 40 branches and clients from Dominican Republic’s insolvent Banco Intercontinental.

Also in 2003, Scotiabank acquired another 36% of Grupo Financiero Inverlat for USD $323-million from Fobaproa, raising its ownership of the Mexican bank to 91%.

In 2004, Scotiabank bought a 2.5% stake in China’s Xi’An City Bank.

In 2005, Scotiabank bought El Salvador's Banco de Comercio (BanCo) for CAD $212-million (USD $178-million) with 67 branches and a 17% market share.

In 2006, Scotiabank bought Canada's Maple Trust for CAD $223-million.

Also in 2006, in a complex transaction, Scotiabank acquired Peru's Banco Wiese Sudameris from owner Banca Intesa (now Intesa Sanpaolo). Banco Wiese Sudameris was integrated into Scotiabank’s 35%-owned Banco Sudamericano (Peru). The total cost of the complex transactions was CAD $385-million. Scotiabank would own 77.8% of the combined bank, named Scotiabank Peru S.A.A. and Intesa Sanpaolo would hold the remaining stake.

Also in 2006, Scotiabank bought Citibank's retail banking operations in Dominican Republic.

Also in 2006, Scotiabank bought Costa Rica's Corporacion Interfin for CAD $325-million.

In 2007, Scotiabank acquired a 10% stake in Puerto Rico's First BanCorp for USD $94-million.

Also in 2007, Scotiabank acquired a 24.99% stake in Thailand's Thanachart Bank for BHT 7.1-billion (CAD $240-million, USD $203-million). Thanachart operated 142 branches in Thailand and was the country's leading auto lender.

Also in 2007, Scotiabank agreed to buy Chile's Banco del Desarrollo for USD $1.03-billion (CAD $1.09-billion). Banco del Desarrollo had 74 branches. Bank of Nova Scotia's local subsidiary Scotiabank Sud Americano already operated 57 branches. Combining the two Chilean banks would make Scotiabank the No. 6 bank in Chile.

Also in 2007, Scotiabank agreed to buy 18% of DundeeWealth Inc. for CAD $348-million. DundeeWealth was 55% owned by Dundee Corp. Scotiabank also agreed to buy Dundee Bank of Canada for CAD $260-million. However, one week after the agreement, mutual fund giant CI Financial launched a hostile bid for 100% of DundeeWealth for CAD $2.36-billion. CI's per-share offer for DundeeWealth was 58% higher than Scotiabank's. However, DundeeWealth’s majority owner Dundee Corp. subsequently proceeded with the sale with Scotiabank.

Also in 2007, Scotiabank bought a 10% stake in Puerto Rico’s First Bancorp, the largest financial holding company in the territory.

In 2008, Scotiabank bought Grupo Atlas Cumbres (of Chile)'s banking operations in Guatemala and the Dominican Republic. Under the agreement, Scotiabank would buy GAC's Banco de Antigua in Guatemala as well as selected assets of Banco de Ahorro y Credito Atlas Cumbres in the Dominican Republic. Banco de Antigua had 47 branches and 98 "Rapidito" service kiosks in Guatemala, whereas Banco de Ahorro Credito Atlas Cumbres had 6 branches in the Dominican Republic.

Also in 2008, Scotiabank bought an additional 20% stake in Scotiabank Peru from Italy's Intesa Sanpaolo. Terms of the deal were not announced but Canada's Globe and Mail newspaper said the deal was worth about CAD $200-million (USD $199-million, Eur 129-million). With the latest purchase, Scotiabank now owned 98% of Scotiabank Peru, the country's No. 3 bank.

Also in 2008, Scotiabank bought Peru's Banco del Trabajo from Grupo Atlas Cumbres. Banco del Trabajo is Peru's 9th largest commercial bank with 132 points of sale and a 1% market share.

Also in 2008, Scotiabank bought E*Trade Canada for CAD $444-million (USD $442-million). E*Trade Canada had about 125,000 active accounts and about CAD $4.67-billion (USD $4.7-billion) of client assets.

Also in 2008, Scotiabank bought Sun Life Financial’s 37% stake in mutual fund manager CI Financial for CAD $2.3-billion (USD $2.09-billion). Scotiabank would pay Sun Life CAD $1.55-billion in cash, CAD $500-million in Scotiabank stock and CAD $250-million in preferred stock for the purchase.

In 2009, Scotiabank reached a deal with the Bank of England to lease space in the British central bank’s vault in Central London to store precious metals.

Also in 2009, Scotiabank bought an additional 24% of Thailand’s Thanachart Bank for CAD $270-million (USD $216-million), raising its stake in Thailand’s No. 8 bank to 49%.

In 2010, Scotiabank raised its holding in Xi’An City Commercial Bank to 18.1% from 2.5%. Following this latest purchase Scotiabank’s investment in the Chinese bank totalled CAD $162-million. Xi’An City Commercial was created in 1997 by consolidating 42 urban credit co-operatives in Xi’An. As at 2009, it had 113 branches and served 1.2-million clients.

Also in 2010, Thanachart Bank, 49% owned by Scotiabank, acquired a 47.6% stake in Siam City Bank for BHT 32.7-billion (CAD $1.03-billion, USD $1-billion) from the Thai government. Thanachart Bank would tender for the rest of Siam City and hope to merge the two banks. The deal valued the entire Siam City Bank at BHT 68-billion (USD $2.1-billion). Siam City had 400 branches currently. If successful, the combined bank would have 660 branches and became the No. 5 bank in the country.

In April 2010, Scotiabank acquired bankrupt Puerto Rican bank R-G Premier Bank from the Federal deposit Insurance Corp. Scotiabank gained 29 branches to its existing 17-branch network in the U.S. territory.

In July 2010, Scotiabank bought the Royal Bank of Scotland’s wholesale banking operations in Colombia.

In late 2010, Scotiabank made three minor acquisitions in Latin America. It acquired Dresdner Bank Brasil from Commerzbank AG, the Royal bank of Scotland’s Chilean wholesale banking operations, and BNP Paribas’ wealth management business in Panama, the Cayman Islands and the Bahamas.

In November 2010, Scotiabank acquired the 82% of DundeeWealth that it didn’t own for CAD $2.3-billion (USD $2.25-billion) in cash and stock. DundeeWealth oversaw CAD $78.5-billion in assets. Following the purchase, Scotiabank would become the No. 5 mutual fund manager in Canada.

In December 2010, Scotiabank acquired Uruguay’s No. 4 private-sector bank, Nuevo Banco Comercial as well as Ponto!, the country’s No. 3 consumer finance firm. Nuevo Banco Comercial had 49 branches in all 19 provinces, 710 employees and 85 ATM in Uruguay, plus three branches in Brazil. Ponto! had 37 branches, 610 retail points of sale and provided personal loans to 200,000 clients.

In September 2011, Scotiabank acquired a 19.99% stake in China’s Bank of Guangzhou (BGZ) for CAD $719-million (CNY 4.65-billion, USD $723-million). BGZ had 84 branches in the city of Guangzhou, a city of 11-million people. BGZ was a major lender to the city’s real estate developers.

In October 2011, Scotiabank bought 51% of Colombia’s Banco Colpatria Red Multibanca Colpatria SA for CAD $1-billion (USD $1-billion). Banco Colpatria was Colombia’s No. 5 bank and operated 175 branches. It was, however, the country’s No. 2 credit-card issuer.

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Germany Bank Mergers & Acquisitions (HypoVereinsbank)

2011-12-20T22:32:00.005-05:00

Photo: HypoVereinsbank’s (HVB Group) head office building Hypo-Haus in Munich, Germany.
Photo source: UniCredit HVB's web site.

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HVB Group and its Bank Austria Creditanstalt subsidiary were taken over by Italy's UniCredit SpA in 2005.

HypoVereinsbank / HVB Group AG (a subsidiary of Italy's UniCredit SpA)

Bayerische Hypotheken- und Wechsel-Bank (Hypo-Bank)

In 1835, King Ludwig I of Bavaria signed a decree authorizing the establishment of Bayerische Hypotheken- und Wechsel-Bank (“Bavarian Mortgage and Exchange Bank”). As its name suggests, the bank’s main focus was on mortgage lending and commercial lending (discounting bills of exchange for businesses). The bank made its first securities underwriting deal in 1879 when it participated in a syndicated bond issue to finance the Bavarian railroad.

In 1889, Bayerische Hypotheken- und Wechsel Bank joined the much larger Deutsche Bank, Disconto-Gesellschaft and other partner banks to create the Deutsch-Asiatische Bank in the Chinese port city of Shanghai. China during the late 19th century was very weak and foreign countries seized the chance to impose preferential trading rights and to establish colony-like territories in China for their industrial and commercial exploitation. Deutsch-Asiatische Bank was only one of a dozen or so British, French, Belgian, Dutch, German, Russian, Portuguese, Scandinavian, Japanese and American banks that created subsidiaries in China to further the economic interests of their home countries.

By 1908, Hypo-Bank (as Bayerische Hypotheken- und Wechsel-Bank was commonly known) had become the leading mortgage lender in the country but Germany soon plunged into 50 years of turbulence. The outbreak of World War I in 1914 embroiled Europe, Africa and the Middle East in deadly battlegrounds as rival European powers and the Ottoman Empire invoked defence alliances and declared war upon each other and their overseas colonies. The four-year war led to some 35 million casualties and ended four major imperial powers, including the German Empire.

After its defeat, Germany suffered a decade of economic and social turmoil. In 1922, radical currency devaluation and a massive increase in money supply led to the infamous hyper-inflation, which made the German mark practically worthless. The hyper-inflation then fuelled a consumption boom, as consumers and businesses alike would rather fully spend the paper money that they received daily, than to hold on to it overnight when it was worth even less the following day. The sky-high inflation rendered Hypo-Bank’s main business of mortgage lending meaningless, as repayments made by borrowers became worthless to the bank due to the much diminished purchasing power of money. Meanwhile, in order to pay the Treaty of Versailles reparations, Germany borrowed heavily from foreign banks and creditors during the 1920s.

Conditions worsened as the 1920s drew to a close when the American stock and real estate markets crashed in October 1929. Foreign creditors withdrew their credit to Germany as loan losses mounted. Then in May 1931, Austrian bank Credit-Anstalt became insolvent due to years of excessive lending, poor management and the cruimbling economy, sending more shocks to the German public. In July, the panic reached its peak in Germany and led to a general run on the nation’s banks. The government imposed a forced, two-day shutdown of all banks on July 14 and July 15, 1931, to restore order in the banking industry.

Ironically, it was the rise of Nazism and rearmament spending that lifted the German economy in the mid-1930s. Lives and economic development were once again devastated across the world by World War II, when Japan invaded China in 1937, and Germany invaded Poland in 1939.

Hypo-Bank wrote off numerous mortgage loans and properties as millions of people were displaced and cities and towns were destroyed during the war. Peace returned in 1945 but things only slowly began to improve in 1947 after the signing of the European Recovery Plan (commonly known as the Marshall Plan), which saw the United States providing USD $12-billion in aid for Western Europe to rebuild the devastated areas. As the German economy boomed, Hypo-Bank greatly expanded its network of branches in the 1960s and 1970s. In the 1980s, the bank formed alliances with other European banks to offer syndicated loans internationally. These alliances allowed smaller European banks to participate international financings that were otherwise too big and too risky for them to offer on their own individually.

The year 1990 was an important one for German history as the collapse of the communist Soviet Bloc led to the reunification of the two Germanys. Hypo-Bank moved aggressively into the East German mortgage market in the early 1990s, a move that the bank would later regret. The bank, however, made the right move by also entering the Eastern European market. In 1992, it set up a subsidiary in Czech Republic; one year later, more subsidiaries were created in Hungary, Poland and Slovakia.

Bayerische Vereinsbank

In 1869, King Ludwig II of Bavaria granted a licence to a group of Munich private bankers to establish the Bayerische Vereinsbank. The bank set out to serve the rapidly industrializing Bavarian economy. In 1870, it issued a loan to finance the building of the Bavarian railway and one year later, began to issue real estate loans. For the next 100 years, Bayerische Vereinsbank remained largely regional in nature compared with the Berlin-based grossbanken (Big Banks) such as Deutsche Bank and Dresdner Bank.

Following World War I, the German economy went into a tailspin and Bayerische Vereinsbank responded by forming alliances with several banks in Berlin and Bavaria. These alliances typically involved cross-minority-shareholdings between the smaller banks, as well as cross-representation on each other’s boards of directors. By adopting this strategy, these smaller banks were able to preserve their independence by making themselves unpalatable to the grossbanken, and yet the alliances allowed them to assist each other financially in times of crisis.

In the aftermath of World War II, the grossbanken like Deutsche Bank, Dresdner Bank and Commerzbank were found guilty of war crimes in financing the Nazi war machine and were broken up into many smaller banks. Regional banks like Bayerische Vereinsbank and Bayerische Hypotheken- und Wechsel-Bank were spared and allowed to operate freely. In 1969 Bayerische Vereinsbank first proposed to combine with its rival Bayerische Hypotheken- und Wechsel-Bank to compete with the grossbanken. Talks however broke off in 1971 when the Bavarian state government insisted that the Bayerische Staatsbank be part of a three-way merger. Subsequently, Bayerische Vereinsbank did end up acquiring Bayerische Staatsbank alone.

In the 1970s Bayerische Vereinsbank finally forayed into the international scene when offices were opened in Rio de Janeiro, Tokyo, Tehran, New York, Chicago, Paris, Johannesburg, London and Hong Kong.

In 1989, Bayerische Vereinsbank joined four other Western European banks (Austria’s Creditanstalt-Bankverein, Banca Commerciale Italiana, France’s Credit Lyonnais and Finland’s Kansallis-Osaki-Pankki) as well as three state-owned Soviet banks (Vneshekonombank, Sberbank and Promstroibank) to establish the International Moscow Bank. It was the first ever Soviet-based bank funded partly by western capital. (Both Bayerische Vereinsbank and Creditanstalt-Bankverein became part of the HVB Group, and HVB Group and International Moscow Bank both became part of UniCredit.)

Recent transaction(s):

In 1992, Bayerische Vereinsbank acquired Austria’s Schoeller & Co. Bank, a private bank with 13 branches.

In 1997, Bayerische Vereinsbank and Bayerische Hypotheken- und Wechsel-Bank announced their merger agreement. The move was to pre-empt a rumoured takeover of Bayerische Vereinsbank by Deutsche Bank and of Bayerische Hypotheken- und Wechsel Bank by Dresdner Bank. The merger was completed in 1998 and the new bank took up a new name: Bayerische Hypo- und Vereinsbank, to be commonly known as HypoVereinsbank.

Between 1998 and 1999, HypoVereinsbank acquired majority control of Poland’s Bank Przemyslowo-Handlowy (BPH); HypoVereinsbank then merged its own Polish operations BV Polska and Hypo-Bank Polska into the newly-acquired BPH.

In 2000, HypoVereinsbank acquired Bank Austria Creditanstalt (BA-CA) for Euro 7.8-billion (USD $7.3-billion). BA-CA was Austria’s largest bank with 280 domestic branches, plus another 400 branches across Central and Eastern Europe.

In 2001, HypoVereinsbank merged its own Polish operations BPH with Bank Austria Creditanstalt’s Polish subsidiary Powszechny Bank Kredytowy (PBK) to form BPH PBK S.A., one of the largest banks in the country.

In 2001, HypoVereinsbank transferred its Central and Eastern European operations to its BA-CA subsidiary.

In 2002, Bayerische Hypo- und Vereinsbank changed its name to HVB Group.

Also in 2002, HVB’s BA-CA subsidiary bought Bulgaria’s Bank Biochim.

Also in 2002, HVB’s BA-CA subsidiary bought 62.6% of Croatia’s Splitska Banka from UniCredito Italiano for Eur 94-million. In 2005, Splitska Banka became part of UniCredito Italiano once again when the Croatian bank's parent HVB Group was taken over by UniCredito Italiano.

In 2003, amidst mounting loan losses at HVB Group due to a wave of corporate bankruptcies resulting from the “tech bust” and the September 11 fallouts, HVB raised Euro 958-million cash by re-floating 22.5% of Bank Austria Creditanstalt on the Vienna and Warsaw stock exchanges.

In 2004, HVB’s BA-CA bought Bulgaria’s Hebros Bank.

Also in 2004, HVB’s BA-CA bought Serbia’s Eksimbanka.

Also in 2004, HVB Group contributed 2/3 of a USD $100-million capital injection for International Moscow Bank and raised its stake to 52.9%, wrestling control of the Russian bank from its other Swedish and French minority shareholders.

In 2005, UniCredito Italiano bought HVB Group for Euro 15.4 billion (USD $19.4-billion). In addition, UniCredito Italiano also made an offer to buy out the 22.5% of Bank Austria Creditanstalt held by the public for Eur 2.63-billion, as well as the 29% of Poland's Bank BPH PBK held by the public for about Eur 1.48-billion. The three offers totalled about Eur 19.5-billion (USD $24.5-billion). HVB Group already owns 77.5% of Bank Austria Creditanstalt and 71% of Bank BPH PBK.

Subsequently, however, the Polish banking regulator vetoed UniCredito Italiano's bid to privatize Bank BPH PBK for Eur 1.55-billion. UniCredito Italiano withdrew its offer for the Polish bank in early 2006, but still indirectly held 71% of the bank through its acquisition of Germany's HVB Group.

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China Bank Mergers & Acquisitions (Bank of China)

2011-11-24T20:39:00.011-05:00

Photo: Bank of China (Hong Kong)'s main branch in Central district, Hong Kong.

Bank of China Ltd.

China’s banking history clearly reflects the country’s turbulent history in the 20th century. In 1905, the sickly and backward Imperial China established the Da Qing Hubu Bank (which means the Great Ching [Dynasty] Finance Ministry Bank) in a largely failed attempt to better manage the country’s fiscal and monetary policies. At the time, modern commercial banking and trade financing in China was typically provided by foreign banks, with British, French, German, Russian, Japanese and American banks dominating the marketplace in major port cities.

On October 10, 1911, forces led by Dr. Sun Yat-Sen overthrew the Qing (Ching) dynasty, ending two thousand years of imperial rule and establishing the Republic of China. In 1912, the defunct Da Qing Bank was re-born as the Bank of China and given central bank functions. The new bank established its headquarters in Da Qing Bank’s former premises in Shanghai’s Bund district. The new entity was a dual state-owned commercial bank and a central bank.

However, the establishment of the new republic did not quell China’s political unrest. Quite the contrary, fighting between various fractions and warlords continued and worsened for the next four decades. Despite this political instability, Bank of China opened a Hong Kong branch in 1917, which eventually evolved into Bank of China (Hong Kong).

In 1928, Bank of China re-located its head office back to Beijing, and was granted the power to handle China’s foreign exchange transactions. To accomplish this new task, the bank opened a London office in 1929, marking the first time a Chinese bank had opened an office outside of Asia.

Meanwhile, from 1927 onward, the Kuomintang (Nationalist) forces and the home-grown Communist forces fought for the control of China, further sickening its national health and economy. The Chinese Civil War coincided with the rise of Japan’s imperial militarism, which aimed to dominate and colonize the entire Far East. Japan invaded China in July 1937, plunging the country into a lengthy and bloody war for the next eight years. The Japanese invasion, ironically, suspended the Civil War between the Kuomintang and the Communists as they joined forces to fight off the Japanese army. The Sino-Japanese War became part of the larger World War II in 1941, when Japan bombed Pearl Harbor in Hawaii and invaded other countries in the Far East.

Between 20 million and up to 35 million casualties in China were attributed to the Sino-Japanese War by the time Japan was defeated in 1945. Sadly, the Chinese Civil War resumed as soon as Japan was defeated. Over the next four years, the Communists gained more and more ground and drove the losing Kuomintang to the island of Taiwan in 1949. This important event split China into two: with the original Republic of China founded by Dr. Sun Yat-Sen in 1911 now controlling the island of Taiwan, and the Communists controlling the mainland and establishing the People’s Republic of China in October 1949.

Bank of China itself was also split. The fleeing Kuomintang brought with them the bank's liquid assets and bullion to Taiwan while the Communists seized the bank's mainland Chinese operations and branch network. The two sides confusingly retained the name Bank of China initially, due to both regimes’ claims of legitimacy and false hope that they would retake the other’s territory soon.

Subsequently in 1971, the Republic of China (Taiwan’s) Bank of China was privatized and renamed the International Commercial Bank of China, which became today’s Mega International Commercial Bank, which is still based in Taipei, Republic of China in Taiwan.

Meanwhile, Communist China’s Bank of China lost its central bank status to the newly-created People's Bank of China, but held on to its foreign exchange bank designation status. Throughout the 1950s, all foreign banks were gradually evicted from China as it rid itself of foreign powers.

Under Chairman Mao Zedong’s regime, Communist China then plunged into three decades of horrific social turmoil, famines and class struggles during which citizens spied on and terrorized each other as they accused each other as being Kuomintang supporters, capitalists, small business owners, intellects, political dissenters or whatever groups were out of favour at the time. The Chinese banking industry during this period was bureaucratic, backward and corrupt. It was only in 1979, three years after the death of Chairman Mao, that China finally adopted an “Open Door Policy” as it opened up to foreign trade, investments and tourism again.

However, true modernization of China’s banking industry only began in the mid-1990s, when regulatory and managerial reforms began to slowly transform Chinese banks towards more market-driven and risk-conscious enterprises. In 1994, Bank of China embarked on a major expansion plan to open more branches across the country.

In 2003, China's State Council approved the joint-stock restructuring of its state-owned commercial banks, of which Bank of China was one of the pilot banks in the process. One year later, Bank of China Ltd. was formally incorporated in Beijing. The Chinese government was said to have injected USD $22.5-billion in new capital to the bank in 2003 to raise its Tier 1 capital to international standards.

In what was then the world's largest IPO since 2000, Bank of China Ltd. raised HKD $87.0-billion (USD $11.2-billion) in May 2006 when it class "H" shares were listed on the Hong Kong stock exchange. Two months later, Bank of China became the first lender to list its class "A" shares on the Shanghai stock exchange, raising another USD $2.5-billion.

Bank of China (Hong Kong)

Due to the close demographic, economic and trade relations between China and Hong Kong, Bank of China opened a branch in the then British colony in 1917. Eight other Chinese banks that would eventually become part of Bank of China had retail branches in Hong Kong, namely: the Kwangtung Provincial Bank, Sin Hua Bank, the China & South Sea Bank, Kincheng Banking Corporation, the China State Bank, the National Commercial Bank, the Yien Yieh Commercial Bank and the Bank of Communications. In addition, China also established two Hong-Kong-registered banks locally: the Hua Chiao Commercial Bank and Po Sang Bank.

Following the Communists’ takeover of mainland China in 1949, the eight Chinese banks were gradually nationalized and integrated into Bank of China during the 1950s. Interestingly, their Hong Kong operations continued under their own management and brands even though they were subsidiaries of Bank of China (Hong Kong), whose name is often shortened to BOCHK.

In the post-1949 era, Bank of China also acquired control of two more Hong Kong-based banks: Nanyang Commercial Bank and Chiyu Banking Corporation. For many years, BOCHK plus its 12 subsidiary banks were referred to as the 中銀十三行 (“BOC 13 Banks”) by the local press. The BOC 13 Banks each had its own administration and branch network. Needless to say, the arrangement created lots of redundancies and inefficiency, with sister banks often competing with each other for business. It was only in the 1980s that a common computer database system and platform was implemented across all 13 banks.

As China prepared for the 1997 turnover of Hong Kong from a British colony to an autonomous part of China, BOCHK aimed to play a much larger role in the local banking market. In 2001, the Kwangtung Provincial Bank, Sin Hua Bank, the China & South Sea Bank, Kincheng Banking Corporation, the China State Bank, the National Commercial Bank, the Yien Yieh Commercial Bank, Po Sang Bank and Hua Chiao Commerical Bank were merged and consolidated into Bank of China (Hong Kong). Nanyang Commercial Bank and Chiyu Banking Corporation kept their own management and branding despite being subsidiaries of BOCHK.

Meanwhile, Bank of Communications Hong Kong Branch left the BOCHK group in 1998 and was returned to the Bank of Communications in China, which was originally founded in 1908, dismantled in 1958 and re-born in 1987.

Recent transaction(s):

In 2008, Bank of China agreed to buy a 20% stake in French-based La Compagnie Financière Edmond de Rothschild for Eur 236-million (USD $340-million). The two planned to develop private-banking and asset management services for China's nouveau riche. The Rothschilds' private and merchant banking business dates back to the 1740s.

The above deal was scrapped in April 2009, after Bank of China failed to win regulatory approval from the Chinese government.

In December 2010, Bank of China raised CNY 59.7-billion (HKD $69.6-billion, USD $8.96-billion) from rights issues in Hong Kong and Shanghai to replenish capital following the lending boom in 2009.

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Norway Bank Mergers & Acquisitions (DnB NOR)

2011-09-01T21:46:00.007-04:00

Photo: Norwegian bancassurance DnB NOR's London branch at the corner of St. Dunstan's Hill and Lower Thames Street.

Photo was taken during my Yorkshire & London trip in 2007.

Prelude to Norway’s Wave of Banking Consolidations

Norway, like the rest of Scandinavia, had a highly fragmented banking system until the 1990s. Before that time, Norway's retail banking sector was dominated by small, regional banking co-operatives that were mutually-owned by the banks’ customers. In the mid-1980s, a credit-fuelled (over-lending) boom across Scandinavia led to an unsustainable real estate bubble that began to unravel in the late 1980s. The subsequent pan-Scandinavian real estate slump coincided with a global economic recession that resulted in a serious banking crisis in Norway.

By 1991, bank failures had depleted both the savings banks’ guarantee fund and the commercial banks’ guarantee fund and the government stepped in to intervene the beleaguered banking industry. Many small, regional savings banks were consolidated into larger ones, and the country’s largest bank DnB was nationalized in 1991.

DnB NOR ASA

The present-day DnB NOR was created when Sparebanken NOR, insurance-pension group Gjensidige Forsikring and DnB (Den norske Bank) combined between 1999 and 2003.

DnB (Den norske Bank)

DnB’s history goes back to the 1855 establishment of Bergens Privatbank in Bergen, the second largest city in Norway. Two years later, another commercial bank known as Den norske Creditbank (DnC) was founded in the capital city of Oslo. In 1928, the Bergens Kreditbank was founded. Bergens Privatbank and Bergens Kreditbank eventually combined in 1975 to form Bergen Bank.

Meanwhile, Den norske Creditbank grew to become Norway’s largest bank during the 20th century, but it was hit very hard by the late 1980s real estate slump. In 1990, the ailing DnC merged with Bergen Bank to form Den norske Bank (DnB). Unfortunately, putting two sick banks together really did not solve the bad loan problem. Just one year later, Norway’s No. 1 bank Den norske Bank had to be rescued by the government and was nationalized.

Gjensidige Forsikring

In 1689, a clergyman and community leader named Jens Colstrup in Nes in present-day Norway lost his family and parsonage in a tragic fire. Seeing the emotional and financial devastation the fire caused him, he established a mutual fire insurance business to provide a sense of security and financial compensation for the locals against fire losses. While the Gjensidige group can be remotely traced back to Jens Colstrup’s fire insurance company, Gjensidige in its present form dates from the 1810s and 1820s. In 1816, a mutual fire insurer called Lands Brannkasse (“brannkasse” is Norwegian for “fire chest” or “fire treasury”) was established. This was followed by the 1823 founding of the Ringsaker Brannkasse. The Lands Brannkasse did not fare well and shut down in 1829, though the Ringsaker Brannkasse became part of Gjensidige.

The number of such mutual fire insurers blossomed during the 19th century and by 1920, some 260 mutual fire insurers existed across Norway. Each often confined to a small and specific market, these regional insurers were exposed to potentially devastating payout liabilities if a major fire were to affect their insured clients. In recognition of such risks, the 260 mutual fire insurers in collaboration with the Landkreditt (a mortgage credit association) and the Norges Bondelag (the Norwegian Farmers’ Union) created a joint superstructure called Samtrygd, Norsk Gjensidige Forsikringsforening (“Norwegian Mutual Insurers Association”). Samtrygd acted as the ultimate re-insurance company to collectively share the 260 fire insurers’ risks.

Meanwhile, in the 1840s, Norwegian mathematician Ole Jacob Broch was commissioned to investigate the application of the relatively new discipline of actuarial science in assessing life insurance risk and premiums. In 1847, Mr. Broch launched Scandinavia’s very first life insurance company, the Christiania almindelige, gjensidige forsørgelsesanstalt (literally, the Christiania [present-day Oslo] General, mutual provident institute). Christiania almindelige changed its name to Gjensidige Liv (meaning “Mutual Life” in English) in 1893 and in 1932, adopted the now familiar Watchman logo.

In 1958, Samtrygd won approval to offer all types of insurance products in addition to its original mandate of re-insuring Norway’s mutual fire insurers. Samtrygd took over auto insurer Norsk Bilforsikring Gjensidige (NBG) in 1974. Following a co-operation agreement with Gjensidige Liv in the same year, Samtrygd changed its name to Gjensidige Skadeforsikring (skadeforsikring means “damage insurance” in Norwegian), offering property and casualty insurance of its own and some of Gjensidige Liv’s life insurance products. After over a decade of co-operation and courtship, Gjensidige Skadeforsikring and Gjensidige Liv finally combined in 1985, under the new name of Gjensidige Forsikring.

Gjensidige Forsikring acquired automobile leasing company ELCON Finans in 1987. The name ELCON stands for “Equipment Leasing Co. of Norway.”

Sparebanken NOR

In 1822, a savings bank called Christiania Sparebank was established. Christiania was the old name of Norway’s capital city Oslo, whereas sparebank is the Norwegian word for “savings bank.” This savings bank was probably modelled after the savings bank movement in Scotland and Germany earlier in the 18th century.

In 1925, Christiania restored its original name of Oslo, and Christiania Sparebank changed its name to Oslo Sparebank in 1926. Subsequently, the savings bank changed its name again to Sparebanken Oslo/ Akershus. In 1985, it merged with Fellesbanken (founded 1920) to create Sparebanken ABC. In the midst of Norway’s banking crisis, Sparebanken ABC merged with four other eastern Norwegian savings banks in 1990 and adopted the new name of Sparebanken NOR, which marketed itself as the “Union Bank of Norway” in English.

This Sparebanken NOR can trace its heritage to more than 100 local savings banks.

Recent transaction(s):

In 1992, Gjensidige Forsikring bought Inter Nordisk Bank A/S. The insurer subsequently created Gjensidige Bank in 1993 to add banking services to its insurance products.

In 1993, Gjensidige Forsikring bought rival pension fund and insurance provider Forenede-Gruppen A/S (Forenede Forsikring).

Between 1993 and 1996, the Norwegian government gradually reduced its holding of DnB to 52% following the nationalization of the bank in 1991.

In 1996, DnB took over insurer and pension manager Vital Forsikring.

In 1999, Sparebanken NOR (Union Bank of Norway) merged with Gjensidige Forsikring to form Gjensidige NOR.

Also in 1999, DnB acquired Postbanken under the increased competition from foreign banks' expansion in Norway.

In 2002, DnB took over insurer Skandia's global asset management operations for SEK 3.2-billion. The purchase gave DnB an additional NOK 245-billion of assets under management.

In 2002, bancassurance group Gjensidige NOR was re-organized into non-life insurer Gjensidige NOR Forsikring and life insurance-banking group Gjensidige NOR Spareforsikring, both as subsidiaries of parent firm Gjensidige NOR ASA, which was listed on the Oslo stock exchange later in the same year.

Also in 2002, DnB took over Nordlandsbanken for NOK 1.05-billion.

Also in 2002, DnB acquired the asset management operations from Sweden’s Skandia insurance group for Eur 347-million (SEK 3.2-billion). The unit purchased had Eur 30.3-billion (SEK 280-billion) in assets under management.

In 2003, DnB Holding ASA and Gjensidige NOR ASA merged to form DnB NOR ASA. The transaction valued Gjensidige NOR at NOK 18.3-billion (USD $2.46-billion, Eur 2.33-billion).

In 2004, DnB NOR sold leasing firm ELCON Finans to Spain’s Banco Santander for NOK 3.44-billion (EUR 400-million). The sale was part of the conditions imposed by the government to approve the DnB-Gjensidige NOR merger.

In 2005, however, the DnB-Gjensidige NOR merger was partially unwound when Gjensidige NOR Forsikring (the non-life insurance business) was spun off from the DnB NOR group. It subsequently restored its former name of Gjensidige Forsikring. The banking and life insurance operations of the former Gjensidige NOR group (Gjensidige NOR Spareforsikring) stayed with DnB NOR. Then in 2007, the now independent Gjensidige Forsikring re-set up an on-line bank called Gjensidige Bank.

Following the partial de-merger, the banking operations of DnB NOR became known as DnB NOR Bank; the automobile and property and casualty insurance division became known as DnB NOR Skadeforsikring; and the life insurance division continues under the name Vital Forsikring.

In 2006, DnB NOR and Germany’s Norddeutsche Landesbank (Nord/LB) established a joint-venture bank named DnB NORD. Based in Denmark, DnB NORD was 51% owned by DnB NOR and 49% owned by Nord/LB. It had 130 branches in Denmark, Estonia, Latvia, Lithuania, Finland and Poland though most of the customers are in Latvia and Lithuania.

In 2006, DnB NOR’s 51%-owned Danish subsidiary DnB NORD bought 73.6% of Poland’s BISE Bank for Eur 140-million. BISE Bank had 46 branches in Poland.

In 2007, DnB NOR bought auto financing firm SkandiaBanken Bilfinans’ operations in Sweden and Norway for NOK 1.9-billion. The operations acquired had 115,000 customers and a loan portfolio of NOK 11-billion.

In 2010, DnB NOR’s Danish subsidiary DnB NORD bought the remaining stake of Poland’s Bank DnB NORD Polska from Nord/LB.

Also in 2010, DnB NOR exercised its call option to buy the remaining stake of Danish-based DnB NORD from Norddeutsche Landesbank (Nord/LB). DnB NORD became wholly-owned by DnB NOR following the purchase.

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Canada Bank Mergers & Acquisitions (Canadian Imperial Bank of Commerce)

2011-08-12T21:14:00.012-04:00

Photo: CIBC's Toronto head office the Commerce Court.

The Canadian Bank of Commerce

The Canadian Bank of Commerce opened for business in Toronto in 1867 just weeks before the Dominion of Canada gained independence from Britain. One of the bank’s principal founders was prominent Toronto businessman The Honourable William McMaster. Displeased about Montreal’s grip on Upper Canada’s (Ontario) commerce, William McMaster hoped the new bank would make credit and banking services more accessible to the local Toronto business community. The Canadian Bank of Commerce opened its first branch outside of Ontario in 1870 in Montreal. Two years later, the bank opened a branch in New York City to better serve its customers dealing with the U.S. Between 1874 and 1895, the bank’s rapidly-expanding network grew from 24 branches to 58 branches.

The discovery of gold in west-central Yukon in 1896 led to a major gold rush to that remote part of Canada, which became known as the famous Klondike Gold Rush. The barren base camp quickly turned into the bustling Dawson City of 40,000 gold prospectors and other migrant workers in 1898. The Dominion government encouraged the Canadian Bank of Commerce to set up a branch in Dawson City. Due to its remoteness, the expedition from Toronto took two months to arrive. Ironically, the Klondike Gold Rush ended as quickly as it started, and by 1899, the population had plummeted to 8,000.

In 1901, the Bank of Commerce (as it’s commonly known) took over the Bank of British Columbia and instantly acquired a network in British Columbia, Oregon, Washington and California. Bank of British Columbia’s London headquarters then became the Canadian Bank of Commerce’s British branch. In 1903, the Canadian Bank of Commerce expanded eastward and bought the Halifax Banking Company, gaining a network of branches in Nova Scotia. Further Maritimes expansion came in 1906 when the bank acquired the Merchants Bank of Prince Edward Island.

A major expansion for the bank happened in 1912 when it took over the Eastern Townships Bank and its 100-branch network in southeastern Quebec and Western Canada. By this time, the Bank of Commerce’s branches numbered over 370. Peace was disrupted in 1914 when World War I broke out in Europe. Even though no battle was fought in North America, over 1,700 (male) Canadian Bank of Commerce employees enlisted to support the British army. The void left by the departure of many employees was filled by the hiring of over 1,400 women employees, the first time that women made up any significant number of the bank’s payroll.

Peace and boom times returned in the 1920s around many parts of the world. Seeing the rapid expansion in trade with the Caribbean, the Canadian Bank of Commerce launched operations in Cuba, Jamaica, Barbados and Trinidad. Domestically, the formation of Stelco and Dofasco in the 1910s rapidly transformed Hamilton into Canada’s “steel town.” The Bank of Commerce in 1924 took over the Bank of Hamilton and its 100 branches in southwestern Ontario and Western Canada. Then in 1928, the bank acquired Toronto-based Standard Bank of Canada, gaining another 243 branches (of which 176 were in Ontario). By 1929, the Bank of Commerce had over 700 branches across the country.

The Roaring Twenties came to an abrupt end when the stock market in New York crashed in 1929, triggering the decade-long Great Depression. Canada did not escape the economic train wreck and its unemployment soared as spending and industrial output tumbled. Interestingly, it was at this time that the Canadian Bank of Commerce decided to build a new head office building in downtown Toronto. When the 34-storey Art Deco marvel opened in 1931, it became the tallest building in the British Empire for the next 31 years.

Due to the poor economic conditions, the bank shut down many branches during the 1930s and the bank’s assets did not return to its pre-Depression level until 1940. Ironically, the soaring unemployment created demand for a new product: the personal loan. In 1936, the bank became the first Canadian bank to offer personal loans to individuals.

When World War II broke out in 1939, Canada, being part of the British Empire, immediately sent its soldiers across the Atlantic to join the front line. A significant number of the Canadian Bank of Commerce’s employees fought overseas and suffered a heavy toll. By the time peace finally returned in 1945, much of Europe and the Orient had been devastated and millions of people had been killed, injured or displaced. North America, despite also suffering heavy casualties in the war efforts, was never occupied or physically damaged. While Europe and Asia struggled to rebuild its economy in the 1950s, Canada and the U.S. enjoyed boom times exporting their natural resources, food staples and manufactured products. Soon after high-quality light sweet crude was discovered in Alberta, the Canadian Bank of Commerce became the first bank in the country to open a specialized petroleum and natural gas department in 1950 to finance the burgeoning oil and gas industry.

The 1950s were also a time when a huge influx of new immigrants from war-torn Europe arrived in Canada. This, combined with the start of “cheap oil” and “auto culture” created massive demand for new houses in the suburbs. In 1954, banking regulation was finally relaxed to allow the chartered banks to offer residential mortgage loans. Previously, life insurers provided a vast majority of mortgages. Between 1954 and 1960, the amount of mortgage loans at the Canadian Bank of Commerce rose by almost 10 folds. In 1955, the bank opened its first “drive-thru” branch in suburban Toronto in response to the popularization of private automobiles.

The Imperial Bank of Canada

The Imperial Bank of Canada was established in March 1875 in Toronto, interestingly, by a former Canadian Bank of Commerce vice-president. Less than four months later, the Imperial Bank made it first acquisition: the Niagara District Bank in the Niagara Falls area of Ontario.

The country in the late 19th century was expanding westward itself, as the colonies west of Ontario gradually joined Canada. In 1880, the Imperial Bank opened a branch in Winnipeg, Manitoba, which had just joined the Canadian confederation. The Calgary branch opened in 1886 and the Edmonton branch in 1891, both in the province of Alberta. Despite this, the Imperial took a conservative approach to expansion, and by 1895, had a network of 18 branches. At the turn of the 20th century, the Imperial Bank gained the nickname of “Canada’s mining bank,” because of its willingness to financing the mining, timber, and paper and pulp industries.

During World War I, over 500 Imperial Bank of Canada employees left their posts to join the army. Between the Bank of Commerce and the Imperial Bank, over 2,200 employees fought overseas and sadly, over 300 of them paid the ultimate sacrifice “for King and Empire.”

After World War I, the bank rapidly opened about 50 new branches during the Roaring Twenties boom. When the Great Depression began in 1929, business tumbled across all sectors and industries. A rural Saskatchewan bank called the Weyburn Security Bank (founded 1910, with about 30 branches in Saskatchewan) decided to sell out to the Imperial Bank in 1931. During the rest of the 1930s, the Imperial’s business volume, network and number of employees contracted like many banks in the West.

Scores of Imperial Bank’s employees once again joined the Canadian army when World War II broke out in 1939. The six-year war took a devastating toll around the world, including many Canadian soldiers, but ironically lifted much of the Western world out of the economic slump.

Canada enjoyed a period of sustained growth in the 1950s and 1960s. In 1956, the Imperial acquired Barclays Bank (Canada) from its British parent.

Canadian Imperial Bank of Commerce

Following two decades of wartime and post-war boom, many Canadian businesses have “outgrown” the banks serving them. As the sizes of commercial loans continue to grow, banks found their capital base too small to adequately fund their lending. In 1961, the chairmen of the Imperial Bank of Canada and the Canadian Bank of Commerce met in secret and reached an agreement to combine the two banks. The resulting Canadian Imperial Bank of Commerce, or CIBC for short, now had 1,200 branches across Canada, the most of any bank in the country.

A very interesting part of CIBC’s history was its floating branch and airplane branch. Before the days of telephone and internet banking, the bank operated a floating branch between 1964 and 1992 along the north shore of the St. Lawrence River in Quebec to serve the remote coastal towns and villages. In 1970, the bank’s commitment to serve Canada’s isolated Nordic communities led to the creation of a “flying” branch in co-operation with NWT Air in a Douglas DC-3 plane. The plane would leave Yellowknife once a month and make five stops, covering over 2,500 kilometers. Customers wanting banking service would go to the airport on the designated day to transact. The flying branch remained in operation until 1979.

The computer age arrived in 1967 when one of CIBC’s Toronto branches became the first in the country to install a computer to electronically update customer bankbooks. Two years later, the bank introduced Canada’s first cash-dispenser machine, a predecessor of the automated teller machine.

CIBC introduced the Chargex product in 1968, providing qualifying individuals instant access to personal credit. The Chargex product became known as its current name of Visa card in 1977. With a wide array of Visa and MasterCard products, CIBC has been the leading credit card issuer in Canada for many years, though competition has been heating up in recent years.

During the mid-1990s, CIBC underwrote its own property and casualty, and life and travel medical insurance products, hoping to cross-sell auto, home and life insurance policies to its millions of bank clients. As many other banks have experienced, the strategy proved easier said than done, and CIBC exited the insurance market between 1999 and 2000.

When Canada’s “Big Bang” financial services industry deregulation went into effect in 1987, CIBC promptly established a securities underwriter named CIBC Securities Inc. Just one year later, the bank acquired a majority stake in leading investment firm Wood Gundy Inc., forming CIBC Wood Gundy. Trying to gain more access to the world’s largest capital market, CIBC took over U.S. stockbroker Oppenheimer & Co., Inc. for USD $525-million in 1997. CIBC Woody Gundy and CIBC Oppenheimer then joined forced to become CIBC World Markets.

During the mid-1990s, CIBC began underwriting its own property and casualty insurance, and life and travel medical insurance products, hoping to cross-sell auto, home and life insurance policies to its millions of bank clients. As many other banks have experienced, the strategy proved easier said than done, and CIBC exited the insurance market in 1999 and 2000.

Canada’s “Big Five” banking oligopoly appeared destined to become even more monopolistic in 1998 when the Royal Bank of Canada and the Bank of Montreal shocked the country with a proposal to merge. Months later, CIBC and the Toronto-Dominion Bank announced their own merger. Had these two deals been allowed to proceed, Canada would have been left with just two mega-banks, plus the Bank of Nova Scotia as a distant third. Both deals were quickly rejected by the government citing anti-competitive reasons.

The year 1998 also marked CIBC’s launch of a new banking concept in Canada: the partnering with leading supermarket chain Loblaws Companies Ltd. to create the President’s Choice Financial (PC Financial). PC Financial has no branches but allows customers to access their cash or do banking through hundreds of ATM machines in Loblaws supermarkets, on-line or via the telephone. Without the overhead costs of maintaining branches and branch staff, PC Financial toots its no-fee and high-savings-interest rate features. The PC Financial division gave CIBC a powerful tool to compete with ING Direct Canada, which was formed just one year earlier.

CIBC then exported the idea to the U.S. in 1999, creating the Marketplace Bank with American supermarket chain Winn-Dixie, and Safeway Select Bank with Safeway. Unlike PC Financial, which proved hugely popular and profitable for CIBC, the U.S. banking market was just too different from Canada’s and too competitive for CIBC to make a profit. After more than two years of heavy losses, the U.S. division, called Amicus, was shut down in 2002.

Unfortunately, CIBC gained a dubious reputation in the 2000s as the Canadian “bank most likely to walk into sharp objects.” It wrote off CAD $1.5-billion of bad loans made to the high-tech sector during the Tech Stock Bubble in the late 1990s, then paid a USD $2.4-billion legal settlement in 2005 over its involvement with the Enron Corp. scandal. Between 2008 and 2009, CIBC wrote down its U.S. subprime mortgage securities by CAD $3-billion. This series of costly missteps knocked CIBC down to the rock bottom of the Canadian Big Five. However, CIBC continued to be sheltered by the protected and highly profitable domestic retail banking market, and the bank comparatively has fared far better than its many foreign counterparts from the global economic crisis that began in 2007.

Recent transaction(s):

In 2000, CIBC exited the property and casualty insurance business by selling the CIBC General Insurance Co. and Personal Insurance Co. of Canada to Desjardins Laurentian Financial Corp. for CAD $224-million.

In 2001, CIBC bought Merrill Lynch's Canadian retail brokerage operations for CAD $546-million. Merrill Lynch Canada had acquired a major Canadian stockbroker called Midland Walwyn for CAD $1.26-billion in 1998.

In 2002, amidst the global tech stock collapse, CIBC sold CIBC Oppenheimer's U.S. retail operations for CAD $401-million.

Also in 2002, CIBC combined its Caribbean operations with those of Barclays plc to create the FirstCaribbean International Bank. CIBC ended up with a 43.7% stake of FirstCaribbean International.

In 2005 CIBC paid a USD $2.4-billion (CAD $2.92-billion) settlement over its involvement in Enron Corp.’s accounting fraud scandal.

Between late 2006 and early 2007, CIBC bought another 47.8% of FirstCaribbean International Bank for CAD $1.40-billion (USD $1.20-billion) from Britain's Barclays plc. Following the acquisition, CIBC’s stake in FirstCaribbean International Bank rose to 91.5%.

In early 2008, CIBC raised CAD $2.9-billion in new capital from a common stock sale amidst CAD $3.0-billion of losses from the U.S. real estate collapse.

In August 2009, CIBC was the subject of rumours that it was in talks to buy a minority stake in Ireland's ailing Allied Irish Banks plc. However, the speculation proved to be false and it's another Canadian financial institution, Fairfax Financial, that ended up taking a 9% stake in the re-capitalization of another Irish bank, the Governor and Company of the Bank of Ireland plc in July 2011.

In March 2010, CIBC injected USD $150-million (CAD $155-million) into Bank of N.T. Butterfield & Son Ltd., Bermuda’s largest bank. CIBC gained a 22.5% stake of the bank, whose balance sheet had been significantly weakened by the American real estate bust and global credit crisis. CIBC’s investment was part of a USD $550-million re-capitalization program led by private equity firm Carlyle Group to strengthen the Bank of Butterfield.

In June 2010, CIBC bought the Canadian MasterCard business from Citigroup for an undisclosed amount. Citigroup’s Canadian MasterCard unit had receivables of about CAD $2.1-billion. CIBC would become a dual VISA-MasterCard issuer following the purchase.

In July 2011, CIBC bought a 41% equity interest (10.1% voting rights) in American Century Investments from JPMorgan Chase & Co. for USD $848-million (CAD $810-million). Kansas City-based American Century had USD $112-billion under management.

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Italy Bank Mergers & Acquisitions (Credito Italiano, UniCredit Page 1)

2011-06-28T20:53:00.007-04:00

Photo: Architectural details above the entrance to an old Credito Italiano branch in Rome.

Photographer: Smeerch

You can view Smeerch's other photos via this link on flickr: http://www.flickr.com/photos/smeerch/

This page contains information on the genealogy of Credito Italiano up to its merger in 1998 with UniCredito to create UniCredito Italiano (now known as UniCredit SpA).

A Few Words about Renaissance Italy's Banking Origins

Many Italian banks can trace their origins to as far back as the 15th century when city-states and the Roman Catholic Church established individual monti di pietà. The word monte (singular of monti) means a mound or an accumulation in Italian, whereas pietà means pity or compassion. Hence, monte di pietà literally means the Mound of Compassion.

During the Renaissance era, these monti di pietà granted small loans to the underclass and small business owners on the security of collateral (in other words, pawning) at minimal interest rates. As such, these monti di pietà were also described as charitable pawn shops. Other than fighting usury and poverty by encouraging saving, the mandates of the monti also included preserving heritage as well as funding education, hospitals, science research, art and infrastructure.

Since many of the monti often also accepted deposits for safekeeping, and relied on this additional source of capital to fund more loans, these charitable pawn shops were essentially an early form of banks. As a matter of fact, in the 19th century, many of these monti di pietà transformed themselves into casse di risparmio (savings banks) but maintained their various social mandates. These mandates, while honourable and commendable, created a fragmented banking system that was backward, inefficient, bureaucratic and sometimes, corrupt. In almost all cases, the former monti di pieta and casse di risparmio continued to be state-owned by the local governments well into the 1990s, though a few private-sector commercial banks did exist, such as the Banca Commerciale Italiana, Credito Italiano and Banca di Roma.

As the European Union prepared to remove trade barriers between member nations in the 1990s, Italy’s fragmented and archaic banking system would be open up to other EU competitors with higher efficiency and more advanced technologies, such as those from Britain, Germany, France and the Netherlands. In order to create national banks strong enough to face the new competition, the Italian government passed two banking reform acts, namely the Amato Act of 1990 and the Ciampi Act of 1998 to privatize the state-owned banks and to foster amalgamation of the regional banks into much larger national banks.

The Amato Act required the savings banks (casse di risparmio) to separate their banking operations from the socially-mandated, non-profit charitable foundations. It also forced the savings banks to convert to the joint-stock form (i.e. public limited-liability company, known as SpA in Italy). Initially, the shares of these newly-spun-off banks could still be held by the social foundations, but the Ciampi Act in 1998 prescribed that the majority shareholdings of the banks held by the social foundations must be sold off gradually. The goal was to ensure a transition towards a purely market-driven, private-sector banking industry away from its former non-profit nature with the dual objectives of providing banking services and promoting social causes.

Credito Italiano

Credito Italiano’s predecessor Banca di Genova was founded in 1870 by a number of Genoa’s prominent citizens. By 1872, the young bank had already established a subsidiary in Buenos Aires to provide trade finance between Italy and Argentina. However, the good times didn’t last long: Italy plunged into a serious economic and banking crisis in the 1890s and many banks failed. Banca di Genova “survived” only when several German banks stepped in to re-capitalize it in 1895 as Credito Italiano. By 1905, the re-born bank had opened branches in Rome, Florence and Naples. The bank relocated its head office from Genoa to Milan in 1907 and opened a London office in 1911.

Throughout the early 20th century, Credito Italiano attracted several prominent industrialists as major shareholders, including Giovanni Battista Pirelli, founder of the Pirelli rubber and telegraph cable maker, and Giovanni Agnelli (the senior), founder of the FIAT automotive empire.

In the 1920s, Credito Italiano made equity investments in several Romanian, Austrian, Czechoslovakian and Albanian banks. Towards the end of the decade, however, the global economy collapsed after the 1929 New York stock market crash. In 1930, at the request of the Italian government, Credito Italiano took over the ailing Banca Nazionale di Credito, the No. 3 bank in the country at the time.

In 1933, the worsening banking crisis was on the verge of collapse. The Italian government stepped in and named the top three banks (Banca Commerciale Italiana, Banco di Roma and Credito Italiano) as “banks of national interest.” They were then nationalized and placed under a state-owned holding agency called the Istituto per la Ricostruzione Industriale (IRI).

When World War II broke out, Italy under fascist Benito Mussolini’s regime joined Nazi Germany and Japan’s imperialist government to invade their neighbouring countries. Not surprisingly, all of Credito Italiano’s overseas operations were shut down.

Following the end of World War II, Credito Italiano, Banca Commerciale Italiana and Banco di Roma in 1946 jointly established Mediobanca - Banca di Credito Finanziario, a specialized lender providing medium- and long-term financing to rebuild the devastated economy. Mediobanca’s direct equity investments in many of Italy’s most well-known industrial, commercial and financial concerns made it a secretive, powerful and manipulative deal-maker in orchestrating mergers, blocking unwanted corporate advances, forcing business break-ups and even reinforcing oligopolies well into the 1990s.

In the 1960s, as Italy’s economy and exports recovered, Credito Italiano needed new capital to finance its growing clients. In 1971, the three “banks of national interest” were finally allowed to list their shares on the stock market again. During the next 20 years, Credito Italiano expanded its international operations in London, New York, Moscow, Tokyo and Hong Kong.

In 1993, Credito Italiano became the first bank controlled by state agency IRI to be privatized when a majority stake of the bank was sold to the public.

Rolo Banca 1473

(Banca del Monte di Bologna e Ravenna, Cassa di Risparmio di Modena, Carimonte Banca, Credito Romagnolo)

In 1473, the senior officials of the Republic of Bologna and the Order of the Franciscans of Primitive Observance founded the Mons Pietatis Bononiensis, the predecessor of the Monte di Pietà di Bologna, which became the modern-time Rolo Banca 1473. Like other monti, its aim was to provide credit to low-income citizens and owners of small businesses at affordable interest rates, to encourage savings, to accept deposits and to offer safe-keeping of valuables.

By the 16th and 17th centuries, the Monte di Pietà di Bologna was also providing debt-collection, payment management, land dealing, and warehousing (for the storage of hemp, silk and grains) services, as well as tax-collection on behalf of the Bolognese government.

In 1795, the invading Napoleonic forces plundered northern Italy and confiscated the monte’s coinage and assets. Seemingly destined to collapse, Monte di Pietà di Bologna survived when many of its creditors voluntarily wrote off the debts owed to them, and when fellow monti in Genoa and Rome forwarded much-needed emergency funding to their counterpart in Bologna.

In modern times, the Monte di Pietà di Bologna once again suffered severe physical and financial losses during World War II, when many branches and warehouses were destroyed. Much of the population was also wounded, killed or displaced when fascist Italy battled the Allied forces. After World War II, banking legislation changes in the 1950s led the Monte di Pietà to adopt the new name Banca del Monte di Bologna.

Also tracing its history to the late 15th century, the Monte di Pietà di Ravenna was founded by the Republic of Venice in 1492 to offer an alternate to the Jewish private bankers who catered only to noblemen. Situated along the strategic ancient trade route in northeastern Italy, Ravenna and Venice both changed hands numerous times between rival empires throughout the Renaissance and Napoleonic periods. During the 1510s and 1790s, Ravenna was twice devastated by the French army. The Monte di Pietà di Ravenna suspended operations for months in 1795 when its coffers were ravaged by the Napoleonic forces.

In modern times, the monte obtained new classification as a bank and in 1956 adopted the name Banca del Monte di Ravenna. Just one year later though, it merged with Monte di Bagnocavallo and became known as the Monte di Credito su pegno di Ravenna e Bagnocavallo.

In 1965, Banca del Monte di Bologna and Monte di Credito su pegno di Ravenna e Bagnocavallo combined to form the Banca del Monte di Bologna e Ravenna. The new bank continued to expand in the next two decades and by 1983, operated a network of 60 branches. In 1988, for the first time in its 500-year history, the bank was partially floated publicly when shares were offered to private investors.

The third major predecessor bank that became Rolo Banca 1473 was the Cassa di Risparmio di Modena, which was established in 1846 by the city council. The savings bank gained independence from the Modena municipal government in 1888. C.R. di Modena had a history of directing part of their profits towards sponsoring social housing, university education and agriculture such as the local parmesan cheese makers.

In 1989, C.R. di Modena opened a representative office in Hong Kong, and in the same year, concluded a memorandum of understanding to combine with Banca del Monte di Bologna e Ravenna. The merger was finalized in 1991 and the new bank adopted the name Carimonte Banca SpA under a parent company called Carimonte Holding. Carimonte Banca combined the strength of 110 branches from the three historic banks from Bologna, Ravenna and Modena, all of which are within the northeastern Italian region of Emilia-Romagna.

The fourth major component of Rolo Banca 1473 was Credito Romagnolo, which traces its history to the 1896 creation of the Piccolo Credito Romagnolo in Bologna. The mandate of the bank was to extend credit (loans) to catholic aid societies, all levels of social classes, small merchants and farms, and to support a local catholic newspaper. The bank dropped the Piccolo name when it ceased to be co-operative and became a joint-stock bank in 1914.

Due to its close ties with the Catholic Church and the then ruling Christian Democrat government, Credito Romagnolo in 1982 was asked to participate in the re-capitalization of the Nuovo Banco Ambrosiano – the original Banco Ambrosiano had collapsed in 1981 under USD $1.3-billion of losses following a major political scandal involving the bank, the Mafia and the Vatican. Credito Romagnolo ended up subscribing to 10% of the Nuovo Banco Ambrosiano for ITL 60-billion (Italian lira), a stake which the bank eventually sold off between 1985 and 1989 for a total of ITL 82-billion. Nuovo Banco Ambrosiano eventually became Intesa Sanpaolo.

Credito Romagnolo’s operations expanded considerably in 1992 when it took over Banca del Friuli. The Italian banking sector entered a period of frenzy consolidations in the 1990s as smaller banks positioned themselves for the desired merger partners in preparation for increased competition.

Following lengthy discussions, Credito Romagnolo and Cassa di Risparmio in Bologna agreed to merge in 1994. In October, however, Milan-based Credito Italiano launched a hostile bid to acquire Credito Romagnolo on the condition that Credito Romagnolo and Cassa di Risparmio in Bologna broke off their merger plan.

C.R. in Bologna in late 1994 formed an alliance with several other Italian financial services firms IMI, Cariplo and Reale Mutua and made a new, joint offer for Credito Romagnolo. Determined to win Credito Romagnolo, Credito Italiano in early 1995 collaborated with Carimonte Banca and insurer RAS (Riunione Adriatica di Sicurtà) and returned with a higher offer. The Credito Italiano group eventually won Credito Romagnolo.

Following a complex restructuring, merger partners Carimonte Banca and Credito Romagnolo amalgamated their operations into a new bank called Rolo Banca 1473 in 1995, whose majority holding was held by Credito Italiano.

Finally in 1998, Credito Italiano and UniCredito agreed to merge to form the UniCredito Italiano (now known as UniCredit), a mega bank with a combined market value of USD $26-billion.

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Japan Bank Mergers & Acquisitions (Sumitomo Mitsui Financial Group)

2011-06-05T19:54:00.020-04:00

Photo: A Sumitomo Mitsui Bank branch in Kamakura.
Photo credit: tomochu. Here is a link to her photostream: http://www.flickr.com/photos/31357178@N08/

Sumitomo Mitsui Financial Group, Inc.

Sumitomo Mitsui Banking Corp. was created in 2001 when Sakura Bank and Sumitomo Bank merged. Sakura Bank itself was known as the Mitsui Taiyo Kobe Bank when formed by the 1990 combination of the Mitsui Bank and the Taiyo Kobe Bank.

The Mitsui Bank

Mitsui has been a powerful name in the Japanese business world for several centuries. In 1672, Mitsui Takatoshi took over a family business and opened a kimono shop in Edo (now Tokyo) in the following year. This kimono shop eventually developed into department store giant Mitsukoshi in the early 1900s, which following a merger with rival Isetan, still exists today as Isetan Mitsukoshi Holdings. Other businesses established by the extended family eventually evolved into the modern-day Mitsui keiretsu (the post-war Japanese conglomerates resulting from the re-grouping of the former zaibatsu).

In 1683, the Mitsui family launched a money exchange business that handled cash transfers between Osaka and Edo. This money exchange marked the House of Mitsui’s first involvement in finance. During the 18th and early 19th centuries, Mitsui became a powerhouse in the fabric trade, finance and mining.

In the 1860s, the House of Mitsui, long supporters of the Tokugawa shogunate, switched allegiance to the Meiji forces that culminated in the restoration of the emperor in 1868. The new regime widely opened up Japan’s ports to foreign trade and visitors for the first time since the 1630s. The Meiji government also promptly rewarded the House of Mitsui’s support with special privileges to manage its tax revenue. Some described the Mitsui finance house as practically the state treasury of the period.

In 1873, the House of Meiji and the House of Ono jointly founded the Dai-Ichi Kokuritsu Ginko (literally the First National Bank), whose responsibilities included issuing currency on behalf of the imperial treasury for the next 23 years. In 1876, the House of Mitsui established an international trading concern called Mitsui Bussan as well as a bank entirely of their own, the Mitsui Bank, to exclusively finance and manage payments for Mitsui Bussan.

Japan’s modernization policies led to a great rise in industrial output, trade volume and most importantly, the country’s rise as a major economic, political and military power in the Far East towards the end of the 19th century. Its rising military aggression towards its neighbours resulted in the Sino-Japanese War of 1894-95, the invasion of Manchuria in 1931, then a full invasion of China in 1937, which in 1941 became part of the larger World War II when Japan attacked Pearl Harbour in Hawaii. All these military conflicts involved heavily and benefited greatly Japan’s zaibatsu including Mitsui Bussan and the Mitsui Bank.

In 1943, amidst the war with the Allied forces, the Mitsui Bank merged with the Dai-Ichi Bank to become the Teikoku Bank. The Dai-Ichi Bank was reformed out of the original Dai-Ichi Kokuritsu Ginko in 1896, when the latter’s central bank status ended. Teikoku then took over Jugo Bank in 1944.

Following the devastating World War II, the General Headquarters (GHQ) of the Supreme Commander of the Allied Powers were determined to ensure the pre-war industrial- banking conglomerates be never powerful enough to support and finance a militarist regime again by enacting laws to break up the zaibatsu system. Powerful zaibatsu like Mitsubishi, Mitsui, Sumitomo and Yasuda were broken up into hundreds of smaller businesses and banned from dealing with their former associated companies. In 1948, the Dai-Ichi Bank was re-spun off from Teikoku Bank. Teikoku itself was banned from dealing with the former Mitsui group.

Japan’s economy expanded rapidly in the 1950s as the burgeoning export sector led to sustained employment growth and rising income. During the decade, Teikoku opened overseas offices in London, Mumbai (Bombay) and Bangkok. The bank also introduced an early form of computer system. Teikoku reverted to its old name of Mitsui Bank in 1954 when the anti-monopoly legislation was relaxed. Gradually, the former zaibatsu system re-formed to a more loosely-affiliated system known a keiretsu. In the early 1950s, the new Mitsui & Co. group of companies were re-established.

The 1960s saw a great increase in both deposits and loans in the Japanese banking system as the economy continued to boom. In 1968, Mitsui took over a Tokyo bank called Toto Bank.

The Taiyo Kobe Bank

The Taiyo Kobe Bank was created in 1973 by the merger of the Kobe Bank and the Taiyo Bank. Both banks were unrelated to the traditional pre-war zaibatsu banks such as Mitsubishi, Mitsui, Sumitomo and Yasuda.

The Kobe Bank was the older one of the two and was established in 1936 from the consolidation of seven regional banks in the Hyogo Prefecture, near the key cities of Kobe, Osaka and Kyoto. While many smaller banks were absorbed by the powerful zaibatsu banks during World War II, the Kobe Bank had maintained its independence and at the end of the war, added the trust business to its lines of products.

The Kobe Bank focused on serving small- and medium-sized businesses in the Kobe region that were too small to attract the big zaibatsu banks. Still, following its clients’ business, the bank first opened representative offices in London and New York in the late 1950s, then upgraded them into full branches by the early 1970s. In 1960, to comply with new banking legislation, the Kobe Bank sold its trust business to Toyo Trust & Banking.

The Taiyo Bank traces its history to the 1940 founding of the Dai Nihon Mujin out of four small mutual savings and loan companies in Tokyo. The small bank struggled through the difficult war years, and in 1948 dropped Dai from its name. Following banking legislation changes, Nihon Mujin was re-chartered in 1951 as a mutual bank under the name Nihon Sogo Bank (meaning Japan Mutual Bank). In 1968, Nihon Sogo demutualized itself and adopted the name Taiyo Bank.
However, despite all the transformations, the lack of economies of scale and nationwide operations made it difficult for the Kobe and the Taiyo to compete with their larger rivals. In 1973, the Kobe Bank and the Taiyo Bank combined to form the Taiyo Kobe Bank, becoming the largest of all city banks in Japan based on the number of branches.

Sumitomo Bank

Like the House of Mitsui, the Sumitomo conglomerate also traces its history to the 17th century. The family was then headed by a Kyoto book shopkeeper and herbal medicine man named Masatomo Sumitomo. Masatomo’s brother-in-law learnt and developed a new copper-smelting technology, which turned the family business into a leading copper refiner by the 1650s. Over the next three centuries, the House of Sumitomo expanded into the textile, sugar, chemicals and medicine business, and moved its base to from Kyoto to the Osaka region.

Following the Meiji Restoration in 1868 and the opening of Japan’s borders to foreign trade and merchants, the country rapidly adopted new technologies from the West. As a historic base metals refiner and trader, the Sumitomo group further expanded into the machinery, electric cable and coal industries, becoming one of Japan’s most powerful zaibatsu. In 1895, the conglomerate established a private bank named Sumitomo Bank. The bank was re-organized into a limited-liability company and floated publicly in 1912.

In 1945, Sumitomo Bank took over Hannan Bank and Ikeda Jitsugyo Bank. After World War II, Sumitomo, which like other zaibatsu had greatly profited from supplying Japan’s weapon sectors, was broken up into hundreds of smaller companies forbidden to use its former name or trade with the former group members. Furthermore, in 1948, Sumitomo Bank was forced to rename itself the Osaka Bank as it broke ties with the former Sumitomo group of companies.

Interestingly, by 1952, the anti-monopoly laws had already been relaxed that the Osaka Bank restored the name Sumitomo Bank. The bank then actively took up the responsibility of re-grouping the Sumitomo conglomerate. During the 1950s, the bank made a number of highly successful investments, including one in Matsushita Electric (maker of the National and Panasonic brands of electronics and appliances).

In 1965, Sumitomo merged with Kawachi Bank. Still lacking a meaningful presence in the Tokyo region, however, Sumitomo in 1986 acquired the Heiwa Sogo Bank, which operated about 100 branches around the Japanese capital city.

Japan’s economy in the late 1980s was marked by low interest rates, a strong Yen as well as a credit-fuelled stock and real estate bubble. Corporate Japan was eager to take advantage of the strong Japanese yen and easy credit to buy up foreign assets, such “trophy” purchases later often proved unwise, if not outright disastrous. In the case of Sumitomo Bank, it spent USD $500-million for a 12.5%-stake in revered Wall Street investment bank Goldman, Sachs & Co. at the top of the market in late 1986. Less than a year later, the 1987 Black Monday stock crash hit and the Dow Jones Industrial Index promptly fell over 30% within weeks.

Recent transaction(s):

In 1990, the Mitsui Bank and the Taiyo Kobe Bank agreed to merge to become the Mitsui Taiyo Kobe Bank. The new bank leapfrogged to become the second largest bank in the country. In 1992, the Mitsui Taiyo Kobe renamed itself Sakura Bank.

Throughout the 1990s, the banking crisis and economic recession worsened significantly in Japan. Loan losses across the entire banking sector were estimated at USD $500-billion, and the Japanese government provided some USD $400-billion in state aid to prevent a complete collapse of the banking sector. Japan’s economy has experienced minimal real growth from 1990 to 2011, and the Nikkei 225 stock index by mid-2011 remained about 75% below its all-time high reached at the end of 1989.

In 1999, Sakura Bank agreed to combine with Sumitomo Bank. The actual combination did not complete until 2001. The name Sakura was dropped and the new bank restored part of Sakura's old name Mitsui, creating the current Sumitomo Mitsui Bank. Like many corporate mergers in Japan, the share exchange ratio was unclear and the value of the merger was not disclosed. Thomson Reuters and WSJ Research later valued the deal at USD $45.4-billion, which appeared unreasonably high for two very sick banks.

In 2004, Sumitomo Mitsui made a competing USD $29.0-billion offer for UFJ Holdings, which resulted from the three-way combination between Sanwa Bank, Tokai Bank and Toyo Trust in 2002. Eventually, however, UFJ Holdings favoured the merger proposal from Mitsubishi Tokyo Financial Group.

In 2008, Sumitomo Mitsui subscribed to GBP 500-million of new shares issued by Britain’s Barclays plc as part of Barclays' effort to raise fund to acquire Dutch banking giant ABN AMRO Holding. Barclays “luckily” lost ABN AMRO to a tri-bank consortium formed by the Royal Bank of Scotland Group (RBS), Fortis and Banco Santander. The consortium’s ill-timed purchase of the over-priced ABN AMRO led to the nationalization of both RBS and Fortis in 2009.

In 2009, Sumitomo Mitsui bought Japanese retail broker Nikko Cordial Securities Inc. and other assets from Citigroup for a total cash value of JPY 774.5-billion (USD $7.9-billion). The purchase also included the stock and bond underwriting units of Nikko Citigroup, and JPY 28.5-billion of Japanese-listed securities held by Citigroup.

In June 2010, Sumitomo Mitsui bought a 4.5% stake in India’s No. 4 bank by market capitalization, Kotak Mahindra Bank, for INR 13.66-billion (USD $296-million).

In January 2012, Sumitomo Mitsui Financial and trading conglomerate Sumitomo Corp. jointly acquired airliner-leasing firm RBS Aviation Capital from the Royal Bank of Scotland for USD $7.3-billion. Sumitomo Mitsui Financial would take 70% of the Dublin-based business and Sumitomo Corp. would take the rest. RBS Aviation Capital owned, managed or had orders for 329 commercial jet airliners.

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Germany Bank Mergers & Acquisitions (Commerzbank)

2011-03-11T21:15:00.004-05:00

Photo: A Commerzbank AG branch in Kiel, Germany.

With special thanks to my very good friend "Vovchychko" of Germany, who gave me permission to use this photo. You can view his other photos by clicking on this link: http://www.flickr.com/photos/schneelocke/

Commerzbank AG

The Commerz- und Disconto-Bank in Hamburg was established in 1870 by a number of German merchants and private banks. As its name suggests, the bank’s mandate was to serve Germany’s burgeoning manufacturing and import-export sectors. In 1871, the bank was one of the founding members of Hamburg Südamerikanische Dampfschifffahrts-Gesellschaft (Hamburg - South America Steamship Company, now known as Hamburg Süd).

In 1873, Commerz- und Disconto-Bank in Hamburg subscribed to a majority capital of the new London and Hanseatic Bank, establishing a presence in London, the then financial centre of the world.

In the 1890s, Commerz- und Disconto-Bank was a major backer of the construction of electric utilities in Nürnberg (Nuremburg) and Hamburg. In 1897, the bank took over Frankfurt-am-Main-based private bank Bankhaus J. Dreyfus & Co., including its Berlin branch. With the expansion outside of Hamburg, the bank formally dropped the “in Hamburg” reference from its name in 1898.

In 1905, Commerz- und Disconto-Bank’s head office was moved from Hamburg to Berlin when it took over the Berliner Bank.

When World War I broke out in 1914, the bank lost its stake in London and Hanseatic Bank. Needless to say, the War devastated normal lives and business across much of Europe.

Between 1917 and 1923, Commerz- and Disconto-Bank acquired more than 40 regional and private banks across Germany, the most important of which was the Mitteldeutsche Privat-Bank with its 90-branch network. When the transaction completed, the bank adopted the new name Commerz- und Privat-Bank.

Following the end of World War I, Germany went through a decade of economic upheavals which included the infamous hyper-inflation in the early 1920s. Still, between 1923 and 1924, the bank made acquisitions in the Netherlands and Latvia, and opened an office in New York in 1927.

Following the Wall Street Crash of 1929, the German economy, like many others in the Western world, went into a tailspin. Commerz- and Privat-Bank merged with Mitteldeutsche Creditbank in this same year.

The Great Depression in the early 1930s saw personal consumption, industrial output and international trade contracting, causing unemployment to soar to 30% in Germany. Then in May 1931, one of Austria’s largest banks, Credit-Anstalt, collapsed, sending shock waves across the world. As the entire German banking sector teetered on the brink of collapse, the government decreed that all banks be closed on 1931-07-13 and 1931-07-14 to stem panic bank runs. In 1932, the ailing Barmer Bank-Verein Hinsburg, Fischer & Comp. was merged into Commerz- und Privat-Bank; meanwhile, the Reich government re-capitalized Commerz- und Privat- by acquiring 70% of the bank’s enlarged capital. Between 1936 and 1937, the government re-floated Commerz- und Privat-Bank to private shareholders.

Under pressure from the new Nazi government, Commerzbank began to let go its Jewish staff in 1933. By 1938, all Jewish staff had been ousted from the bank. To comply with new discriminatory legislation, Commerz- und Privat- also took part in expropriating Jew-owned properties and stopped dealing with Jewish clients. Soon after World War II broke out in 1939, the bank commenced operations in German-occupied Netherlands, Belgium, the Baltic states and southeastern Europe. In 1940, the bank shortened its name to Commerzbank AG.

Following six years of intense fighting, 60-million deaths and utter devastation around the world, Germany, Japan and Italy were finally defeated in 1945. Commerzbank lost its operations in the Soviet zone of Germany (later East Germany), the occupied territories, as well as its head office in Berlin, as the former German capital was also split into the Soviet Zone (later East Berlin) and the American, British and French zones (later West Berlin). Of the 359 domestic branches in existence in 1940, 161 were lost to the Soviets. Even within the American, British and French zones (later West Germany), the Liquidation Commission broke up the large German banks (Deutsche, Dresdner and Commerzbank) into much smaller entities to ensure that they would never be big enough to finance a war machine again. Commerzbank was split into nine small separate banks in 1947. Meanwhile, in West Berlin, Bankhaus Holbeck KG began operations in 1949.

In 1952, the nine small banks were allowed to re-group into three regional banks, namely: Bankverein Westdeutschland (Düsseldorf), Commerz- und Disconto-Bank (Hamburg) and Commerz- und Credit-Bank (Frankfurt-am-Main). Meanwhile, Berlin’s Bankhaus Holbeck became Berliner Commerzbank. Between 1952 and 1955, the three regional banks opened their first post-World War II foreign representative offices in Amsterdam, Madrid and Rio de Janeiro. In 1956, Bankverein Westdeutschland was re-grouped as Commerzbank-Bankverein.

In 1958, Düsseldorf-based Commerzbank Bankverein took over Commerz- und Disconto-Bank and Commerz- und Credit-Bank. The new bank revived the Commerzbank AG name, which was previously in use between 1940 and 1947.

Commerzbank listed its shares on the London stock exchange in 1962, marking the bank’s first listing abroad. The bank then acquired a minority interest in Korea Exchange Bank in 1967. In 1968, Commerzbank and a number of other European banks jointly introduced a cheque-guarantee card, launching the Euro-Cheque product. During the 1970s, the bank began to actively re-build its former expertise in international corporate and public finance by opening branches in New York, London, Chicago, Paris, Brussels, Tokyo and Hong Kong.

In 1971, majority interests in real estate lenders Rheinische Hypothekenbank and Westdeutsche Bodenkreditanstalt were acquired. (Commerzbank first took a minority stake in Rheinische Hypothekenbank in 1960.) Commerzbank’s interest in Rheinische Hypothekenbank (commonly known as RHEINHYP) was gradually raised to almost 100% over the years. In 1974, the two real estate lenders were combined.

In the 1980s, Commerzbank expanded operations in the Netherlands and Switzerland, as well as acquired 10% of Spain’s Banco Hispano-Americano (1984) and 10% of Brazil’s Unibanco (1988). The end of the 1980s was marked by the 1989 fall of the Berlin Wall and the collapse of Communism in the Soviet Union and Eastern Europe. As soon as East Germany and West Germany re-unified in 1990, Commerzbank promptly opened branches in 50 former East German locations. In 1992, the West Berlin subsidiary Berliner Commerzbank was integrated into the parent bank. The bank also expanded into other former Eastern European countries such as Hungary and Czechoslovakia. In Poland, Commerzbank acquired a majority stake in Bank Rozwoju Eksportu (BRE) in 1994. In the same year, it also bought a 51% interest in Hypothekenbank in Essen AG.

In 1995, an on-line retail securities broker cominvest was established, which grew into Germany’s leading on-line broker.

Recent transaction(s):

In 2000, shortly after merger talks failed between Deutsche Bank and Dresdner Bank, Commerzbank and Dresdner Bank entered merger discussions but they also failed to conclude.

In 2002, Commerzbank merged its RHEINHYP holdings with Deutsche Bank’s and Dresdner Bank’s real estate lenders to form EuroHypo AG, in which all three German banks held a stake.

In 2005, Commerzbank bought out the 66.2% of EuroHypo AG that it didn’t yet already own for Eur 4.65-billion from its two other shareholders Deutsche Bank and Dresdner Bank. With the EuroHypo purchase, Commerzbank became the No. 2 bank in Germany. Prior to the sales, Deutsche Bank had owned 37.7% of EuroHypo, whereas Dresdner Bank had owned 28.5% of the real estate and public finance lender.

In 2007, Commerzbank sold its British-based asset management division Jupiter to its management and TA Associates for about Eur 1-billion (GBP 740-million). Jupiter had GBP 19.2-billion of assets under management.

Also in 2007, Commerzbank bought 60% of Ukraine's Bank Forum for Eur 435-million (USD $600-million). Bank Forum served 230,000 retail and 12,000 business clients through 230 branches.

Also in 2007, Commerzbank sold its Paris-based asset management firm Caisse Centrale de Reéscompte SA (CCR) to UBS for Eur 435-million.

Also in 2007, Commerzbank bought out the 49% minority interest in Hypothekenbank in Essen AG (known as Essen Hyp). Commerzbank had owned 51% of Essen Hyp since 1994. In 2008, Essen Hyp was integrated into Commerzbank's other wholly-owned commercial real-estate and infrastructure (public finance) lender EuroHypo AG.

In August 2008, Commerzbank agreed to buy the weakened Dresdner Bank from insurance giant Allianz SE for Eur 8.8-billion (USD $12.81-billion). Dresdner’s investment unit Dresdner Kleinwort had been badly hurt by the 2008 global banking crisis. The purchase price consisted of Eur 1.6-billion in cash, Eur 6.5-billion in Commerzbank shares, and the cominvest division valued at Eur 700-million. In addition, Commerzbank agreed to make a maximum Eur 975-million payment to Allianz to cover potential future losses from some sub-prime securities that Allianz was exposed to, bringing the potential total value of the deal to Eur 9.775-billion (USD $14.23-billion).

Following a turbulent summer which saw global financial asset prices tumbling, Commerzbank in November 2008 revised its agreement to buy Dresdner Bank. Commerzbank had already acquired 60% of Dresdner in August for Eur 1.6-billion in cash, Eur 2.75-billion in stock and the cominvest division valued at Eur 700-million. Instead of issuing another Eur 3.75-billion of stock and insuring Eur 975-million of potential sub-prime losses, Commerzbank immediately acquired the remaining 40% of Dresdner from Allianz for Eur 1.65-billion in cash. The amendment reduced the value of the entire Dresdner Bank acquisition to Eur 6.7-billion (USD $8.93-billion). Dresdner Bank’s 1,000 branches would become Commerzbank though branch closures were expected.

In January 2009, the German financial stabilization fund SoFFin agreed to guarantee up to Eur 15.0-billion (USD $20.34-billion) of a new Commerzbank’s bond issue in exchange for new ordinary shares representing 25% of the enlarged capital for Eur 1.77-billion.

Commerzbank had just received Eur 8.2-billion (USD $11.2-billion) of capital from SoFFin in November 2008 with no voting privilege.

In September 2009, Commerz returned the remaining Eur 5-billion (USD $7.2-billion) of unused debt guarantees to SoFFin. Commerzbank tapped and issued Eur 5.0-billion of government-backed bonds in early 2009. The remaining Eur 10-billion of debt guarantees were not needed and returned to the German government in late 2009.

In October 2009, Commerzbank sold Kleinwort Benson Private Bank to Belgian private-equity firm RHJ International for GBP 225-million (USD $365-million). Kleinwort Benson had GBP 5.4-billion of assets under management and another GBP 15.7-billion of assets under administration.

In March 2010, Commerzbank acquired another 26.25% in Ukraine’s Bank Forum for an undisclosed amount. Commerz had held 63% of the bank since early 2008.

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United States Bank Mergers (PNC Financial Services Group)

2011-02-12T14:02:00.010-05:00

Photo: Following the sale of National City to PNC Financial in 2008, the former NatCity branch in Norwalk, Ohio, is now a PNC branch.

The PNC Financial Services Group, Inc.

National City Corporation

In 1845, two executives from the Fireman’s Insurance Co. founded the City Bank of Cleveland. The new bank quickly gained prominence in the city by issuing secured paper banknotes, offering deposit accounts to safely store cash and loans to businesses. Two years after the passing of the National Banking Act of 1863, City Bank of Cleveland converted to a national charter and renamed itself National City Bank of Cleveland.

As one of the inland port cities in the Great Lakes, Cleveland became a major commercial and transportation hub, and National City Bank also prospered. The bank operated on conservative principles, which helped it weather the Panic of 1893, when hundreds of American banks failed.
Like America itself, National City fared well well into the 1920s, until another asset bubble burst led to the infamous Stock Crash and the ensuing Great Depression. Despite that, the bank’s cautious management once again steered the bank through the challenges and came out relatively unscathed.

Following the end of the World War II, America enjoyed decades of boom while much of Europe and Asia rebuilt from its ruins. National City launched new products and services. In 1959, a computer system was installed to link its branches together. Still, by 1960, the bank remained largely just a Cleveland city bank with 24 branches. Between 1974 and 1984, the bank acquired a number of small Ohio banks such that by 1980, it operated a network of 111 branches.

National City broke out of its relative confinement in the Cleveland area in 1984, when it took over Columbus-based BancOhio Corp. (BancOhio National Bank) for USD $310-million. The purchase gave National City a major foothold in Ohio’s state capital and made it the No. 1 bank in the state. When the ban on inter-state banking was lifted in the late 1980s, National City made its first out-of-state expansion in 1988 by buying First Kentucky National Corp. for USD $660-million.

The 1990s saw a massive wave of bank consolidations in the U.S. In 1991, National City engaged in a bidding war for Cleveland rival Ameritrust Corp. In the end, National City’s USD $860-million offer was trumped by Society Corp.’s (present-day KeyCorp) USD $1.2-billion offer. The rebuffed National City quickly turned its attention to other opportunities and took over Merchants National Corp. of Indianapolis in the same year.

Following a few small acquisitions in Indiana and Kentucky, National City made a major move into the Pennsylvania market in 1995 by buying Pittsburgh’s Integra Financial Corp. for USD $2.1-billion. Integra operated 260 branches in western Pennsylvania.

By 1997, National City was emerging as a regional powerhouse in the Midwest with 750 branches. In the same year, the bank bought Sterling Ltd., an Ohio wealth management firm. The buying frenzy continued in 1998 when the bank bought the First of America Bank Corporation of Kalamazoo, Michigan, for USD $6.7-billion and Fort Wayne National Corp. of Indianapolis for USD $800-million. The bank closed out the decade by buying California-based subprime (i.e. high-risk) mortgage lender First Franklin Financial from Bank of America in 1999 for USD $266-million. This purchase would turn out deadly for National City a decade later.

After a few years of digesting its earlier acquisitions, National City in 2003 took over Missouri’s Allegiant Bancorp for USD $475 million, obtaining 37 branches in the St. Louis area. One year later, the bank bought Cincinnati-based Provident Financial Group for USD $2.1 billion.

By 2006, the decade-long real estate bubble that had been fuelled by super-low interest rates, loose lending practices and just plain old “herd mentality,” was starting to leak air. As mortgage default rates began to creep up, National City sold its subprime mortgage lender First Franklin to Merrill Lynch for USD $1.3-billion, though the bank had to keep USD $10-billion of the riskiest mortgage assets that Merrill refused to take on. Buying First Franklin turned out to be a big mistake for Merrill, which shut down the lender merely two years later after a multi-billion dollar write-off.

Ironically, at the same time that National City sold First Franklin, it bought two new banks in Florida: Fidelity Bankshares for USD $1-billion and Harbor Florida Bancshares for USD $1.1-billion. Even as late as 2007, the bank bought MAF Bancorp (MidAmeria Bank) for USD $1.9-billion. MidAmerica had 82 branches in Chicago and Milwaukee areas.

Soon after, in early 2008, the global credit bubble burst and banks around the world suffered billions of dollars of losses from bad mortgage and consumer loans. Investment bank Bear Stearns collapsed in March 2008 and was sold to JPMorgan Chase. When panicky institutional investors withdrew from the short-term money market, banks around the world became short of the capital needed to keep their business going. Citigroup, Wachovia, Washington Mutual, Fannie Mae, Freddie Mac, HBOS and Fortis were just a few of a long list of lenders that would have gone bankrupt without emergency state aid. It was clear that National City would not survive without the backing of a healthier bank, and it agreed to a buyout offer from PNC Financial in October 2008.

PNC Financial Services Group

In 1852, the Pittsburgh Trust and Savings Co. opened for business, making it the oldest bank in the city. Following the passing of the National Banking Act of 1863, the bank promptly applied for a national charter and renamed itself the First National Bank of Pittsburgh.

In 1946, First National of Pittsburgh merged with Peoples-Pittsburgh Trust Co. to form Peoples First National Bank & Trust Co. In 1959, Peoples First merged with Fidelity Trust Co. and adopted the name Pittsburgh National Bank.

Meanwhile, a number of Quaker merchants founded the Provident Life and Trust Co. in 1865 to provide life insurance and banking services. Provident Life and Trust was often dubbed the “Quaker Bank.” In 1922, the company was split into the Provident Mutual Life Insurance Co. and the Provident Trust Co. In 1957, the Provident Trust Co. of Philadelphia acquired the Provident Tradesmen’s Bank and Trust Co. to form the Provident National Bank.

It was only in 1982 that the legislative ban on state-wide banking in Pennsylvania was abolished, and Pittsburgh National Bank and Provident National Bank became the first two in the state to merge, forming the PNC Financial Corp. In 1984, PNC bought Northeastern Bancorp for about USD $100-million. As the 1980s progressed, further legislative reforms made inter-state banking legal, and PNC acquired Louisville, Kentucky-based Citizens Fidelity Corp. for USD $700-million in 1986. In 1987, the bank bought the Central Bancorporation of Cincinnati. Just one year later, PNC acquired the Bank of Delaware Corp. for USD $230-million. Though still sporadic outside of Pennsylvania, PNC by this time was already building a network in the Midwest and along the Eastern Seaboard.

Recent transaction(s):

Between 1991 and 1995, PNC made a series of small acquisitions to expand its operations in its hometowns of Pittsburgh and Philadelphia, as well as in northern Kentucky, northern Pennsylvania and the Cincinnati area.

In 1993, PNC acquired The Massachusetts Company from the Travelers Group for USD $52-million. Founded in 1818, The Massachusetts Co. offered trust and pension services and had a small branch network.

Also in 1993, PNC acquired Sears Mortgage from department store Sears, Roebuck & Co. for USD $329-million.

In 1994, PNC bought BlackRock Financial Management for USD $240-million. BlackRock specialized in fixed-income asset management. In 1999, PNC floated 30% of BlackRock on the stock market.

In 1995, PNC bought Midlantic Corp. for USD $3.0-billion, entering the southern New Jersey market for the first time and strengthening its presence in Philadelphia.

Also in 1995, PNC acquired 84 branches in southern New Jersey from Chemical Banking Corp. for USD $504-million.

In 1998, PNC bought stock broker Hilliard Lyons for USD $275-million.

Also in 1998, PNC sold its credit-card portfolio with USD $2.9-billion in receivables to MBNA Bank for USD $3.343-billion.

In 1999, PNC acquired the mutual fund processing services unit of First Data Corp. for USD $1.1-billion.

In 2000, PNC sold its residential mortgage portfolio to Washington Mutual Inc. for USD $605-million.

In 2003, PNC bought United National Bancorp for USD $638-million. United National operated 52 branches in central New Jersey and eastern Pennsylvania.

In 2004, PNC bought Riggs National Corp. for USD $779-million.

In 2006, BlackRock exchanged a 49.8% stake of itself for Merrill Lynch & Co., Inc.'s investment management business. PNC Financia’s 70% stake in BlackRock was diluted to 34%.

Also in 2006, PNC bought Mercantile Bancshares Corp. for USD $6.0-billion. Mercantile Bank operated 240 branches in the Washington D.C., Maryland, Delaware, Virginia and south-eastern Pennsylvania areas.

In 2007, PNC bought Lancaster, Pennsylvania-based Sterling Financial for USD $565-million. Sterling Financial had 67 branches in Pennsylvania, Maryland and Delaware under five banking subsidiaries.

Also in 2007, PNC bought Hamilton, New Jersey-based Yardville National Bancorp for USD $403-million. Yardville National operated 33 branches in New Jersey and Pennsylvania.

On 2008-10-24, PNC Financial Services bought National City Corp. for USD $5.2-billion in stock plus USD $384-million in cash to certain warrant holders. The deal valued each National City share at USD $2.23. Just a few years earlier, National City traded at over $30 per share. PNC also announced that it would obtain USD $7.7-billion in state aid (TARP fund) from the U.S. Treasury. National City had 1,300 offices and 2,100 ATMs in Ohio, Florida, Illinois, Kentucky, Indiana, Missouri, Michigan and Pennsylvania. The enlarged PNC would have 2,750 branches but branch closures were expected.

In 2008, as part of the sale of Merrill Lynch to Bank of America, Merrill’s 48.5% stake in BlackRock was restructured. The change of ownership of Merrill triggered a clause in BlackRock’s shareholder agreement that allows BlackRock to reduce Merrill’s voting control of BlackRock. Merrill Lynch, BlackRock and BlackRock’s other major shareholder PNC would exchange common stock into preferred stock. Following the exchange, Merrill’s voting stake in BlackRock fell from 48.5% to 4.9%; whereas PNC’s voting control in BlackRock rose from 36.5% to 47%.

In June 2009, BlackRock, an associated company of PNC and Bank of America, agrees to buy San Francisco-based Barclays Global Investors from Barclays plc for USD $13.5-billion (GBP 8.2-billion). BlackRock would pay USD $6.6-billion in cash and issue USD $6.9-billion of new stock to Barclays plc. Barclays ended up with a 19.9% economic interest in the newly-named BlackRock Global Investors, but only a 4.9% voting stake. Bank of America, through its 2008 purchase of Merrill Lynch, saw its economic holding in BlackRock fall to 34.2% from 47%, while PNC’s economic stake was diluted to 24.6% from 32%. The new BlackRock had USD $2.7-trillion of assets under management.

In 2010, PNC sold PNC Global Investment Servicing the Bank of New York Mellon for USD $2.31-billion in cash. The unit sold provided back-office data and accounting processing for financial advisers, fund managers and brokers. PNC Global Investment Servicing had USD $855-billion in assets under administration. PNC planned to repay the USD $7.7-billion in government bailout fund to the U.S. Treasury. PNC would finance the rest of the repayment from a USD $4.5-billion to $5-billion common share and senior notes sale.

In June 2011, PNC agreed to buy RBC Bank USA and its credit-card potfolio from Royal Bank of Canada for USD $3.615-billion (CAD $3.54-billion). The purchase included 424 branches in North and South Carolinas, Florida, Alabama, Georgia and Virginia. RBC Bank USA had USD $19-billion of deposits and USD $16-billion of loans. The purchase would turn PNC into the No. 5 bank in the U.S. based on deposits.

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Ireland Bank Mergers & Acquisitions (Allied Irish Banks)

2011-01-22T17:04:00.010-05:00

Photo: Two older Northern Irish (British) pound banknotes issued by the former Provincial Bank of Ireland and Allied Irish Banks. The Irish Republic’s currency was the Irish punt between 1938 and 1998, and the Euro since 1999. Northern Ireland, as part of Great Britain, uses the British Pound Sterling.

Allied Irish Banks, plc (AIB Group)

Allied Irish Banks was formed in 1966 through the three-way merger of the Provincial Bank of Ireland, the Royal Bank of Ireland and the Munster and Leinster Bank. All three founding members were established long before Ireland gained independence from Britain in 1922.

The Provincial Bank of Ireland

Of the three, the Provincial Bank of Ireland was the oldest, have been founded in 1825. Despite its Irish focus, the Provincial Bank of Ireland’s nominal head office was in London at the time.

Long an innovative bank, Provincial was one of the parties that pushed for the creation of a clearing house in Dublin in 1845. The clearing house was a centralized place where bills of exchange and cheques were swapped and cleared and balances settled amongst the banks. In the second half of the 19th century, the Provincial Bank became closely associated with the burgeoning linen industry in Ireland.

The Royal Bank of Ireland

The Royal Bank of Ireland opened for business in 1836 and initially served mostly the wealthy merchants. The name “Royal” obviously dated from a time when the entire Ireland was a part of the United Kingdom of Great Britain and Ireland. Following the establishment of the Irish Free State in 1922, a civil war broke out between the pro-Anglo Irish Treaty forces and those against it. It was during this divisive and violent time that Royal Bank of Ireland sold its Northern Ireland business to Belfast Banking Company, in return for Belfast Banking’s business in the Irish Free State.

Interestingly, as the Big Four on the Irish Isle today all started long before Ireland became independent, they have always operated in both the north and the south. Hence, Allied Irish Banks and Bank of Ireland, both based in Dublin, also operate in Northern Ireland. Similarly, Ulster Bank and Northern Bank, both based in Belfast, have major operations in the Republic. The Irish may not agree on religions and politics, on money matters the border doesn't seem to affect their choice of bank. It should be pointed out, however, that Ulster Bank is part of The Royal Bank of Scotland Group whereas Northern Bank is now a subsidiary of Denmark's Danske Bank.

The Munster and Leinster Bank

The Munster and Leinster Bank was created in Cork in 1885 as a re-birth of the insolvent Munster Bank. The former Munster Bank was founded in 1864 and had in its better days acquired the famous Dublin private bank David La Touche & Son (founded 1693) back in 1870. With its extensive branch network in rural Ireland, Munster and Leinster was the average folks’ choice of bank.

Allied Irish Banks

Despite the creation of Allied Irish Banks in 1966, the Royal, the Provincial and the Munster and Leinster continued to operate under their own names for some years. By 1971, they operated more than 280 branches in Ireland and another 46 in Northern Ireland.

In 1977, Allied Irish Banks opened a branch in New York. Six years later, it acquired a 43% stake in American regional bank First Maryland Bancorp, which operated the First National Bank of Maryland. AIB’s stake in First Maryland was raised to 49% in 1988 at which point the Irish bank launched an offer to fully privatize First Maryland.

In 1990, Allied Irish Banks formally adopted the abbreviation AIB, though in legal matters “Allied Irish Banks” remains in use.

Recent transaction(s):

In May 1991, AIB purchased TSB Northern Ireland from TSB Bank plc (the former Trustee Savings Bank, see entry under Lloyds Banking Group). Following the purchase, Allied Irish changed the name of its Northern Ireland division to First Trust Bank.
In December 1991, AIB acquired York Bank & Trust Company in Pennsylvania. The enlarged First Maryland now had branches in Pennsylvania, Delaware and Washington DC.
Between 1995 and 1997, AIB bought 60.1% of Polish bank Wielkoposki Bank Kredytowy.
In 1999, AIB bought 80% of another Polish bank Zachodni from the Polish state treasury.
Also in 1999, AIB acquired 24.9% of Keppel TatLee Bank of Singapore.
In 2001, AIB’s Polish holdings were combined to form Bank Zachodni WBK, the 5th largest bank in Poland, in which AIB had a 70.5% stake.
Also in 2001, AIB sold its stake in Singapre's Keppel TatLee Bank to Oversea-Chinese Banking Corp (OCBC).
In February 2002, AIB's U.S. unit Alltrust Financial discovered that currency trading losses totalling USD $750-million had been run up by a rogue trader named John Rusnak. Mr. Rusnak apparently hid the losses by falsifying bank records. The resulting scandal caused Allied Irish's share prices to tumble. Later in 2002, AIB decided to merge (sell) its Alltrust Financial unit with Buffalo-based M&T Bank in exchange for a 22.5% stake in M&T, plus USD $865-million in cash. The whole deal put a value of about USD $3.1-billion on Alltrust Financial.
In 2007, AIB bought AmCredit for Eur 40-million. AmCredit was a mortgage lending specialist in the Baltic region and operated 13 outlets across Latvia, Lithuania and Estonia.
In 2008, AIB bought 49.99% of Bulgaria's Bulgarian-American Credit Bank AD (BACB) for Eur 216-million (USD $318-million). BACB specialized in providing secured financing to small- and medium-sized enterprises. It had four offices and a mobile staff of 130 employees to cover another 15 cities.
Following the collapse of the U.S. housing market in 2007, losses from the collateralized debt obligations (CDOs) soared to billions of dollars around the world, and the inter-bank credit market froze during the summer of 2008. As funding sources dried out, some of the world’s largest banks were on the verge of collapse, including Citigroup, Wachovia, Washington Mutual, HBOS (Halifax-Bank of Scotland), Royal Bank of Scotland, Fortis and all three of Iceland’s commercial banks. Ireland’s Allied Irish Banks, Anglo-Irish Bank and Bank of Ireland were no exception and certainly would have gone down without state aid.
On 2008-09-30, the Irish government had to offer a sweeping guarantee covering all deposits and loans at six major Irish banks (including AIB) to prevent a panic run on the banks. The unconditional state guarantee would be effective at least until the end of September 2010.
In December 2008, the Irish government announced plans to recapitalize the three largest Irish banks for Eur 5.5-billion. The government offered AIB Eur 3.5-billion (USD $4.92-billion, GBP 3.26-billion) in return for perpetual preference shares with an annual yield of 8%. The purchase gave the government a 25% indirect stake of AIB.
In mid 2009, the Dublin government announced the creation the National Asset Management Agency (NAMA) to take the bad loans off the books of distressed Irish banks. NAMA planned to buy between Eur 20-billion to 25-billion of AIB’s bad loans at a significant discount. The resulting loan loss would require AIB to raise more capital from the Irish state or private investors.
In September 2009, NAMA unveiled plans to pay a number of Irish financial institutions Eur 54-billion (USD $79.5-billion) to unload Eur 77-billion (USD $113.4-billion) of bad loans from their books. The financial institutions would record losses of 30% of the loans. However, as the poor quality of the loans was revealed in 2010, the Irish government significantly lowered the percentage that it offered to take over the bad loans during 2010.
In March 2010, the Central Bank of Ireland published its Prudential Capital Assessment Review (PCAR), which required AIB to raise Eur 7.4-billion in addition to the proposed sales of AIB’s bad loans to NAMA, as well as the proposed sales of AIB’s Polish and American operations. The amount of additional fresh capital requirement was further raised to Eur 9.8-billion in November 2010.
In April 2010, AIB transferred its first tranche of bad loans to NAMA. AIB received Eur 1.9-billion for loans with a book value of Eur 3.3-billion, representing a “haircut” of 42%.
In July 2010, AIB transferred its second tranche of bad loans to NAMA. AIB received Eur 1.4-billion for loans with a book value of Eur 2.73-billion, representing a “haircut” of 49%.
In September 2010, AIB sold its 70.4% stake in Poland’s Bank Zachodni WBK S.A. and 50% stake in BZWBK AIB Asset Management to Banco Santander for Eur 3.09-billion (USD $3.97-billion). Bank Zachodni WBK was Poland’s No. 3 bank and had 512 offices. The sale generated Eur 2.5-billion of tier 1 capital for the troubled Irish bank.
In October 2010, AIB sold its 22.4% stake in U.S. regional bank M&T Bank Corp. for USD $2.07-billion (Eur 1.5-billion). The sale raised AIB’s tier 1 capital by Eur 900-million.
Between 2010-06-30 and 2010-11-16, a total of Eur 13-billion (UD$ 18-billion) of deposit was withdrawn from AIB, mainly due to wary corporate and institutional clients transferring their cash away from the debt-crippled bank.
Between November and December 2010, AIB transferred two more bad-loan portfolios to NAMA. AIB received Eur 5.1-billion for loans with a book value of Eur 12.5-billion, representing a “haircut” of 59%.
On 2010-12-23, the Irish government injected Eur 3.7-billion (USD $4.85-billion) into AIB to raise its stake from 18.6% to 49.9%. The government also planned to exercise its Eur 3.5-billion of convertible non-voting stock in the bank in early 2011, raising its ownership to 92.8%, effectively nationalizing Ireland’s largest bank. AIB still needed to raise another Eur 6.1-billion by the end of February 2011 to meet its Eur 9.8-billion fresh capital requirement. As part of the restructuring, AIB’s stock listing would move from the Irish Stock Exchange’s main board to the Enterprise Securities Market as of 2011-01-26.
In February 2011, Allied Irish Banks (AIB) paid Eur 3.5-billion (USD $4.81-billion) to acquire Eur 8.6-billion (USD $11.78-billion) in deposits and Eur 12.2-billion (USD $16.78-billion) in NAMA bonds held by Anglo Irish Bank. The purchase price basically represented the value differential between the total deposits and the NAMA bonds. In addition, AIB also bought Anglo Irish's Isle of Man unit for Eur 200-million. The government-brokered deposit sale was a major step to wind down the bankrupt Anglo Irish Bank, which lost Eur 12.7-billion in the 15 months ending on 2009-12-31 and another Eur 17.6-billion in fiscal 2010 from non-performing commercial real estate loans.

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China Bank Mergers & Acquisitions (Bank of Communications)

2011-01-03T10:51:00.009-05:00

Photo: A Bank of Communications branch in downtown Shanghai, China.

With special thanks to Mark Chang of New Jersey, United States, for allowing me to use his photo. You can see his photo stream via this link: http://www.flickr.com/photos/kramchang/

Bank of Communications

Founded in 1908 during the final years of Imperial China’s Qing (Ching) dynasty, Bank of Communications quickly became one of Big Four banks in China. It was also one of the first local note-issuing banks in China (many foreign banks also issued banknotes at the time). The bank's original mandate was to manage payments for, and to finance the building of the country's shipping, railways, telegraph, postal service, mining and forestry industries.

Three years later in 1911, forces led by Dr. Sun Yat-Sen overthrew the Qing (Ching) dynasty, ending two thousand years of imperial rule in China but also plunging it into almost four decades of wars and instability. In 1934, Bank of Communications opened a Hong Kong branch to handle the massive amount of remittance business between the then British colony and China.

Following the devastating invasion from Japan, World War II and China’s own civil war between the Communists and the Kuomintang (Nationalists), the Republic of China government (founded in 1911) fled to the island of Taiwan in 1949 while the Communists took over mainland China, establishing the People’s Republic of China. Like China itself, Bank of Communications was also split, with the Communists taking over the mainland Chinese operations and the Kuomintang taking the senior management team and the bank's precious metals to Taiwan. Both parts of the bank were effectively nationalized, though Communist China's Bank of Communications continued operations until 1958, when it was dismantled and its assets divided up between the People's Bank of China and the People's Construction Bank (today's China Construction Bank). Interestingly, ownership of Bank of Communications Hong Kong Branch was transferred to Bank of China (Hong Kong), but maintained its own management and branding, becoming the only entity operating under the original banner for quite some years.

Meanwhile, Taiwan's Bank of Communications remained shut as Taiwan itself plunged into a decade of social unrest and terror. It was only in 1960 that the remnants of Bank of Communications resumed operations in Taiwan, adopting a new English name Chiao Tung Bank, which actually means "Bank of Communications" in Mandarin Chinese. Eventually Chiao Tung Bank and International Commercial Bank of China (the Taiwan descendant of the Bank of China) merged in 2006 to form today's Mega International Commercial Bank.

After decades of social turmoil, famines and terror under Chairman Mao Zedong's regime, China in 1979 launched its “economic reform and open-door policy” and the new Bank of Communications Co. Ltd. was re-established in Shanghai in 1987 as modern China’s first state-owned joint-stock bank. Despite this, under state-control, bureaucracy and corruption was common in all Chinese banks well into the 1990s, when regulatory and managerial reforms began to slowly transform them towards more market-driven and risk-conscious enterprises.

The new Bank of Communications became the first bank in China with a mandate to transform itself from the old, corrupt, backward and bureaucratic mode of operations that merely carried out official policies regardless of risk and profitability, or lack thereof, to one based on market forces.

In 1983, Bank of Communications Hong Kong was amalgamated into the Bank of China (Hong Kong) Group. However, in 1998, Bank of China (Hong Kong) Group returned Bank of Communications Hong Kong back to the Shanghai-based Bank of Communications Co. Ltd.

As of 2010, Bank of Communications had a nationwide network of over 2,600 branches in China and was the No. 5 bank in China. Overseas, the bank operates a network of branches in Hong Kong while maintaining offices in New York, Tokyo, Singapore, Seoul, Macao, Frankfurt and London.

Recent transaction(s):

In 2004, with the banking reform now well under way with other state-owned banks like the Agricultural Bank of China, Bank of China, China Construction Bank and the Industrial & Commercial Bank of China, the State Council approved Bank of Communications' plan to partially float its share capital. To facilitate the modernization of the bank’s management, product lines and operations, Bank of Communications invited HSBC Holdings to take a 19.9% stake in itself for USD $1.75-billion.

On 2005-06-23, the bank was listed in Hong Kong, becoming the very first Chinese bank to do so outside of mainland China.

On 2007-05-15, Bank of Communications obtained a dual listing on the Shanghai Stock Exchange, becoming the first Chinese bank to float its stock domestically.

In February 2010, Bank of Communications raised HKD $37.24-billion (CNY 32.77-billion, USD $4.79-billion) from a rights issue to improve its capital level after a surge in lending and an increase in capital requirement ratio by the People’s Bank of China, the country’s central bank. HSBC Holdings, which aimed to maintain its 19% stake in the Chinese lender, subscribed to CNY 6.29-billion (HKD $7.17-billion, USD $921-million) of the rights issue.

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Brazil Bank Mergers & Acquisitions (Itaú Unibanco Banco Múltiplo)

2011-01-02T20:31:00.006-05:00

Photo: A Banco Itaú branch in Curitiba, Paraná.

With special thanks to Rafael Duarte de Lima for taking and allowing me to use his photo. You can see more of his photo stream by clicking on this link: http://www.flickr.com/photos/litswd/

Itaú Unibanco Banco Múltiplo S.A.

Itaú Unibanco Banco Múltiplo S.A. was formed in 2008 by the merger of Banco Itaú Holding and Unibanco Holdings. The merger created Brazil’s largest financial services provider.

Itaú Holding Financeira S.A. (Banco Itaú) [1944 to 2008]

In 1945, Banco Central de Crédito was founded in São Paulo. The bank changed its name to Banco Federal de Crédito in 1953. The Brazilian economy was growing rapidly at this time, coinciding with a wave of Europeans immigrants looking for better opportunities. In 1964, the Brazilian government initiated a program to modernize its banking sector, and Banco Federal de Crédito was merged into Banco Itaú S.A. (founded 1944), taking up the new name Banco Federal Itaú. The consolidation wave continued and the bank took over Banco Sul Americano do Brasil in 1966 (with a name change to Banco Federal Itaú Sul Americano). In 1969, Banco da América was taken over.

Following the acquisition of Banco Aliança (in 1970), Banco Português do Brasil (1973) and Banco União Comercial (1974), the name of the bank was simplified to Banco Itaú S.A., which became Brazil’s No.2 private-sector bank at the time.

In 1980, Itaú opened its first overseas branch in New York, then another one in Buenos Aires. The computer age arrived in 1981 when the bank’s first main frame was installed, allowing real-time inter-branch data processing for the first time. The 1980s were tough time for Brazil though: a foreign currency debt crisis caused the currency to tumble, resulting in a major recession, high inflation and high interest rates for much of the decade.

In 1994, Itaú launched a subsidiary in Argentina and opened more than 30 branches in Buenos Aires. More recently, between 1997 and 2001, Banco Itaú acquired a number of domestic banks in Rio de Janeiro, Minas Gerais, Paraná and Goiás.

Recent transaction(s):

In 1995, Banco Itaú acquired from Crédit Lyonnais' 54.50% stake in Banco Francês e Brasileiro (BFB). Itaú subsequently made a public offering for the rest of the shares held by minority shareholders.
In 1998, Itaú bought Argentina's Banco del Buen Ayre for USD $213-million. Buen Ayre had 62 branches in Buenos Aires. Banco Itaú then merged its Argentine unit Itaú Argentina with Buen Ayre and adopted a new name Banco Itaú Buen Ayre. The new bank would have 94 branches and 349 ATM machines in the Argentine capital region.
Also in 1998, Itaú bought formerly state-owned Banerj (Banco do Estado do Rio de Janeiro) for BRL 311-million. Banerj had 193 branches in the state.
Also in 1998, Itaú bought 90.74% of Banco do Estado de Minas Gerais (BEMGE) for BRL 583-million. Acquiring BEMGE added 583 branches to Itaú's 112-branch network in the state of Minas Gerais.
In 2000, Itaú bought 88.04% of Banco do Estado do Paraná (Banestado) for BRL 1.625-billion. Banestado's 549 branches (519 of which in Paraná) significantly expanded Itaú's 63-branch network in the state.
In 2001, Itaú acquired 84.46% of Banco do Estado de Goiás (BEG) for BRL 665-million. BEG had 264 branches or points of sale.
Also in 2001, Itaú made an offer to buy Banque Sudameris (Paris) S.A. from Italy’s IntesaBci (now Intesa Sanpaolo) for up to USD $1.6-billion. However, the proposal failed and IntesaBci eventually sold Sudameris (Paris)'s subsidiary Banque Sudameris Brasil to ABN AMRO Banco Real (now Santander Brasil).
In 2002, Itaú took over Banco Fiat from Fiat SpA for BRL 897-million (USD $243-million). Banco Fiat was the market leader in financing Fiat cars in Brazil.
In 2003, Itaú acquired 96% of Banco BBA-Creditanstalt S.A. for BRL 3.3-billion (USD $900-million). A major wholesale bank in Brazil, Banco BBA-Creditanstalt provided commercial banking, asset management, brokerage service as well as investment banking to business clients. Itaú acquired 48% of BBA Creditanstalt from Bank Austria Creditanstalt, a unit of Germany's HVB Group, and another 48% from local shareholders.
In 2006, Banco Itaú bought Bank of America's Brazilian-based BankBoston for BRL 4.5-billion (USD $2.2-billion) in stock. Bank of American would end up holding a 5.8% stake in Banco Itaú. BankBoston provided banking services to high net-worth clients in Brazil, Chile and Uruguay.
Also in 2006, Itaú bought from Bank of America's BankBoston International and BankBoston Trust Co. Ltd. for USD $155-million, both banks offered private banking services.
In 2008, Banco Itaú Holding acquired Unibanco Holdings to form Brazil’s and Latin America’s largest bank. The deal was valued at BRL 26.5-billion (USD $12.3-billion). Existing Itaú shareholders would own 66% of the new entity, to be known as Itaú Unibanco Banco Múltiplo S.A., with Unibanco shareholders owning the rest. The combination was said to have been spurred by Banco Santander’s purchase of ABN AMRO Banco Real in 2007. Itaú Unibanco would leapfrog state-owned Banco do Brasil to become the nation’s largest bank with 4,800 branches and 30,000 ATMs serving 14.5-million clients.

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France Bank Mergers & Acquisitions (BNP Paribas)

2010-12-21T18:08:00.009-05:00

Photo: A BNP Paribas pocket notebook and pen kit that forms part of my banking item collection.

BNP Paribas S.A.

BNP Paribas was formed in 1999 by the merger of Banque Nationale de Paris S.A. and investment bank Paribas S.A.

Banque Nationale de Paris

In 1966, the French government combined two of the four state-owned banks, Comptoir National d'Escompte de Paris and the Banque Nationale pour le Commerce et l'Industrie, into the new Banque Nationale de Paris (BNP).

Comptoir National d’Escompte de Paris (CNEP)

In 1848, a political and economic crisis hit France and many private bankers went bankrupt following yet another revolution. The government of the Second Republic intervened and established the Comptoir National d’Escompte de la ville de Paris (literally, the National Discount Counter of the City of Paris) to provide banking service for businesses in major towns. In 1851, the bank shortened its name to Comptoir National d’Escompte de Paris. This was further changed to Comptoir d’Escompte de Paris (CEP) in 1853 when the French state relinquished control.

Interestingly, in 1860, CEP opened its first international office in Shanghai, as the bank acted as the state collection agent of war indemnities owed to France by Imperial China. From 1860 to the 1880s, the bank also opened offices in Reunion Islands, Calcutta (Kolkata), Bombay (Mumbai), Hong Kong, Saigon (Ho Chi Minh City), London, Yokohama, Alexandria, Melbourne and Sydney to provide trade financing for French industries.

In 1887, the bank’s management was embroiled in a major scandal that caused a bank run. When it became clear the bank had become insolvent, the French state injected cash and the bank restored its old name of Comptoir National d’Escompte de Paris (CNEP). CNEP became a limited-liability company in 1889.

Between the 1910s and 1920s, CNEP greatly expanded its national branch network and became the third largest bank in France by 1929. The bank, partly due to its strong retail deposit base, survived the Great Depression and World War II relatively unscathed.

When peace returned in 1945, the de Gaulle government nationalized the Banque de France, plus the Big Four retail banks: Banque Nationale pour le Commerce et l’Industrie, Comptoir National d’Escompte de Paris, Crédit Lyonnais and Société Générale. The nationalization was part of the plans to coordinate the nationwide re-building efforts.

In the 1950s, CNEP lost its operations in Egypt and scaled back from Tunisia as the rise of nationalism in some former French colonies forced out foreign businesses.

Banque Nationale pour le Commerce et l’Industrie

(Comptoir National d’Escompte de Mulhouse, Banque Nationale de Crédit, Banque Française pour le Commerce et l’Industrie)

In the same year that CNEP was founded by the French state, a smaller counterpart, the Comptoir National d’Escompte de Mulhouse (CNEM) was established in Mulhouse, in the region of Alsace. In 1854, CNEM was no longer under state control and was renamed Comptoir d’Escompte de Mulhouse (CEM).

During the 1850s and 1860s, CEM rode on the industrializing economy and opened offices in other principal towns, including Lyon, Marseille, Le Havre and Paris.

In 1870, France found itself at the losing end of a war and lost the region of Alsace-Moselle to Germany. This created a major complication for CEM: it had now become a French bank operating in a German region. As France and Germany continued to dispute the ownership of Alsace over the next 40 years, CEM in 1913 finally decided to re-group its larger operations in France proper into a subsidiary called Banque Nationale de Crédit (BNC). Parent company Comptoir d’Escompte de Mulhouse operating within German-controlled Alsace, now actually only had three branches. Despite their parent-subsidiary relationship, the Comptoir and Banque Nationale de Crédit agreed to avoid doing business in each other’s domain.

In the 1910s, Banque Nationale de Crédit grew quickly by absorbing more than 30 other banks. And in 1922, the bank took over Banque Française pour le Commerce et l’Industrie (founded 1901), a bank that had financed France’s public utilities, railway and heavy industries, but was in need of new capital at the time of merger.

The end of World War I saw France re-gaining control of Alsace-Moselle, but this didn’t solve the CEM-BNC complication even though both were operating in France once again. Their prior non-competition agreement meant that the parent company CEM still could not operate anywhere in France outside of Alsace-Moselle. Animosities between the two banks became so bitter that Comptoir d’Escompte de Mulhouse sold its stake in BNC in 1918.

By 1930, however, Comptoir d’Escompte de Mulhouse realized that its home market of Alsace-Moselle was too limiting, and agreed to be acquired by its former subsidiary Banque Nationale de Crédit. The good times didn’t last for BNC, however, for the bank soon got into severe financial difficulties during the 1930s Depression. A state guarantee on the bank’s deposits failed to stem depositors from withdrawing their money and between April and December, 1931, Banque Nationale de Crédit’s share price fell 96%. The bank soon collapsed and was rescued by the government, which re-structured it into the Banque Nationale pour le Commerce et l’Industrie (BNCI) in 1932. Throughout the 1930s, BNCI also absorbed other ailing banks.

World War II significantly restricted BNCI’s domestic operations, and the bank turned its attention to the French overseas colonies and territories, such as Algeria, Morocco, Ivory Coast, Cameroon, the Congo, Senegal, Madagascar, Reunion Islands and the French West Indies. However, the “de-colonialization” in the 1950s and 1960s saw the French bank retreating from many former colonies.

In 1945, BNCI, along with three other big commercial banks and the Banque de France, were nationalized by the French government. Between 1945 and 1959, the Big Four hardly opened any new branches under state control.

In 1966, the French government merged two of the Big Four state-owned banks, the Comptoir National d’Escompte de Paris and the Banque Nationale pour le Commerce et l’Industrie to form the new Banque Nationale de Paris (BNP). The new bank combined CNEP’s stronghold in retail banking with BNCI’s expertise in corporate and international banking. In 1972, BNP and seven other European banks jointly created the Associated Banks of Europe Corporation (ABECOR) that specialized in medium-term financing. In 1979, BNP acquired a significant minority stake in BancWest Corp. (Bank of the West) of California. BancWest in 1998 acquired First Hawaiian Bank.

In 1993, the French government finally privatized Banque Nationale de Paris.

Paribas (originally Banque de Paris et des Pays-Bas)

Paribas itself can trace its origins to two banks: Banque de Crédit et de Dépôt des Pays-Bas (Bank of Credit and Deposit of the Netherlands) and the Banque de Paris. Of the two, the Banque de Crédit et de Dépôt des Pays-Bas was older, having been founded in Amsterdam in 1863. The bank was established by a private banker family with connections in the Netherlands, France, Belgium and Germany. The bank soon opened branches in Paris, Brussels, Antwerp and Geneva.

In 1869, the Banque de Paris was established with French, Belgian and Danish capital. The two banks merged in 1872 to form the Banque de Paris et des Pays-Bas (the Bank of Paris and the Netherlands). Right from its beginning, the bank has had a strong position in the investment underwriting business, and during its first year of existence, helped float a three-billion francs debt issue for the French government.

Between 1872 and 1913, Banque de Paris et des Pays-Bas became an international power house in underwriting sovereign loans for nation states, including France, Belgium, the French and Belgian colonies, Imperial Russia, Morocco, the Balkan states, the Scandinavian nations, and Latin American countries.

Acting also as a merchant bank, Banque de Paris et des Pays-Bas took equity interests in numerous French and foreign companies in the railway, electric utilities, tramway, iron and steel, and chemicals industries. The bank also at one point held interests in numerous banks, including Banco Español Credito (Spain), Banca Commerciale Italiana, Banque Russo-Asiatique (a leading bank in Russia at the time), as well as other banks in Bulgaria, Romania, Serbia, Egypt, Turkey, Morocco, Canada and Japan.

Following the 1917 the Bolsheviks revolution, however, the new regime confiscated all foreign businesses in Russia, and refused to honour the debts incurred during the Tsarist era. Some estimates put France’s total losses in Russia to be USD $4-billion. During the 1930s Great Depression, as demand for international financing dwindled, the bank retreated to its home markets of France, Belgium and the Netherlands.

France itself was devastated during World War II, and the Sovietization of Eastern Europe following the war further shrunk Banque de Paris et des Pays-Bas’ international operations. In 1945, under General de Gaulle’s government, France nationalized Banque de France plus the Big Four commercial banks to co-ordinate re-building efforts. The nationalized Big Four focused on channeling shorter-term savings into supporting state treasury issues. As a merchant and investment bank, Banque de Paris et des Pays-Bas escaped the government intervention and remained a private-sector concern.

Throughout the 1950s and 1960s, the bank provided crucial financing to rebuild France’s industries across a wide spectrum, and to facilitate French exports. The bank opened an office in New York in 1960, to be followed by others in London, Luxembourg, Moscow, the Middle East and the Far East throughout the next 20 years.

Following a major policy shift by the French government, consolidations in the banking sector heated up in earnest. Between 1966 and 1973, Banque de Paris et des Pays-Bas gradually acquired majority control in another merchant bank, the Compagnie Bancaire. In 1968, the bank acquired French retail bank Crédit du Nord. In the same year, Banque de Paris et des Pays-Bas and rival Compagnie de Suez fought over the control of CIC (Crédit Industriel et Commercial). The fight only ended in 1971 when Suez took over CIC but gave up Banque de l’Union Parisienne to Banque de Paris et des Pays-Bas.

The bank became a major player in the Eurobond (foreign-currency bonds issued in Europe) market during the 1970s in co-operation with British trading house S.G. Warburg. At the same time, it expanded into asset management and wealth management for the first time.

When a new socialist government under Pierre Mauroy took power in 1981, Banque de Paris et des Pays-Bas, along with 39 other banks and another financing firm Suez, were nationalized. At the same time, the bank’s name was changed to Compagnie Financière Paribas, Banque Paribas. The short name Paribas actually had been the bank’s telegraph address since the beginning of the 20th century. Another shift in France’s ever-changing political wind meant that in 1987, Paribas was privatized and floated back on the stock market, with AXA (French insurer), Power Corp. (a Canadian financial conglomerate), Sumitomo Life (Japan) and Kuwait Investment Authority amongst its strategic institutional shareholders.

In 1997, Paribas decided to return to its corporate and investment banking root and sold its French retail banking unit, Crédit du Nord, to rival Société Générale, for FRF 2.2-billion (USD $420-million). Crédit du Nord had 600 branches. Paribas then sold its Belgian and Dutch retail banking operations to Belgium’s Bacob-Arco Group (which became Dexia). In the same year, Compagnie Financière Paribas, Banque Paribas and majority-owned subsidiary Compagnie Bancaire decided to fully integrate into a new entity called Paribas S.A.

In early 1999, Paribas agreed to a 15.0-billion (USD $17.0-billion) buyout offer from Société Générale. Not wanting to be left behind, however, rival Banque Nationale de Paris made a hostile USD $21.o-billion counter-offer for Paribas, and an unimaginable, separate USD 19.6-billion offer for Société Générale (SocGen). BNP’s three-way merger proposal would have created the world's largest bank.

Uncertainties surrounding BNP’s insane ambition resulted in a drop of its share price, reducing the combined value of the offers for Paribas and SocGen to USD $38.0-billion. For months, all three banks engaged in a public relations battle in an attempt to win support from the public, shareholders and the French banking regulator. In the end, BNP succeeded in breaking SocGen and Paribas' merger plan, and acquired Paribas to form BNP Paribas. However, it could only secure 31.5% of SocGen's shares. The French banking regulator eventually vetoed BNP's merger plan to acquire Société Générale.

Recent transaction(s):

In 2001, BNP Paribas bought the 55% of BancWest Corp. in the U.S. that it didn’t already own. BancWest owned Bank of the West in California and First Hawaiian Bank.
In 2002, BNP Paribas bought United California Bank for USD $2.4-billion from UFJ Holdings of Japan.
Also in 2002, BNP Paribas bought a 10.9% holding in Crédit Lyonnais S.A. from the French government for Eur 2.2-billion. Following a ruling by the French court in 2003 denying BNP Paribas' proposal to take over Crédit Lyonnais, BNP Paribas sold its minority stake in Crédit Lyonnais to Crédit Agricole S.A.
In 2004, BNP Paribas bought Community First National Bank for USD $1.2-billion. Fargo, North Dakota-based Community First National operated 155 branches in 12 Midwest states.
In 2005, BNP Paribas' BancWest Corp. subsidiary bought Omaha, Nebraska-based Commercial Federal Corp. for USD $1.36-billion. Commercial Federal Bank had 198 branches across the U.S. Midwest.
In 2006, BNP Paribas bought Italian bank Banca Nazionale del Lavoro (BNL) for Eur 9.0-billion (USD $11.3-billion). This followed the Bank of Italy's veto of Unipol Assicurazioni's bid for Banca Nazionale del Lavoro.
In 2007, BNP Paribas agreed to purchase 19% of Libya's Sahara Bank from Libya's central bank for Eur 145-million (USD $200-million). BNP Paribas would take over the operational control of the bank, and retained the right to take up 51% of the bank by 2012.
In 2008, BNP Paribas bought Bank of America's hedge fund servicing prime brokerage unit for a reported USD $300-million (Eur 194-million). The unit has about 500 hedge fund clients.
Following months of legal challenges and negotiations between Fortis shareholders, BNP Paribas, and the French, Belgian and Luxembourg governments, BNP Paribas in March 2009 agreed to acquire 75% of Fortis Bank Belgium and 25% of Fortis Insurance Belgium for Eur 9.625-billion (USD $12.25-billion). In addition, BNP Paribas also acquired a direct 16% stake in BGL (Fortis’ Luxembourg operations) for Eur 831-million (USD $1.06-billion). BNP Paribas controlled another 50% of BGL through 75%-owned Fortis Bank Belgium. Click here for details of Fortis’ collapse and the transactions.
The purchase gave BNP Paribas 1,458 Fortis branches in Belgium, Luxembourg, Poland, Turkey, France, and other countries except the Netherlands. It would also gain more than Eur 239-billion of customer deposits, propelling BNP Paribas to become the largest bank in the Eurozone based on deposits.
In October 2008 and March 2009, the French state injected a total of Eur 5.10-billion into BNP Paribas in return for non-voting shares of the bank.
In September 2009, BNP Paribas raised Eur 4.3-billion (USD $6.27-billion) from a rights issue to repay the government the Eur 5.10-billion bailout funds.
In November 2009, BNP Paribas’ Fortis Bank unit sold its 49% stake in Chinese fund manager ABN AMRO TEDA Fund Management for Eur 105-million (CAD $156-million, HKD $1.2-billion) to Canada’s Manulife Financial. BNP inherited the ABN AMRO TEDA stake from Fortis, which acquired parts of Dutch banking ABN AMRO Holding in 2007.

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Canada Bank Mergers & Acquisitions (Toronto-Dominion Bank)

2010-11-10T15:54:00.011-05:00

Photo: Sex appeal for the pink dollars.

Canada has a reputation for being a liberal and accepting society. In recent years, the Toronto-Dominion Bank has actively wooed the gay and lesbian segment of the market by participating in various Gay Pride Parades. This photo was taken at the Toronto Pride 2009.

The Bank of Toronto

The Bank of Toronto, the oldest predecessor of today’s Toronto-Dominion Bank, was established by a number of grain dealers and millers in 1855 to serve Toronto’s mercantile and agricultural community. At the time, Montreal was the main economic and financial centre in Canada (then still a British colony) and its powerful banks often favoured their existing local clients over Toronto’s emerging economy. This lack of attention from Montreal’s banks led to a proliferation of Toronto banks, including the Bank of Toronto.

In 1860, the Bank of Toronto expanded outside of Ontario when a branch was opened in Montreal. By 1863, the bank’s network had expanded to five branches.

The second-half of the 19th century was boom times for North America. Demand for lumber, steel, copper, grains and meat soared due to railway booms and industrialization around the world. Hundreds of thousands of newcomers escaped Europe’s political and economic upheavals and settled in the new frontiers of both the Canadian and U.S. Midwest. The start of the American Civil War in 1865 also stirred demand for Canadian leather, tanning, hardware and even the safety of the Canadian dollar. The good times were, of course, also interrupted by the occasional collapses due to over-heating and over-building in the economy.

Towards the end of the 19th century, the Bank of Toronto expanded westward along with new settlers. Bank of Toronto opened an office in the mining town of Rossland, British Columbia in 1899.

Canada’s economy and the fortunes of the Bank of Toronto gyrated in the first half of the 20th century. The outbreak of World War I saw many Canadians, including roughly half of the Bank of Toronto’s staff, joining the armed forces and suffering a great toll in Europe. Yet, the Great War increased demand for Canada’s natural resources and also led to a huge increase in output of manufactured products. Between 1900 and 1920, the Bank of Toronto expanded from 16 to 161 branches. Peace and prosperity returned for 10 years after the Great War ended in 1918, but the U.S. real estate and stock speculation collapsed on its own weight in 1929, leading to a decade of global economic disaster, unemployment, hunger, sickness and homelessness. The worldwide economic slump of the 1930s was again ended by another world war in 1939. Canadian men and women once again enlisted in the armed forces to fight on the frontline.

The Dominion Bank

In 1871, a group of Toronto businessmen founded the Dominion Bank with an emphasis on commercial banking, particularly in the railway, infrastructure and textile industries. In 1879, the Dominion Bank opened its new headquarters at the corner of Yonge and King Streets in Toronto.

Like the Bank of Toronto, the Dominion Bank began to establish branches in the Prairies in the late 19th century, beginning with a Winnipeg office in 1897. This marked the start of a national branch network.

In 1911, the Dominion opened its first international office in London, which was followed by a New York office in 1919. In 1922, the Dominion’s first branch in the East Coast opened in Saint John, New Brunswick.

During both World Wars, the Dominion Bank helped the war effort by selling Victory bonds, and saw many of its employees joining the army.

The Canada Trust Co.

The Canada Trust Co. can trace its history to Canada Permanent Trust, Huron & Erie Savings & Loan, and the Toronto General Trusts. Canada Trust became part of TD Bank in 2000.

In 1855, the creation of Canada Permanent Building & Savings Society marked one of Canada’s first mortgage lenders. It later became Canada Permanent Trust.

In 1864, Huron and Erie Savings and Loan Society was founded.

Meanwhile, Canada’s first trust company, Toronto General Trusts, was established in 1872.

In 1901 Huron & Erie established a trust subsidiary called the Canada Trust Company in London, Ontario. The parent company and the subsidiary later became one company called Huron & Erie – Canada Trust. Following the lead of the bigger bank rivals, Huron & Erie opened its first western branch in Regina, Saskatchewan in 1911.

In 1961, Canada Permanent Trust Co. and Toronto General Trusts Corp. merged to form the Canada Permanent Toronto General Trust Co.

In 1962 Huron & Erie - Canada Trust reversed the order of its name to Canada Trust - Huron & Erie to better reflect its national scope. In 1976, Canada Trust pioneered its 8 A.M. to 8 P.M., Monday to Saturday branch service. The extended banking hours were so popular that it was adopted by many TD Canada Trust branches after the sale of Canada Trust to Toronto-Dominion Bank. In 1987, Canada Trust and Canada Permanent Trust combined into one company.

The Toronto-Dominion Bank

The 1950s were the golden age of the 20th century for Canada. A new wave of European immigrants left the ruins of Europe for Canada, strong demand for new homes was further spurred by returning soldiers now ready to get married and start a family, oil was discovered in the province of Alberta, automotive production exploded in Ontario and Quebec with the middle class’ migration to the suburbs, factories churned out products of all sorts for other parts of the world still devastated by the war. Major cities in Canada were busily building new public transit systems, highways, sewage and water lines and power plants to serve the ever-expanding population.

As the size of business and infrastructure loans increased, the existing banks found their capital base too small to meet regulatory requirements. In 1955, the Bank of Toronto and the Dominion merged to form the Toronto-Dominion Bank. The newly-merged bank had 499 branches across the country, plus offices in New York and London.

The computer age arrived in 1962 when the bank installed its first mainframe to allow up-to-date balances for its clients for the first time. Mutual funds were offered across all branches in 1964; then in 1967, the bank began offering Chargex (Visa) credit cards.

In 1967, Toronto-Dominion Bank moved into a newly-built 56-storey tower of the Toronto-Dominion Centre, Canada’s very first modern skyscraper retail-office complex.

The Toronto-Dominion Bank introduced a new green TD corporate identity in 1969, formally adopting the TD initials. Throughout the 1970s, TD Bank opened international offices outside of the U.S. and Britain. In 1976, the bank introduced the automated teller machines (ATM), which were affectionately known as the Green Machines by the bank.

Like other international banks, Toronto-Dominion suffered major losses in the Third World debt crisis in the mid-1980s. In 1984, the bank launched the Green Line Investor Services discount brokerage for self-serve retail investors. This preluded Canada’s “Big Bang” in 1986, a term that refers to the de-regulation of the financial services industry which eliminated the restrictions banning commercial banks from undertaking investment underwriting and trust activities. Unlike other big Canadian banks, Toronto-Dominion opted to build up its investment division, the Toronto Dominion Securities Inc., (established 1987) organically rather than buying up existing investment underwriters, a route taken by the rest of the Big Five banks.

The good times in the 1980s eventually led to a real estate (both residential and commercial) bubble that burst in 1989. Fortunately TD’s losses were contained by its prudent management. In 1992, the bank acquired the ailing Central Guaranty Trust Co. for CAD $125-million, and gained 154 branches. Just one year later, TD launched a full-service brokerage service called TD Evergreen. In this regard, TD was a late entrant into the brokerage service, lagging behind the other Big Five.

Recent transaction(s):

In 1996, TD bought Waterhouse Investor Services, the No. 4 discount broker in the U.S., for CAD $720-million (USD $525-million). The firm adopted a new name TD Waterhouse. Subsequently, TD re-branded its Canadian discount broker TD Greenline as TD Waterhouse also.

In 1998, shortly after rivals the Royal Bank of Canada announced its surprise merger plan with the Bank of Montreal, TD announced its own merger proposal with the Canadian Imperial Bank of Commerce. However, the reduction of the Big Five into Mega Two, plus a stand-alone Bank of Nova Scotia, raised serious anti-competitive concerns and the Ministry of Finance quickly denied both mergers.

In 1999, amidst the explosion of the tech stock boom and the on-line trading craze, TD sold a 12% stake in TD Waterhouse in an IPO for USD $1.1-billion (CAD $1.47-billion). The IPO gave TD Waterhouse an implied value of CAD $12.2-billion, or about 17 times what TD paid for Waterhouse just three years ago.

The internet stock boom was short-lived. After reaching a high of 5,048 points on 2000-03-09, the NASDAQ index collapsed and so did on-line trading activities. In 2001, TD offered USD $409-million (CAD $618-million) to buy back the 12% of TD Waterhouse that it didn't own.

In 2000, TD bought Newcrest Holdings Inc. (Newcrest Capital) for CAD $225-million. Newcrest provided institutional equity sales, trading, research and underwriting services.

Also in 2000, TD bought CT Financial Services Inc. (Canada Trust) from conglomerate British American Tobacco/ Imasco for CAD $8.0-billion. In the complex deal, BAT bought the 58% of Imasco Ltd. that it didn’t own for GBP 4.2-billion (USD $6.8-billion, CAD $10.3-billion), then sold Imasco’s CT Financial Services to TD for CAD $8.0-billion (GBP 3.2-billion). All of TD's Canadian retail branches were re-branded TD Canada Trust subsequently.

In 2003, TD bought the 57-branch Ontario network from Laurentian Bank.

In 2004, TD bought 51% of Banknorth for USD $3.8-billion to form TD Banknorth.

In 2005, TD Banknorth bought New Jersey-based Hudson United Bancorp for USD $1.9-billion (CAD $2.2-billion).

In 2005, TD sold TD Waterhouse USA to Ameritrade for USD $3.3-billion in stock to form TD Ameritrade. TD ended up holding a 32% stake in the new TD Ameritrade, becoming its single largest shareholder. TD Waterhouse's Canadian and U.K. operations were not part of the deal and remained 100% owned by TD Bank.

In 2006, TD bought Canadian auto financing company VFC for CAD $326-million.

Also in 2006, subsidiary TD Banknorth bought New Jersey-based Interchange Financial for USD 468-million (CAD $545-million).

In 2007, TD bought out the 43% of TD Banknorth it did not already own for CAD $3.7-billion (USD $3.3-billion).

In 2007, TD agreed to buy Cherry Hill, New Jersey-based Commerce Bancorp Inc. for CAD $8.25-billion (USD $8.25-billion) in cash and stock. Commerce Bank operated 460 branches in New Jersey, New York, Connecticut, Pennsylvania, Delaware, Washington D.C., Virginia, Maryland and Southeast Florida. Commerce Bank's branches (called "stores") were open 7-day-a-week and had extended operating hours. The transaction almost doubled Toronto-Dominion's presence in the U.S. and made it the No. 7 bank in North America. The purchase also gave TD a major foothold in the wealthy urban markets of New York City, Philadelphia, Washington D.C. and Miami. All of TD's U.S. retail operations were re-branded TD Bank subsequently.

In 2009, TD raised its stake in on-line broker TD Ameritrade Holding Corp. to 45% from 39.9% for USD $515-million (CAD $643-million).

In April 2010, TD Bank took over the branch networks, client accounts, deposits and loans of three bankrupt Floridian banks that were placed under the administration of the Federal Deposit Insurance Corp. The three banks acquired were the Riverside National Bank of Florida (58 branches), First Federal Bank of North Florida (8 branches) and AmericanFirst Bank (3 branches). Like other banks sold by the FDIC, the acquiring bank and FDIC agreed to share future loan losses based on a complex formula. In this case, the transactions would cost FDIC’s insurance fund USD $508-million. TD Bank already had 28 offices in Florida before these purchases.

In May 2010, TD acquired the ailing South Financial Group of Greenville, S.C., for USD $192-million. South Financial operated 110 branches in North and South Carolinas, and another 66 in Central and Southern Florida.

In December 2010, TD acquired auto-leasing firm Chrysler Financial from private-capital firm Cerberus Capital Management for USD $6.3-billion in cash (CAD $6.41-billion). The purchase would make TD the top five auto lease financer in the U.S. Chrysler Financial had USD $5.9-billion in net assets, the additional USD $400-million in the purchase price represented goodwill.

In August 2011, TD acquired Bank of America's Canadian credit card operations, MBNA Canada, for CAD $8.6-billion (USD $8.5-billion). TD paid CAD $7.5-billion in cash and assumed CAD $1.1-billion of liabilities and the amount represented a premium of CAD $100-million over the book value of the receivables. The purchase added 1.8-million MasterCard accounts to TD's existing 4-million Visa accounts and more than doubled TD's credit card balances.

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Sweden/ Scandinavia Bank Mergers & Acquisitions (Nordea Bank)

2010-10-20T18:47:00.005-04:00

Photo: A Nordea Bank office in Copenhagen, Denmark.

With special thanks to Johan Bakken of Norway, who kindly granted me the permission to use his photo. You can see more of Mr. Bakken's photos via this link: http://www.flickr.com/photos/johanbak/

Nordea Bank AB

Stockholm-based Nordea Bank group is one of Scandinavia's largest banks. The pan-Scandinavian bank has four national home markets: Sweden, Denmark, Norway and Finland. In addition, the bank also operates in Lithuania, Estonia, Latvia, Poland and Russia. Nordea was formed in 2000 but its earliest component was established in 1820 in Denmark. Since that time, over 250 banks have been amalgamated into today's Nordea.

Unidanmark/ Unibank (Denmark)

SDS Bank A/S

The earliest predecessor of the present-day Nordea Bank was founded in 1820 under the name Sparekassen for Kjøbenhavn og Omegn in Denmark. Unlike most banks in existence at the time that catered to wealthy merchants, Sparekassen for Kjøbenhavn og Omegn's main goal was to encourage savings and to provide banking services for the ordinary people. Interestingly, the savings bank counted Hans Christian Andersen (1805 to 1875), the famous children’s book author, as one of its clients. Over the years, the bank subsequently became Sparekassen København-Sjælland.

In 1973, Sparekassen København-Sjælland joined forces with two other major Danish savings banks Sparekassen Midtjylland and Sparekassen Falster-Østlolland to form Sparekassen SDS. The combination was in preparation to legislation changes in 1974 that relaxed the types of services that Danish savings banks could offer to corporate clients. In 1988, the Danish Parliament passed legislation allowing savings banks to convert to joint-stock status. In 1989, Sparekassen SDS converted itself into a limited-liability bank called SDS Bank A/S. SDS operated 316 branches as of 1989.

Privatbanken A/S

In 1857, Privatbanken i Kjøbenhavn was founded by a group of Copenhagen businessmen. During its first 100 years, the bank mainly focused on the commercial banking market by providing loans and discounting bills for larger businesses. Only after World War II did the rise of the middle class turn Privatbanken’s attention to individual clients. Over the years, Privatbanken acquired 25 smaller rivals; by 1989, the bank’s network had expanded to 189 full-service branches within Denmark, plus overseas offices in Luxembourg, New York and Singapore.

Andelsbanken A/S

In 1925, Den Danske Andels- og Folkebank was established to act as the central bank for a number of co-operative banks in the agricultural and food processing sector. In 1974, Andelsbanken/ Danebank became a public limited company. During the 1980s, Andelsbanken acquired a number of domestic rivals and by 1990; it had 230 branches in Denmark plus offices in the Isle of Man and Singapore.

In 1990, these Danish banks Andelsbanken A/S, Privatbanken A/S and SDS Bank A/S merged to form Unibank under a holding company called Unidanmark. In 1999, Unidanmark took over Danish insurer Tryg-Baltica A/S. In the same year, Tryg-Baltica bought Norwegian insurer Vesta.

Nordbanken (Sweden)

Sweden’s Nordbanken just before its merger with Finland’s Merita Bank in 1997 can trace its history to four major Swedish banks: the original Nordbanken, PKbanken, Sveriges Kreditbank and Gota Bank.

Nordbanken (Nordbanken, PKbanken, Sveriges Kreditbank)

In 1864, a bank closely connected to Sweden's forestry sector was founded under the name of Sundsvallsbanken. One year later, the Uplandsbanken was founded. In 1986, Sundsvallsbanken and Uplandsbanken merged to form Nordbanken.

In 1884, the Postsparbanken was founded by the Swedish government to provide nationwide competition to the private-sector banks. Postsparbanken was renamed Postbanken subsequently. In 1920, it became under the administration of the Svenska Postverket (Swedish Post Office).

In 1917, the predecessor of Sveriges Kreditbank, the Lantmannabanken (loosely translated to “Rural Folks’ Bank”) was founded. The bank failed in 1923 during an economic crisis and was nationalized and renamed Jordbrukarbanken (“Farmers Bank”). This bank subsequently renamed itself the Sveriges Kreditbank (“Swedish Creditbank). In 1974, the Swedish Parliament transferred the banking business of Postbanken to the state-owned Sveriges Kreditbank. The new bank adopted the name Post- och Kreditbanken, or PKbanken. PKbanken gained market share rapidly from about 11% to 22% between 1974 and 1977. As PKbanken expanded rapidly, more capital was needed and an IPO was launched to list the bank on the Stockholm stock exchange in 1984.

In 1990, PKbanken acquired Nordbanken but the enlarged bank kept the Nordbanken name. The bank suffered severe losses during the pan-Scandinavian economic crisis in the early 1990s. At one point, close to half of the bank’s corporate loan portfolio was in danger of default, and the bank was fully nationalized in September 1992. In 1993, the state-owned Nordbanken further absorbed Gota Bank (see below), another ailing Swedish bank.

By 1995, Nordbanken had been nursed back to financial health and the Swedish government listed 30% of its stock on the Stockholm stock exchange in October and raised SKR 5.9-billion (USD $888-million).

Gota Bank

In 1848, a group of Gothenburg merchants founded their own bank, Göteborgs Privat Bank. In 1858, following the lead of Stockholm Enskilda Bank, Göteborgs Privat Bank changed its name to Göteborgs Enskilda Bank. In 1898, the bank merged with the Stockholms Diskontobank, which specialized in discounting bills. In 1903, the bank was transformed into a public limited company and renamed Göteborgs Bank. The bank expanded further when it acquired the Kopparbergs Enskilda Bank. In 1972, after a merger with Smålandsbanken (founded 1837), the Göteborgs Bank adopted the name Götabanken.

In 1990, Götabanken, Wermlandsbanken (founded 1832) and Skaraborgsbanken (founded 1865) consolidated to form the new Gota Bank. The Scandinavian economic and banking crisis in the early 1990s saw the nationalized Nordbanken taking over the ailing Gota Bank in 1993.

Christiania Bank og Kreditkasse (Norway)

In 1848, the earliest Nordea constituent bank in Norway was founded in Oslo (called Christiana at the time) under the name Christiania Kreditkasse. The bank was established by the local trade association with the expressed aim to provide modern banking for the business community. Interestingly, Christiania Kreditkasse’s attempt to expand outside of Oslo was met with great resistance. Local business interests in other towns shunned the Oslo bank, while the Oslo merchants also protested against draining the bank’s working capital out of the capital city.

During the 1920s and 1930s, Norway experienced three major economic crises and hundreds of smaller banks failed and were amalgamated into the dozens of stronger banks.

In the early 1980's, Christiania Bank og Kreditkasse bought several other Norwegian banks. However, by 1990, a severe banking crisis in Norway forced the bank into bankruptcy and the Norwegian government took control of Christiania Bank og Kreditkasse. As the bank's financial health recovered, the Norwegian government gradually sold its holdings in Christiania Bank og Kreditkasse to the public from 1995 onwards.

Merita Bank (Finland)

In 1862, Suomen Yhdyspankki ("Finnish Union Bank"), Finland's first commercial bank was established. Finland at the time was an autonomous republic of the Russian Empire. Even though a number of co-operative savings banks had existed in Finland since the 1820s, they proved too small and their operations too regional to serve the rapidly industrializing national economy. Within its first year, 10 branches were opened throughout the country.

Finland gained official independence in 1917 and the need to become self-reliant became even more urgent. In 1919, Suomen Yhdyspankki merged with a rival commercial bank called Pohjoismaiden Osakepankki ("Nordic Joint-Stock Bank") to form the Pohjoismaiden Yhdyspankki ("Nordic Union Bank"). During the tough times of the 1930s, the prudently-managed Pohjoismaiden Yhdyspankki took over a number of smaller commercial banks that had become insolvent.

During the 1960s and 1970s, Pohjoismaiden Yhdyspankki opened offices overseas in Geneva, London, Luxembourg, New York, Paris and Singapore.

In 1975, the bank became known as the Union Bank of Finland internationally, and its Finnish name was reverted back to Suomen Yhdyspankki. The bank merged with Helsingin Osakepankki, Finland’s No. 3 bank, in 1986.

The pan-Scandinavian real estate bust of the early 1990s severely destabilized the region’s economy and banking system. In Finland, Suomen Säästöpankki (The Finnish Savings Bank) failed in 1993 and its operations were split four-way between the Union Bank of Finland, Kansallis-Osake-Pankki ("National Joint-Stock Bank," also known as KOP Bank) and two other Finnish banks. Just the year before, Kansallis-Osake-Pankki had already taken over Suomen Työväen Säästöpankki (the savings bank belonging to the Finnish labour movement). Kansallis-Osake-Pankki itself was founded in 1889 by the Finnish national movement before Finland gained independence from Russia in 1917.

In 1995, further consolidation saw the merger between the Unitas Ltd. (parent company of the Union Bank of Finland) and Kansallis-Osake-Pankki. The enlarged entity adopted the new name Merita Bank.

Recent transaction(s):

In 1997, Finland's Merita Bank merged with Sweden's Nordbanken to form the MeritaNordbanken. This was the first cross-border merger of the constituent banks that would later become Nordea.
In March 2000, Finnish-Swedish bank MeritaNordbanken merged with Denmark's Unidanmark in a deal worth Eur 4.80-billion (USD $4.0-billion or 5.0 billion). Nordic Baltic Holding was created as the parent company of MeritaNordbanken and Unidanmark.
In October 2000, Swedish-Danish-Finnish bank Nordic Baltic Holding acquired Norway's Christiania Bank og Kreditkasse for NKR 24.3-billion (USD $3.11-billion). Nordic Baltic Holding now had four national home markets: Denmark, Finland, Norway and Sweden.
In early 2001, Nordic Baltic Holding renamed itself Nordea. The name was chosen by combining the words "Nordic" and “idea”.
In 2001, Nordea bought Sweden's Postgirot Bank for SEK 4.1-billion (Eur 440-million). PostGirot subsequently was renamed PlusGirot.
In May 2002, Nordea bought 54.3% of Polish bank LG Petro Bank for Eur 128-million from Korean conglomerate LG.
In June 2002, Nordea sold its general insurance business to Tryg I Danmark for Eur 760-million.
In June 2004, Nordea bought Kredyt Bank's operations in Lithuania.
In September 2004, Nordea participated in the capital increase of Russia’s International Moscow Bank (IMB) for USD $100-million, raising Nordea’s stake in IMB from 21.7% to 26.4%.
In June 2005, Nordea bought Sampo Bank’s life insurance and pension business in Poland for Eur 95-million. The purchase included Sampo PTE and Sampo Life.
In June 2006, Nordea divested its entire 26.4% stake in International Moscow Bank to Italy’s UniCredit SpA. The value of the sale was believed to be about USD $463-million.
In November 2006, Nordea bought a 75.01% stake in Russia's JSB Orgresbank for Eur 246-million (USD $314-million).
In March 2008, Nordea sold its global custody business to JPMorgan Chase. The business unit sold administered Eur 200-billion of assets.
In April 2009, Nordea raised Eur 2.5-billion (USD $3.52-billion) in new capital from a rights issue.
In August 2009, Nordea bought Fionia Bank from Denmark’s Finansiel Stabilitet A/S. Fionia collapsed early in 2009 after massive loan losses and was nationalized by the Danish government. Nordea gained 29 branches in Denmark from the Fionia purchase, which excluded the bad assets of the bank.

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United States Bank Mergers & Acquisitions (Capital One Financial)

2010-09-15T20:38:00.013-04:00

Photo: A Capital One Bank at the corner of 5th Avenue and West 37th Street in Manhattan. Capital One gained a significant foothold in New York and New Jersey when it acquired North Folk Bank in 2006.

Capital One Financial Corp.

Capital One can trace its history to the credit card division of Signet Bank, a major bank in the state of Virginia. (Following a few consolidations, Signet Bank has since been integrated into Wells Fargo.) In 1988, Signet adopted a credit-card specialty system developed by Richard D. Fairbank and Nigel W. Morris that manages card products, marketing and pricing strategies, default risk, customer service and technical operations. The new system was a huge success and Signet Bank greatly expanded its credit card portfolio by launching the balance-transfer “teaser” offer in 1991. This strategy involved enticing clients of other credit cards to transfer their unpaid balances to Signet’s credit cards by offering temporary super-low interest rates (the “teaser rates”).

Signet then entered the so-called “sub-prime” market segment by offering credit cards to individuals with flawed credit histories who normally would not qualify for a credit card. While these clients have higher default risks, they are also charged higher interest rates on their unpaid balances. As long as the higher-risk portfolio is carefully monitored, the issuer can gain market share and maintain profitability.

In late 1994, Signet Bank decided to focus on its traditional branch banking operations and sold an 11.5% stake of its credit card division named Oakstone Financial to the public in an IPO. Early in 1995, the rest of Oakstone Financial was distributed to Signet’s shareholders and Oakstone thus was fully separated from Signet Bank. At the same time, Oakstone Financial renamed itself Capital One Financial Corp.

During the boom times from mid-1990s to 2007, Capital One quickly became one of the largest credit card issuers in the United States as American consumers simply became accustomed to using lines of credit, personal loans and credit cards to buy things that they didn’t have the cash for. The bank also launched local credit-issuing subsidiaries in Canada and Great Britain.

Capital One became a “brick-and-mortar” bank in 2005 when it acquired Hibernia National Bank.

Recent transaction(s):

In 2004, North Folk Bancorporation bought GreenPoint Financial Corp. for USD $6.3-billion. The newly-enlarged North Folk now had more than 340 branches in New York/ New Jersey area.

In 2005, Capital One acquired New Orleans-based Hibernia Corp. / Hibernia National Bank for USD $5.3-billion. Hibernia National operated over 300 branches in Louisiana and Texas. The purchase of Hibernia National represented the first major entry into retail banking for Capital One, which had previously been a consumer finance lender and credit card issuer.

In 2006, Capital One bought New York's North Folk Bancorporation for USD $14.6-billion. North Folk was the No. 3 depository institution in the Greater New York/ New Jersey area.

In 2007, at the start of the great real estate bust and banking crisis, Capital One shut down its sub-prime mortgage unit GreenPoint Mortgage.

In November 2008, Capital One acquired privately-held Chevy Chase Bank for USD $445-million in cash and 2.56-million shares, valuing Chevy Chase at USD $520-million. Capital One immediately took a USD $1.75-billion mark-down to account for potential losses from Chevy Chase’s bad loans. Chevy Chase was based in Bethesda, Maryland, and served 1 million clients through 250 branches and 1,000 ATMs in Maryland, Virginia and the District of Columbia area.

Following the lead of Britain’s GBP 37-billion (USD $64-billion) partial nationalization of The Royal Bank of Scotland Group, HBOS and Lloyds TSB Group, the U.S. government unveiled a similar plan on 2008-10-14 under which the U.S. Treasury injected USD $250-billion into nine major U.S. banks in exchange for their interesting-bearing, non-voting preferred securities. The nine banks that received a total of USD $250-billion Troubled Asset Relief Program (TARP) funds were: Bank of America, Citigroup, JPMorgan Chase, Wells Fargo, Goldman Sachs, Morgan Stanley, Merrill Lynch, Bank of New York Mellon, and State Street. Other American banks later joined the TARP program and Capital One received USD $3.6-billion from the U.S. Treasury. The bank, however, redeemed the preferred securities and paid back the state aid in June 2009.

In October 2010, Capital One acquired the Hudson'a Bay Company credit card portfolio from the General Electric Co. The transaction involved CAD $1.3-billion (USD $1.3-billion) in receivables and 400 employees. The Hudson's Bay Co. is North America's oldest corporation, having been founded in 1670 by English King Charles II. It operated 600 high-end and discount department stores across Canada as of 2010.

In June 2011, Capital One agreed to acquire U.S. on-line bank ING Direct USA from ING Groep for USD $9.0-billion (Eur 6.3-billion). Capital One would pay USD $6.2-billion in cash and USD $2.8-billion in shares. Following the purchase, ING would hold a 9.9% stake in the U.S. lender. Capital One, which began mainly as a credit-card issuer, has been transforming itself into a retail bank in recent years. Already the 8th or 9th largest bank in the U.S. based on deposits, the ING Direct USA purchase would push Capital One up to the 5th or 6th largest with over 7-million new clients and USD $82-billion of new deposits.

In August 2011, Capital One bought a vast majority of HSBC's U.S. credit card operations for USD $32.7-billion (GBP 20.15-billion, HKD $254.86-billion). The amount represented a premium of USD $2.6-billion over the portfolio's book value. The purchase was the latest aggressive expansion for Capital One as European banks retreated from their disastrous forays into the U.S.

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China Bank Mergers & Acquisitions (Industrial & Commercial Bank of China)

2010-08-27T11:55:00.021-04:00

Photo: An Industrial & Commercial Bank of China (Canada) branch in the Toronto suburb of Markham, Ontario.

Industrial and Commercial Bank of China Ltd.

The Industrial and Commercial Bank of China (ICBC) was created out of the People’s Bank of China (the central bank) in 1984. As its name suggested, the bank has a focus on financing China’s industries and commerce, though it also serves a huge number of individual customers through its extensive branch network.

In 1992, ICBC established its first overseas subsidiary in Singapore, followed by its first European office in London in 1995. In 1997, the bank launched its popular “95588” nationwide telephone banking platform.

Under Communist China’s state-control, bureaucracy and corruption was common in all Chinese banks. Regulatory and managerial reforms since the 1990s, however, have slowly transformed them towards more market-driven and risk-conscious enterprises.

In order to prepare ICBC for its initial public offering (IPO), the Chinese government injected USD $25-billion into the bank in 2005 to raise its Tier 1 capital level to international standards. On 2006-10-27, the floating of ICBC in Hong Kong and Shanghai made history as the world’s biggest IPO ever. ICBC was also the first company ever to float its class "A" and class "H" shares simultaneously. Class "A" shares are listed on the Shanghai stock exchange in the Chinese currency Renminbi (CNY), and can only be held by Chinese citizens. Class "H" shares are shares of Chinese companies listed on the Hong Kong stock exchange, which are traded in Hong Kong dollar (HKD), and can be bought and sold by Hong Kong and international investors.

ICBC's IPO had initially called for a sale of 13-billion "A" shares and 35.4-billion “H" shares, for a total of 48.4-billion shares to raise HKD $148.6-billion (USD $19.12-billion). Due to overwhelming demand for the stock, the over allotment (called "greenshoe") option was exercised in both Hong Kong and Shanghai in November 2006, bringing the total number of shares floated to 14.95-billion "A" shares and 40.7-billion "H" shares, for a total of 55.65-billion shares, raising the IPO size to HKD $170.8-billion (USD $21.97-billion). The ICBC IPO surpassed the old world record held by Japan's NTT Mobile Communications, which raised USD $18.40-billion in 1998.

The Hong Kong portion of ICBC's IPO attracted more than 977,000 individual retail applicants, or about 1 in 7 of the population. As retail investors subscribing to an IPO in Hong Kong must fully pre-pay the value of the shares at the time of application, the massively over-subscribed IPO apparently locked up HKD $420-billion (USD $53.9-billion) of funds for a few days.

As of 2008, ICBC served more than 193 million individual and business clients through more than 16,000 branches and 385,000 employees.

Recent transaction(s):

In April 2000, ICBC agreed to buy 53.24% of Union Bank of Hong Kong Ltd. for HKD $1.80-billion (USD $231-million). ICBC also agreed to launch an unconditional offer for the remaining shares held by the public. By the time the offer expired, 70% of the shares were tendered, raising ICBC's total purchase price to HKD $2.37-billion (USD $304-million). Founded in 1964, Union Bank of Hong Kong had 22 branches within the territory, and one overseas branch. After closing, Union Bank of Hong Kong was renamed ICBC (Asia), and 30% of its equity remained listed on the Hong Kong stock exchange.

In 2004, ICBC's Hong Kong subsidiary ICBC (Asia) bought Belgian Bank from Fortis S.A./ NV for HKD $2.16-billion (USD $278-million). Belgian Bank was the Hong Kong retail banking operations of Fortis S.A./ NV. Fortis retained a 9% stake in the enlarged ICBC (Asia) following the sale of its 22-branch Hong Kong network.

In 2005, ICBC (Asia) bought Shenzhen-based China Mercantile Bank for HKD $749-million (USD $96-million) from ICBC. ICBC (Asia) acquired China Mercantile in order to obtain a banking licence to conduct Renminbi (China’s currency) business in Shenzhen.

In 2006, ICBC acquired 90% of PT Bank Halim Indonesia, a tiny bank with 12 branches and only USD $50-million in assets. Terms of the deal were not disclosed. The purchase, while symbolic in nature as the first foreign acquisition outside of China/Hong Kong for a Chinese bank, was not expected to have any material impact on ICBC's earnings. China's enterprises are sometimes known to make foreign acquisitions for "pride."

In 2007, bought 79.93% of Macau (Macao)'s Seng Heng Bank for MOP 4.68-billion (Macao patacas, or HKD $4.55-billion, USD $583-million) from majority shareholder casino tycoon Sir Stanley Ho.

In 2007, ICBC subscribed to a new share issue representing 20% of South Africa's Standard Bank Group Ltd. for ZAR 36.7-billion (USD $5.46-billion, HKD $42.32-billion, CNY $40.95-billion). Standard Bank is Africa's largest bank group and has operations in 18 African countries and 19 countries outside of Africa. It operates 713 branches in South Africa and another 240 in the rest of Africa.

Also in 2007, ICBC bought the 8.23% stake in ICBC (Asia) held by Belgium's Fortis S.A./ NV for HKD $1.92-billion (USD $ 246-million). With the latest acquisition, China's ICBC raised its stake in its Hong Kong unit ICBC (Asia) to 71.21%. Fortis acquired the 8.23% stake in ICBC (Asia) in 2004 when it sold its Hong Kong-based Belgian Bank to ICBC (Asia).

In 2009, ICBC bought 19.3% of Thailand’s ACL Bank for USD $108-million (3.55-billion TBT).

In 2010, ICBC bought 70% of Bank of East Asia (Canada) for CAD $80-million (HKD $589-million, CNY 517-million, USD $76-million). Bank of East Asia (Canada) was the Canadian unit of Hong Kong-based Bank of East Asia. At the same time, Bank of East Asia raised its stake in joint-venture ICEA Finance to 75% for HKD $372-million.

In August 2010, ICBC privatized its 73%-owned Hong Kong-listed subsidiary ICBC (Asia) Ltd. by offering HKD $10.8-billion (CNY 9.45-billion, USD $1.39-billion) for the 27% stake not yet controlled.

In October 2010, ICBC acquired 60% of AXA-Minmetals Assurance Co. for CNY 1.2-billion (USD $179-million). AXA-Minmetals was a joint-venture between French insurance giant AXA S.A. and China Minmetals Corp., a major base metals miner. Following the transaction, AXA's stake in the joint-venture would fall to 27.5% from 51%, whereas China Minmetals' stake would fall to 12.5% from 49%. The joint venture would rename itself rather clumsily to ICBC-AXA-Minmetals Assurance Co.

Also in October 2010, ICBC was planning to raise up to CNY 45-billion (HKD $52.2-billion, USD $6.7-billion) from a rights issue in Hong Kong and Shanghai to replenish capital after a lending boom in 2009.

In January 2011, ICBC agreed to buy 80% of Hong Kong-based Bank of East Asia's American retail operations for USD $140-million (HKD $1.08-billion, CNY 922-million). The politically sensitive purchase included 13 branches in California and New York City and is subject to U.S. government approval. The purchase marked the very first time a Chinese bank has attempted to acquire a commercial banking licence in the U.S.

In August 2011, ICBC bought 80% of Standard Bank Argentina and its two affiliates for USD $600-million (ARS 2.49-billion, ZAR 4.31-billion, CNY 3.86-billion, HKD $4.68-billion) from South Africa's Standard Bank Group (55% stake) and other shareholders (25% stake). Before the sale, Standard Bank owned 75% of Standard Bank Argentina and 70% of the other two units. Following the sale, Standard Bank Group would retain 20% of Standard Bank Argentina, which had 103 branches. ICBC and Standard Bank would inject a total of USD $100-million of new capital into the Argentine bank based on their new ownership.

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Great Britain Bank Mergers & Acquisitions (Royal Bank of Scotland Group)

2010-08-13T08:32:00.019-04:00

Photo: The former Royal Bank of Scotland branch at 171 Tottenham Court Road, central London. This photo was taken in 2007 during my Yorkshire and London trip. In 2010, all 311 Royal Bank of Scotland-branded branches in England and Wales were sold to Banco Santander. RBS still has an extensive network in England and Wales through its NatWest operations.

The Royal Bank of Scotland Group plc

During the 17th and 18th centuries, Scotland went through a lengthy period of economic and political upheavals, heightened religious tension, and even the occasional wars with England. Back in 1698, one-quarter of Scotland’s wealth vanished when its attempt to establish the Darien trading colony in modern-day Panama failed miserably. Politically, the Act of Settlement of 1701 rescinded the House of Stuart's right to the throne of England and Scotland. Six years later, Scotland reluctantly agreed to a political union with England, creating the United Kingdom of Great Britain. The political union abolished the Scots parliament, yet gave Scotland full trade access to the English market and all her overseas colonies and trading partners.

It was during this turbulent time that the Royal Bank of Scotland (RBS) was founded in Edinburgh in 1727 by Royal Charter. It's the second joint-stock commercial bank to be founded in Scotland. The Royal Bank’s founding ended Bank of Scotland's monopoly since 1695. Right from the start, the two Scottish banks have been bitter rivals. During their early co-existence, both the Royal Bank and Bank of Scotland would hoard large quantities of the other bank’s banknotes, then they would present them for cash payment. Neither succeeded in causing a liquidity crisis at their rival, however, and both eventually accepted each other’s presence.

During the 1745 Jacobite Rising against King George II (House of Hanover), Bonnie Prince Charles’ (House of Stuart) army occupied Edinburgh and reached within 200 kms of London, putting the entire Britain into a political and constitutional crisis. However, King George’s army fought back and defeated the Jacobites in April 1746. During the occupation of Edinburgh, the Royal Bank temporarily moved its cash, precious metals and important documents to the Edinburgh Castle for safekeeping.

The Jacobite Risings alarmed the English greatly, and London quickly imposed oppressive measures to punish and quell those who supported the Stuart prince. The Scottish way of life was harshly suppressed with the banning of the tartan and the bagpipes. The clan-chiefs system was abolished and tens of thousands of people were evicted from their land. Despite all this hardship, however, southern Scotland’s industries boomed thanks to the union with England, which gave Scotland new access to a huge source of raw materials from England’s colonies, as well as the vast world market for Scottish products. Glasgow rapidly became the industrial heartland of the British Empire and its population exploded from 40,000 to 500,000 from 1780 to 1880.

In 1783, the Royal Bank opened a branch in Glasgow to serve the thriving industries. The Glasgow branch was the bank’s first outside of Edinburgh. The branch banking that people have come to be accustomed to in a modern society developed very slowly in the beginning. In the case of the Royal Bank of Scotland, a small network of branch outside of Edinburgh and Glasgow only took shape commencing in the 1830s, over 100 years following the bank’s founding. In 1864, the bank made its first ever banking acquisition when the Dundee Banking Co. was taken over.

With London’s rapid rise as the international financial centre, the bank opened an office on Bishopsgate in the City in 1874. By the time World War I broke out, Royal Bank’s network had grown to 158 branches. As a large number of male staff enlisted to the army, women began to form a meaningful percentage of the bank’s staff for the first time. The Royal Bank continued its expansion south of the Scottish border with the acquisition of London private banking firm Messrs. Drummond in 1924 and the Williams Deacon’s Bank in 1930, which had an extensive network in the northwest of England.

In 1939, RBS bought Glyn, Mills & Co. which operated exclusively in Central London. Both Williams Deacon’s Bank and Glyn, Mills & Co. continued to operate under their own brands until 1970, when the bank’s 300 branches in England and Wales were rebranded Williams & Glyn’s Bank.

During the 1950s and 1960s, RBS launched personal loans for the first time, and further expanded its branch network. It also introduced a pre-paid form of cash-dispensing machine, the forerunner of the ATM. A New York office was opened in 1960, marking the bank’s first overseas office.

In 1969, the Royal Bank of Scotland and the National Commercial Bank of Scotland amalgamated. The National and Commercial Banking Group Ltd. was created as the parent company holding the enlarged Royal Bank. In 1979, National and Commercial adopted the current name the Royal Bank of Scotland Group.

In 1972, RBS became the first British clearing bank to offer residential mortgage loans. 1973, all of the bank’s branches were linked up to its Edinburgh head office by a computer. The 1970s was a good time for the bank as the Scottish economy flourished when oil was discovered in the North Sea.

In 1980, the Royal Bank of Scotland became the subject of a bidding war between British overseas bank Standard Chartered and the Hongkong and Shanghai Banking Corp. (then of Hong Kong, now HSBC). Fears that Standard Chartered would shut down RBS’ head office in Edinburgh, or worse still, that the Scottish bank should be controlled by a bank based in a colony, aroused much opposition in Scotland. In the end, Britain's Monopolies and Mergers Commission ruled that a takeover of RBS by the Hongkong & Shanghai would not be in the interests of Scotland. The remaining bid from Standard Chartered also failed to win government approval, and RBS survived as an independent bank.

In 1985, Williams & Glyn’s Bank was fully integrated into the Royal Bank of Scotland. In the same year, the bank introduced a novel product called Direct Line to sell auto insurance over the telephone. Direct Line became an instant success.

RBS’ first foray into the American personal banking market began in 1988 when it acquired Citizens Financial of Providence, Rhode Island for USD $440-million. Back home in Scotland, 24-hour telephone banking was launched in 1994, followed by internet banking in 1997.

Recent transaction(s):

In 2000, RBS joined the major league by taking over the much larger National Westminster Bank for GBP 21.0-billion (USD $34.0-billion).

In 2000, Citizens Financial bought Boston-based UST Corp. for USD $1.4-billion (GBP 875-million).

In 2001, Citizens Financial bought Mellon Bank's retail banking division for USD $2.1-billion.

In 2002, Citizens Financial bought Medford Bancorp for USD $273-million. Medford Bank operated 19 branches and 24 ATMs in Massachusetts.

In 2003, Citizens Financial bought Commonwealth Bancorp for USD $450-million. Norristown, Pennsylvania-based Commonwealth Bancorp (unrelated to Australia's Commonwealth Bank) operated 60 branches and 61 ATMs.

Also in 2003, Citizens Financial bought Port Financial Corp. for USD $285-million. Port Financial was the parent of CambridgePort Bank of Boston, which had 11 branches and 15 ATMs.

Also in 2003, RBS bought Banco Santander's German unit Santander Direkt Bank for Eur 486-million. Santander Direkt Bank offered credit cards and personal loans and had 540,000 clients in Germany. As part of the deal, RBS sold Coutts's Latin American private banking business to Banco Santander for a USD $75-million premium. Coutts is RBS' private banking division. The Latin American unit sold was based in Miami.

Also in 2003, RBS acquired Churchill Insurance from Credit Suisse for GBP 1.1-billion (USD $1.8-billion).

Also in 2003, RBS bought Swiss private bank Bank von Ernst from Germany's Bayerische Hypo- und Vereinsbank (later HVB Group) for GBP 228-million. Bayerische Hypo- und Vereinsbank had suffered significant losses and was in need of restoring its capital.

In 2004, RBS’ Irish unit Ulster Bank bought Ireland's First Active for Eur 887-million (GBP 617-million). First Active specialized in mortgages and personal banking.

In 2004, Citizens Financial bought Connecticut's People's Bank for USD $360-million.

In 2004, Citizens Financial bought Charter One Financial for USD $10.5-billion (GBP 5.8-billion). Cleveland-based Charter One had 616 branches in the U.S. Northeast and Midwest.

In 2005, RBS led a consortium that included Hong Kong billionaire Li Ka-Shing and Merrill Lynch to buy 10% of Bank of China for USD $3.1-billion.

In 2006, Citizens Financial bought GreatBanc Inc. for USD $180-million. GreatBanc had 10 offices in the Chicago area.

In 2007, RBS formed a joint-venture providing commodities trading, marketing and risk management products with Sempra Energy. RBS bought 51% of Sempra Commodities from Sempra Energy for GBP 669-million (USD $1.35-billion). Sempra Commodities was renamed RBS Sempra Commodities LLP.

In October 2007, after a six-month battle, RBS, along with Belgium's Fortis and Spain's Banco Santander defeated Barclays in acquiring ABN AMRO Holding NV for Eur 70.0-billion (USD $101.1-billion) in cash and stock. The deal was the world's largest banking M&A. The three banks then broke up ABN AMRO's global operations amongst themselves with RBS taking over ABN AMRO's retail banking business outside of the Netherlands, Brazil and Italy, as well as its global investment banking operations. Until the break-up was completed, RBS held 38.3% of ABN AMRO, Fortis held 33.8%, Santander held 27.9%. Click here for a detailed timeline of the takeover battle for ABN AMRO.

In 2008, in a bid to restore its severely-depleted capital, RBS sold its 50% stake in Tesco Personal Finance to partner supermarket operator Tesco plc for GBP 1-billion (USD $1.96-billion). Tesco subsequently applied for a banking licence of its own from the British Financial Services Authority.

Following years of unrestrained credit-based spending and real estate speculation, air began to leak out of the global asset bubble in 2007, cumulating into a full-blown housing market collapse in 2008. As mortgage borrowers defaulted on their mortgages, banks around the world suffered billions of losses from bad loans and collateralized debt obligations (CDOs). When panicky institutional investors withdrew from the short-term money market, banks found themselves short of the capital needed to finance their lending activities, causing major financial institutions in the U.S., Britain, Belgium, Germany, and Iceland to fail. During an emergency summit held in Washington D.C. in October 2008, the world’s top economies pledged to bail out all major banks in financial difficulties and to provide unlimited loan guarantees for interbank lending.

Under the partial nationalization scheme, the British Treasury promised to subscribe to a maximum of GBP 37-billion (USD $64-billion, Eur 50-billion) of new shares from RBS, HBOS and Lloyds TSB.

In December 2008, RBS raised GBP 19.7-billion in new capital, which consisted of GBP 14.7-billion in ordinary shares (rights issue) and GBP 5-billion in preference shares with a yield of 12% p.a. As private investors refused to take up the rights issue offer, the British government ended up backstopping the issue and became holder of 60% of RBS. It was only six months earlier that RBS raised GBP 12-billion in new capital from another massive rights issue. By the time it accepted the latest government bail-out, its market capitalization had fallen below that to GBP 11-billion.

In early 2009, RBS unloaded its 4.26% stake in Bank of China for GBP 1.6-billion (USD $2.37-billion, HKD $18.4-billion).

On 2009-01-19, news of RBS’ GBP 28-billion (USD $41-billion) loss in 2009 sent its share prices plunging by 67% to GBP 0.16 per share. The panic selling was caused by fears that RBS would be nationalized with its shares becoming worthless. To alleviate RBS’ cash expense, the British government swapped the GBP 5-billion preferred securities that it just bought a month earlier for ordinary shares, raising the government’s holding in RBS to 70%. The swap eliminated the bank’s annual GBP 600-million dividend expense.

During the course of 2009, RBS and the British Treasury agreed to more government bailout to limit future loan losses at the ailing bank. Under the Asset Protection Scheme (APS), RBS issued GBP 25.5-billion (USD $36.58-billion) of non-voting, convertible class “B” shares to the British government in return for state insurance against GBP 282-billion (USD $404-billion) of potential losses. RBS would bear the first GBP 60-billion of the potential losses from the loan pool; whereas any further losses from the pool would be borne 90% by the government and 10% by RBS. At RBS’ option, it could issue HM Treasury another GBP 8-billion (USD $11.5-billion) of class “B” shares in the future. RBS agreed to forfeit its ability to claim certain U.K. tax losses or allowances. With the latest re-capitalization scheme, the British government’s economic interest in RBS rose to 84.4%.

In 2009, RBS sold its 50% stake in Spanish car insurer Linea Directa Aseguardora to its joint-venture partner Bankinter for Eur 426-million (USD $565-million).

Also in 2009, RBS sold its operations in six Asian countries to Australia and New Zealand Banking Group (ANZ) for USD $550-million (AUD $656-million, GBP 324-million). The sale included 54 branches and about 2 million clients in Hong Kong, Singapore, Taiwan, Philippines, Vietnam and Indonesia.

In February 2010, RBS’s commodity-trading joint-venture RBS Sempra sold its metals and energy assets outside of the U.S. to JPMorgan Chase for USD $1.74-billion (GBP 1.11-billion). RBS would receive about USD $799-million from the sale and Sempra Energy would receive USD $940-million. RBS Sempra was still looking for a buyer for its U.S.-based commodity-trading business.

In June 2010, RBS raised GBP 137-million from three overseas disposals. First, it sold its Pakistani unit (75 branches) to Faysal Bank for GBP 34-million (USD $50-million). Then it sold its United Arab Emirates operations to the Abu Dhabi Commercial Bank for GBP 68-million (USD $100-million). Finally, it sold its Kazakhstani business (4 branches) to HSBC for GBP 35-million (USD $52-million).

Also in June 2010, RBS sold its Indian retail banking operations to HSBC for an undisclosed amount. RBS had 1.1 million clients and 31 branches in India.

In August 2010, RBS sold 311 RBS branches in England and Wales and 7 NatWest branches in Scotland to Banco Santander for GBP 1.65-billion (Eur 1.99-billion, USD $2.63-billion). The branch sale was part of the EU-imposed requirements for RBS to receive state aid from the British government.

Also in August 2010, RBS sold 80% of its global payment-handling unit WorldPay to Advent and Bain Capital for GBP 1.9-billion (USD $3.0-billion).

In January 2012, RBS sold its Dublin-based airliner-leasing firm RBS Aviation Capital to Japan's Sumitomo Mitsui Financial Group and trading conglomerate Sumitomo Corp. for USD $7.3-billion. RBS Aviation Capital owned, managed or had orders for 329 commercial jet airliners.

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Australia Bank Mergers & Acquisitions (Westpac Banking)

2010-08-13T08:20:00.007-04:00

Photo: A Westpac branch in Hay, New South Wales, Australia.

With special thanks to Giles Martin of New South Wales, Australia and of Ohio, United States of America, for allowing me to use his photo. You can see Mr. Martin's photostream via this link:
http://www.flickr.com/photos/75905404@N00/

Westpac Banking Corporation

Westpac Banking was born in 1817 when the Fifth Governor of New South Wales signed a charter to establish the Bank of New South Wales, Australia's very first bank. Between the year 1788 when the first fleet carrying British convicts arrived in Australia and 1817, the colony lacked a standardized monetary system. Rum, promissory notes, British treasury bills, foreign coins and bartering were all used to settle transactions. The unreliable and inefficient system often led to disputes, confusion and corruption. One of the main goals of the creation of the new bank was to establish a monetary system and provide basic banking services.

In 1821, just four years into its establishment, the Bank of New South Wales suffered a serious blow when it was discovered that its Chief Cashier had stolen half the bank's prescribed capital. But the bank survived the crisis and the subsequent Banking Crisis of the 1840s, during which many of the bank's competitors failed. In the 1850s, the Bank of New South Wales enjoyed exponential growth after gold was discovered in New South Wales and Victoria.

Thanks to its cautious management, the Bank of New South Wales survived the two World Wars, as well as the Great Depression of the 1930s. In 1982, the Bank of NSW merged with Victoria-based Commercial Bank of Australia (CBA) and became the country's biggest bank at the time. It also changed its name to Westpac Banking Corp.

Recent transaction(s):

In 1995, Westpac bought Challenge Bank in Western Australia.
In 1996, Westpac acquired Trust Bank New Zealand.
In 1997, Westpac bought Bank of Melbourne.
In 2008, Westpac Banking, the No. 3 bank in Australia, agreed to take over the No. 5 bank, St. George Bank Ltd. in an AUD $18.6-billion all-stock deal (USD $17.5-billion, Eur 11.31-billion). The enlarged Westpac will become the No. 2 bank in Australia. St. George Bank was founded in 1937 as St. George Cooperative Building Society and became a full-service bank in 1992. At the time of the takeover, St. George Bank operated more than 400 branches. Australia has a long-standing policy to prohibit its Big Four banks (ANZ Banking, National Australia, Westpac and Commonwealth Bank) to merge with each other. Westpac's purchase of the largest bank outside of the Big Four group raised some anti-competitive concerns in Australia, but it was approved without much of a challenge from the banking and competition authorities.

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Italy Bank Mergers & Acquisitions (Intesa Sanpaolo)

2010-07-26T14:30:00.007-04:00

Photo: Pending.

Intesa Sanpaolo SpA

Intesa Sanpaolo was created in 2007 when Banca Intesa and Sanpaolo IMI combined. Banca Intesa traces its roots to Cariplo SpA, Banco Ambrosiano Veneto and Banca Commerciale Italiana.

Cariplo SpA

Cassa di Risparmio delle Provincie Lombarde was established in 1823 in Lombard, which was then part of the Austrian Empire. The bank, whose name means the Savings Chest [Bank] of the Province of Lombard, initially focused on promoting household savings. The bank began to offer agricultural, industrial and commercial banking during the second half of the 19th century. Cassa di Risparmio delle Provincie Lombarde was a major force in providing much-needed capital to industries in northern Italy during World War I, as well as the reconstruction of Milan after World War II. In the 1950's, the bank created a specialized small-business lender called Mediocredito Lombardo.

Like Italy’s numerous other savings banks, Cassa di Risparmio delle Provincie Lombarde was a state-owned regional credit institution with a socio-charitable mandate. This changed in 1990, when the long-awaited banking reform legislation (the Amato Act) was passed, requiring the savings banks (casse di risparmio) to separate their banking operations from the socially-mandated, non-profit charitable foundations. The Amato Act also forced the savings banks to convert to the joint-stock (i.e. public limited company) form. Initially the shares of these newly-spun-off banks were still held by the social foundations, but the Ciampi Act in 1998 prescribed that the majority shareholdings of the banks held by the social foundations to be sold off gradually. The goal was to ensure a transition towards a purely market-driven, private-sector banking industry away from the former dual objectives of providing banking services and promoting social causes. The phenomenon under which for-profit, market-driven joint-stock banks dominating the banking sector is sometimes referred to as the Anglo-American system.

In 1991, Ente Cassa di Risparmio delle Provincie Lombarde spun off Cassa di Risparmio delle Provincie Lombarde and merged it with IBI to create a new banking group named Cariplo SpA. Parent organization Ente Cassa di Risparmio delle Provincie Lombarde then renamed itself the Fondazione Cariplo and focused solely on doing social and charitable work.

Banco Ambrosiano Veneto SpA (also known as Banco Ambroveneto)

Banco Ambrosiano Veneto can trace its history to two banks named Nuovo Banco Ambrosiano and Banca Cattolica del Veneto. It is worth noting that the original Banco Ambrosiano was involved in one of Italy and Vatican’s most mysterious and infamous political scandals in the 1980s. The bank’s senior management and some top Vatican officials were implicated to have close ties with the Mafia. In 1982, Banco Ambrosiano’s deposed chairman, Roberto Calvi, disappeared and was found dead in London days later. It was believed that he had been murdered by the Mafia. The bank, then Italy’s No. 2 private-sector bank, collapsed soon after under losses of USD $1.3-billion.

In 1989, the rebuilt Nuovo Banco Ambrosiano and Banca Cattolica del Veneto merged to form the Banco Ambrosiano Veneto (BAV). Between 1991 and 1995, BAV expanded nationwide by taking over other Italian banks including Banca Vallone di Galatina, Citibank Italia, Società di Banche Siciliane, Banca Massicana di Sessa Aurunca, and Banca di Trento e Bolzano. BAV also acquired Caboto to expand into the securities business in Europe.

Banca Commerciale Italiana SpA

Banca Commerciale Italiana (BCI) was established in 1894 in Milan with German (Deutsche Bank, Dresdner Bank), Austrian and Swiss (Credit Suisse) capital. Initially, BCI specialized in providing long-term corporate loans to the shipping, steel, textiles and electricity industries in northern Italy. In 1911, BCI became the first modern Italian bank to have a branch abroad when its London branch opened. Since then and for much of the 20th century, BCI had always had the largest international presence of all Italian banks. During the early 20th century, BCI also acted as a merchant bank and held direct equity investments in various industrial, non-banking companies.

The New York Stock Market Crash in 1929 jolted the global economy, including Italy. The entire Italian banking system became so distressed that in 1933, it was on the verge of collapse. BCI, along with fellow powerhouses Banco di Roma and Credito Italiano (both evolved into today’s Unicredit) were nationalized and became part of the state agency IRI (Istituto per la Ricostruzione Industriale). In 1937, the three banks were declared banca d’interesse nazionale (bank of national interest) due to their national importance.

Following the devastation of World War II, these same three banks created Mediobanca in 1944, a specialized lender providing medium- and long-term financing to rebuild Italy’s manufacturing industries. Mediobanca’s direct equity investments in many of Italy’s most well-known industrial, commercial and financial services concerns made it a secretive, powerful and manipulative deal-maker in orchestrating mergers, blocking unwanted corporate advances, forcing business break-ups and even reinforcing oligopolies for the next 60 years.

After World War II, BCI re-employed its former international expertise and focused on trade finance, while also gradually expanded into agricultural and mortgage loans. Italy, however, suffered from chronic high inflation and lackluster growth during most of the second half of the 20th century. Its banking sector was backward, over-staffed, bureaucratic and corrupt. The Italian state imposed strict restrictions on lending, money supply, foreign exchange and international expansion until the late 1980s. Bureaucracy and a chronic lack of capital hampered the expansion of Italian banks, including BCI. This challenge was partly relieved, when the state-controlled IRI sold a minority stake of BCI to the public in 1969, though the bank was not fully-privatized until 1994.

In 1982, BCI acquired Litco Bancorporation for USD $93-million. Litco was the parent company of the Long Island Trust Co. in New York. Merely five years later, however, BCI sold Litco (by then it had been renamed North American Bancorporation) to the Bank of New York.

In 1988, BCI made a USD $755-million bid for 51% of Irving Bank Corp., which was then trying to fend off a hostile bid from the Bank of New York. However, BCI’s bid for Irving Bank was blocked by the Federal Reserve due to regulatory reasons, and the Bank of New York subsequently acquired Irving Bank.

By the early 1990s, the Italian government finally decided to get out of the business of running the banking industry. BCI was fully privatized in 1994, the centenary of its establishment. The bank’s privatization was mired in controversies, however, when powerful Milan merchant bank Mediobanca organized a group of institutional allies to gain majority control of BCI without paying a meaningful premium that the government was hoping for.

Almost immediately, the country’s banks entered into a frenzy of consolidations to improve efficiency and increase their market coverage. Later in 1994, BCI made an offer to buy Banco Ambrosiano Veneto (BAV) for USD $1.13-billion. However, due to fragmentation of cross-institutional shareholdings in Italy’s industries at the time, winning all institutional shareholders’ acceptance to tender their shares was extremely difficult in those early days of consolidation, and many banking merger proposals ended up as “false starts.” In the end, BCI failed to acquire BAV. Ironically, in 1999, the roles of the “hunter” and the “prey” were reversed when Banca Intesa, the result of the combination between Cariplo and BAV, acquired control of BCI.

Recent transaction(s):

In 1997, Banco Ambrosiano Veneto acquired Cariplo SpA to form Banca Intesa SpA for between ITL 8-trillion to 9-trillion (USD $4.8-billion to $5.5-billion). Fondazione Cariplo’s agreement to sell Cariplo SpA to Banco Ambrosiano Veneto was a setback for the powerful Mediobanca, which had been engineering a combination between Banca Commerciale Italiana (BCI) and Cariplo.
In March 1999, UniCredito Italiano SpA made a hostile bid to take over Banca Commerciale Italiana for USD $16-billion. However, Mediobanca, which had effective control over BCI, opposed UniCredito Italiano’s proposal and was busily engineering a merger between BCI and Banca di Roma, much to the opposition of Italy’s business and political leaders, as it would give the already manipulative Mediobanca even more control on the banking sector.
When it became clear that the government would block Mediobanca’s plan to combine BCI and Banca di Roma, Mediobanca orchestrated a sale of 70% of BCI to Banca Intesa in July 1999 for Eur 10.6-billion (valuing all of BCI at Eur 14.6-billion, USD $15.1-billion). The sale essentially resurrected Mediobanca’s 1997 failed attempt to combine BCI with Cariplo SpA. (Banca Intesa is the result of the merger between Banco Ambrosiano Veneto and Cariplo SpA.)
In 2000, Banca Intesa offered to buy the 30% of BCI that it didn’t already own. BCI was fully incorporated into Banca Intesa in 2001 with the new name IntesaBci. In 2003 though, the bank dropped “Bci” and resumed using its old name Banca Intesa.
Also in 2002, IntesaBci sold its 25% stake in Banca Carime to Deutsche Bank for Eur 400-million.
Later in 2002, IntesaBci sold its 69.6% stake of Banco di Chiavari e delle Rivera Ligure to Banco Popolare di Lodi (now Banca Popolare Italiana) for Eur 405-million.
In April 2003, Intesa sold its 94.6% stake in Banco Sudameris Brasil to ABN AMRO’s Banco ABN AMRO Real for Eur 648-million (BRL 2.29-billion).
During the Argentine economic crisis in 2003, Intesa gave up its Banco Sudameris Argentina to locally-owned Banco Patagonia. Intesa would retain a 19.95% stake in the enlarged Banco Patagonia-Sudameris, which would have 100 branches following the merger. Later in 2003, Intesa also sold its local units in Uruguay and Colombia.
In 2005, Intesa agreed to buy between 75% and 100% of Delta Banka of Serbia-Montenegro for between Eur 277-million and Eur 370-million. With 144 branches, Delta Banka was the country’s No. 2 bank. Delta Banka was subsequently renamed Banca Intesa Beograd.
Also in 2005, Intesa bought Bosnia Herzegovina’s ABS Banka for Eur 12-million. ABS Banka had 41 branches.
Also in 2005, Intesa bought 75% of Russian small-business lender KMB Bank for Eur 90-million. KMB had 50 offices.
In late 2005, Intesa transferred Banco Wiese Sudameris to Bank of Nova Scotia’s 35%-owned Peruvian unit Banco Sudamericano in a complex deal. Intesa would own 19.95% of the enlarged Banco Sudamericano, which would have 130 branches following the merger.
In 2006, Intesa bought 81% of Bosnia Herzegovina’s UPI Banka for Eur 37-million. UPI Banka had 16 branches.
In late 2006, Banca Intesa announced a friendly bid for Sanpaolo IMI SpA for Eur 29.6-billion (USD $37.5-billion). This deal combined Italy's 2nd and 3rd largest banks. Thanks to a rise in Banca Intesa's share prices, the value of the takeover had risen to Eur 31.5-billion (USD $40.0-billion) by late 2006.
Later in 2006, Banca Intesa agreed to sell 652 branches in northern Italy to France's Crédit Agricole for Eur 5.93-billion (USD $7.44-billion). Crédit Agricole, a significant shareholder of Banca Intesa, supposedly threatened to vote against the Intesa-Sanpaolo IMI merger proposal unless a side deal was signed to give the French bank a sizeable presence in Italy.
In 2006, Intesa bought 67% of LT Gospodarska Banka (LTG Banka) for Eur 11-million. LTG had 25 offices in Bosnia Herzegovina.
In 2007, Intesa Sanpaolo bought 19.99% of China’s Qingdao City Commercial Bank for USD $135-million.
Also in 2007, Intesa Sanpaolo sold 198 branches to four regional rivals for Eur 1.9-billion.
In 2008, Intesa Sanpaolo bought the 81% of CariFirenze that it did not already own for Eur 4.42-billion (USD $6.54-billion) in stock and cash. Florence-based CariFirenze had 547 branches in Italy and 19 in Romania. As part of the agreement with Italy's anti-trust authorities, Intesa Sanpaolo promised to sell off 29 branches to other financial institutions.
In 2008, Intesa Sanpaolo sold its 49% stake in consumer finance business AGOS SpA to JV partner Crédit Agricole for Eur 546-million.
In 2008, Intesa Sanpaolo bought Ukraine's JSC Pravex-Bank for Eur 504-million (USD $747-million). JSC Pravex-Bank operated 560 branches in Ukraine, the sixth largest network in the country.
In 2008, Intesa Sanpaolo sold its remaining 19.95% stake in Scotiabank Peru to the Bank of Nova Scotia. Terms of the deal were not announced but the Globe and Mail reported it to be worth about Eur 129-million (USD $199-million).
In June 2009, Intesa Sanpaolo unwound its four bancassurance joint-ventures to acquire full ownership. The four JVs affected were: Intesa Vita, EurizonVita, Centrovita Assicurazioni and Sud Polo Vita.
Also in 2009, Intesa Sanpaolo agreed to sell its 50% stake in Italy’s No. 2 consumer finance specialist Findomestic to partner BNP Paribas. Intesa Sanpaolo immediately sold 25% of Findomestic for Eur 500-million. The remaining 25% stake would be sold between 2011 and 2013 for an estimated Eur 350-million to 650-million.
In December 2009, Intesa Sanpaolo sold its global securities servicing business to State Street Corp. for Eur 1.28-billion (USD $1.87-billion). The unit sold had Eur 343-billion in assets under custody and Eur 141-billion of assets under depository bank services.
In June 2010, Intesa Sanpaolo (Banca CR Firenze) bought 50 branches from rival Banca Monte Paschi di Siena for Eur 200-million.
Also in June 2010, Intesa Sanpaolo sold its 80% stake in Cassa di Risparmio della Spezia (which had 76 branches) and another 96 branches to Crédit Agricole for Eur 740-million.

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Great Britain Bank Mergers & Acquisitions (NatWest Group)

2010-06-16T21:02:00.011-04:00

Photo: NatWest's office at the heart of the City (of London) at No. 1 Princes Street. NatWest has been a subsidiary of the Royal Bank of Scotland Group since 2000.

[Limited-coverage page] NatWest has been a subsidiary of the Royal Bank of Scotland Group since 2000. Events after 2000 are listed under the Royal Bank of Scotland Group's page.

National Westminster Bank plc (NatWest Group)

The creation of National Westminster Bank was announced in 1968 when two of Britain's then Big Five, National Provincial Bank and Westminster Bank, agreed to merge. When the combination was completed in 1970, the resulting bank was the 5th largest in the world. In 2000, however, NatWest was taken over by the Royal Bank of Scotland Group but it continues to operate under its own identity in England and Wales.

National Provincial Bank Ltd.

In 1833, Thomas Joplin and other investors founded the National Provincial Bank of England after five years of preparation. The bank’s mandate was to provide banking services in England and Wales outside of London, so it could issue its own banknotes. At the time, the Bank of England enjoyed a monopoly in issuing banknotes within a 65-mile perimeter of London. National Provincial did maintain a purely administrative head office in the British capital.

From 1834 onwards, branches were opened in Gloucester, Birmingham, Boston and many other towns. By 1865, through the acquisitions of many private and joint-stock rivals, the bank already operated 122 branches across England and Wales. Soon it became clear that London was too important a market for the bank to avoid and a London branch was opened, requiring the bank to surrender its privilege to issue banknotes.

In 1880, National Provincial restructured itself as a limited liability company and modified its name to the National Provincial Bank of England Ltd. By 1900, further expansion increased the number of branches to around 200.

In 1917, National Provincial acquired 50% of Lloyds Bank (France) Ltd., renaming it Lloyds & National Provincial Foreign Bank Ltd. in 1919, with branches in London, France, Belgium and Switzerland. In 1918, National Provincial merged with the Union of London & Smiths Bank Ltd., which had more than 230 branches. The new bank with 700 branches adopted the cumbersome name of National Provincial & Union Bank of England Ltd. In 1920, the bank acquired London private bank Coutts & Co., which was founded in 1692 and today continues to offer wealth management services under its own brand as part of the Royal Bank of Scotland Group.

In 1924, the bank’s name was simplified to National Provincial Bank Ltd. It continued to expand during the inter-war years and after World War II by acquiring other banks domestically. In 1954, it divested its stake in Lloyds & National Provincial Foreign Bank back to Lloyds Bank. National Provincial acquired the Isle of Man Bank Ltd. in 1961, which continues to trade under its own name today. In 1962, National Provincial took over District Bank, the seventh largest London clearing bank with a substantial branch network in Northern England and the northern Midlands counties. National Provincial kept the District Bank identity until its merger with Westminster Bank in 1970. At the time of the amalgamation, National Provincial and District Bank together had a network of about 2,200 branches.

Westminster Bank Ltd.

Westminster Bank can trace its roots to the London & Westminster Bank and the London & County Bank. London & Westminster was the older of the two and was officially founded in 1834 in the City. As its name suggested, the bank’s main activities focused on central London but it also acted as the City agent to various country and foreign banks. By 1905, the bank had a network of 35 branches.

London & County Bank was created in 1836 in Southwark as the Surrey, Kent & Sussex Banking Company. Southwark was a borough in the county of Surrey at the time, but is now part of London. Just one year after its founding, the bank moved its head office to the City and in 1839, adopted the name London & County Banking Co. The bank grew rapidly during the second half of the 19th century through a series of acquisitions. By 1875, London & County had a network of 150 branches in London and Southern England, the most of any British bank.

In 1909, London & County and London & Westminster decided to combine into the London, County & Westminster Bank. London & County’s network of more than 260 branches in London and south and east of London was merged with London & Westminster’s 37 London branches. In 1917, the bank expanded outside of southern England and acquired Belfast-based Ulster Bank, gaining 170 branches in Ireland. Ulster Bank had been weakened by the political and social upheavals gripping Ireland following the Easter Rising of 1916. In 1918, National Provincial merged with Parr’s Bank of Warrington and London (with 235 full branches) to become the London County Westminster & Parr’s Bank. The new entity now operated 700 branches.

London County Westminster & Parr’s sensibly shortened its name to Westminster Bank in 1923. Throughout the 1920s, Westminster acquired more banks in Nottinghamshire, Yorkshire and Guernsey. By 1968, Westminster had a network of 1,400 branches across Britain, Ireland and Northern Ireland.

National Westminster Bank Ltd.

In 1968, National Provincial Bank (including its subsidiary District Bank) and Westminster Bank (including subsidiaries Isle of Man Bank and Ulster Bank) agreed to amalgamate into the National Westminster Bank. The new bank adopted the three arrow-heads logo, which is still in use today. When the merger was completed in 1970, the bank had 3,600 branches, though branch consolidation reduced that number to 3,200 by 1979.

In 1972, National Westminster introduced Access, the bank’s first credit card. Throughout the 1970s, the bank actively participated in financing oil exploration in the North Sea, as well as created an international division. In 1979, National Westminster bought National Bank of North America, which had 141 branches in New York State, marking the bank’s first retail network in the United States.

Soon after the British financial services industry was deregulated in 1986, National Westminster entered the securities business by buying up stock-brokers and underwriters. In 1988, the bank’s U.S. unit acquired New Jersey’s First Jersey National Corp. Following this purchase, National Westminster Bancorp’s network totalled 340 branches in New York and New Jersey.

In 1991, a major restructuring programme saw the bank’s various private banking businesses combining under the Coutts & Co. brand. Coutts & Co. had been part of National Provincial Bank since 1920. Then in 1992, NatWest Markets was created to handle the group’s corporate and investment banking products.

In 1993, the bank launched NatWest Life to embark on the life insurance business. NatWest sold its American retail bank National Westminster Bancorp to Fleet Financial in 1995 for GBP 2.3-billion (USD $3.6-billion) to focus on its British operations. In the same year, the name NatWest Group was officially adopted.

NatWest’s fortune took a dramatic turn in 1999 that eventually culminated in the loss of its independence. The events all began in September 1999 when NatWest announced a friendly deal to acquire U.K. insurer and unit trust (mutual fund) manager Legal & General plc for GBP 10.7-billion. To many analysts and institutional shareholders, however, swallowing up and integrating Legal & General was the last distraction NatWest needed when the bank’s core business was already underperforming. NatWest's share prices promptly tumbled by 26% over the next few weeks.

Two days after NatWest's share collapse, on 1999-09-24, the Bank of Scotland launched a surprise GBP 21.0-billion (USD $34.3-billion) hostile bid to take over NatWest.

By early October 1999, NatWest’s CEO Derek Wanless had lost the board of directors’ confidence and resigned. The bank also abandoned its offer for Legal & General. Throughout October, NatWest announced cost-cutting plans to eliminate 1,650 jobs and to sell off Ulster Bank, fund management arm Gartmore, NatWest Equity Partners and Greenwich NatWest in the hope of persuading its shareholders to vote against selling out to the Bank of Scotland.

NatWest’s struggle to remain independent became even more complicated on 1999-11-29, when the Royal Bank of Scotland (RBS) joined the foray and announced its own hostile bid for the embattled bank.

Throughout December and January (2000), both Bank of Scotland and RBS jockeyed for shareholders’ support (from both their own and those of NatWest) and raised their respective bids to over GBP 25.6-billion (USD $41.7-billion).

In early February, RBS secured a GBP 500-million financing from its own institutional shareholder Spanish banking giant Banco Santander Central Hispano (now Banco Santander). With the additional cash infusion from BSCH, RBS was able to increase the cash portion of its bid for NatWest, and won over the major shareholders of NatWest.

On 2000-02-11, NatWest finally gave up its fight and recommended its shareholders to accept the offer from RBS. By this time however, the value of the offer had fallen back to GBP 21.0-billion due to a fall in RBS share prices. What began as a seemingly ordinary takeover bid for Legal & General ended up with NatWest losing its own autonomy.

Interestingly, both Bank of Scotland and RBS were rather smaller than NatWest. So even RBS in the end "took over" NatWest in a cash-and-share purchase, the former shareholders of NatWest actually ended up owning 62% of the newly-enlarged Royal Bank of Scotland Group, with the former RBS shareholders owning the remaining 38%.

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Jordan Bank Mergers & Acquisitions (Arab Bank)

2010-05-04T19:57:00.004-04:00

Photo: EuropeArab Bank is the European unit of Jordan's Arab Bank plc. This is EuropeArab Bank's office on Moorgate, London.

Photo was taken during my London trip in 2007.

Arab Bank plc

Arab Bank’s founder Abdel Hameed Shoman was born in a Palestinian village just outside of Jerusalem in 1890. In 1910, he emigrated to the United States to seek a better life. Even though he eventually became the owner of a garment factory in New York, he decided to return to Palestine to launch a modern bank in the Arab world. In 1930, Mr. Shoman founded the Arab Bank in Jerusalem, then still within the British Mandate of Palestine.

The British Mandate of Palestine was created in 1922 following the collapse of the Ottoman Empire when World War I ended. It soon became the centre of the Arab-Israeli conflict. Officially, the objective of the various British and French Mandates in the Middle East was to stabilize the region until such time when they could become independent political jurisdictions. In reality, even though the Palestinian Arabs constituted a 90% majority of the population at the beginning of the Palestinian Mandate, they were only ambiguously referred to as “non-Jewish communities”. And while the Arabs had the same civil and religious rights as the Jews, the Jews enjoyed specific national and political rights through the Jewish Agency, which was officially recognized by the League of Nations (predecessor of the United Nations). On the other hand, the majority Palestinian Arab population had no representative government of their own, and was only represented by the British government.

Feeling that they were second-class citizens in their own land, the Arabs began to attack the Jewish communities and soon the Jews counter-attacked. The skirmishes became increasingly frequent and violent during the 1930s and 1940s and some Arab and Jewish groups were officially labelled as terrorist organizations.

Several proposals to partition Palestine into an Arab state and a Jewish state failed. In May 1948, just prior to the expiry of the British Mandate, the State of Israel declared independence and was immediately recognized by the United States and Soviet Union. The conflict then escalated to the turbulent Arab-Israeli War. During this time, Arab Bank lost its branches in Jaffa and Haifa, as both cities became part of the new Israeli state. The Haifa branch was relocated to Beirut in Lebanon, while the Jaffa branch was moved to Nablus and later Ramallah. Before long, Arab Bank also withdrew its headquarters from Jerusalem to Amman and re-established itself as a Jordanian-based public joint-stock bank.

During the 1950s Arab Bank expanded its network to 43 branches in the Arab world. In the 1960s, however, Arab Bank entered a devastating period as its branches were nationalized across the region. The bank’s Egyptian and Syrian operations were nationalized in 1961, followed by Iraq (1964), Aden (1969), and Sudan and Libya (1970). More branches were shut in 1967 when the West Bank and Gaza Strip were lost to Israel following the brief Six-Day War.

At the same time though, Arab Bank sought expansion outside of the Middle East beginning with the establishment of Arab Bank Switzerland in 1962. In the 1970s Arab Bank renewed its international expansion efforts and initially focused on the emerging oil economies in the Persian Gulf. The bank then established branches in London, Frankfurt, New York, Australia and Singapore.

Following the signing of the Oslo Peace Accord in 1993, Arab Bank re-established branches in several Palestinian communities. The bank also expanded into larger-scale industrial and infrastructure financing, as well as investment banking for the first time.

In 2005, Arab Bank resumed operations in Syria after a gap of 44 years. In 2006, the bank reorganized its European operations into the London-based Europe Arab Bank.

Today Arab Bank has over 500 branches in 30 countries (accurate as of 2010).

Recent transaction(s):

In 2006, Arab Bank bought 50% of a small Turkish bank named MNG Bank. MNG Bank had 11 branches. In 2007, MNG changed its name to Turkland Bank, or T-Bank as its trading name.
Also in 2006, the bank acquired 50% of Al Nisr Al Arabi Insurance Co. in Jordan to launch its insurance products.
In 2008, Arab Bank won an auction to buy 19% of Libya's Wahda Bank for Eur 210-million. Wahda was Libya's second largest private-sector bank and had Eur 1.7-billion of assets and 71 branches. Arab Bank had the option to eventually raise its stake in the Libyan bank to 51%.

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Japan Bank Mergers & Acquisitions (Mitsubishi UFJ Financial Group)

2010-04-18T11:15:00.023-04:00

Photo credit: With special thanks to my friends Don and Rupert for taking this photo of Mitsubishi UFJ Financial Group for me while visiting Tokyo, Japan in 2006.

Mitsubishi UFJ Financial Group

Mitsubishi Tokyo Financial Group

Mitsubishi Bank was one of the many industrial and commercial concerns within the massive Mitsubishi Shokai (a money clique conglomerate known as a zaibatsu). Mitsubishi started out as a shipping and warehousing business in 1870. The shipping firm’s foreign currency department began to offer banking services towards the end of the 19th century. In 1919, the group’s banking operations were formally spun off into the Mitsubishi Bank, an autonomous company with close ties to other sister firms of the Mitsubishi group.

Japan’s rapidly modernizing economy and industries in the early 20th century soon made it the dominating power in the Orient, overtaking the backward Imperial China. In 1931, Japan’s imperialistic supremacist government invaded Manchuria (North-eastern China), to be followed by a series of skirmishes between the two countries in the next several years. Using the excuse of "liberating" Asia of foreign (Western) colonialism, Japan launched an all-out war with China in 1937. Within months, Japan's better equipped and trained army took control of Beijing, Shanghai and Nanjing (hence the infamous Massacre of Nanjing). In 1941, Japan attacked Pearl Harbor and the Sino-Japanese War became part of the larger World War II. The Mitsubishi group was at the time Japan’s largest manufacturer of arms and warplanes, and used forced labour in occupied Korea and China. Mitsubishi Bank, like many other Japanese banks, also actively financed the military aggression by underwriting war bonds.

When peace finally returned in 1945, the Allied occupation authority imposed strict restrictions on the re-organization of the Japanese economy. The former zaibatsu’s were broken into hundreds of smaller companies forbidden to use their pre-war names and banned from collaborating with each other. Mitsubishi Bank was renamed Chiyoda Bank in 1948, named after the financial district in Tokyo. The regulations, however, proved too restrictive to rebuild Japan’s economy and the ban to prohibit the zaibatsu remnants to conduct business with each other was also ineffective. In 1953, as Chiyoda Bank re-opened its offices in London and New York, the bank was allowed to resume the Mitsubishi Bank name.

During the 1950s and 1960s, Mitsubishi Bank became the coordinating entity in re-establishing the links between the Mitsubishi group of companies. With its strong ties to Japan’s large enterprises, the bank focused on the corporate debt sector rather than on the personal banking market.

Mitsubishi bank began to branch out into leasing, asset management and capital markets in the 1970s. Then in 1984, the bank acquired the Bank of California (founded 1864).

In the late 1980s, Japan experienced a period of extreme real estate and stock speculation mania. The country’s bank made easy credit to their corporate clients, which then ploughed the money back into the red-hot real estate and stock markets, pushing prices to even more unsustainable levels. This cycle of keep adding fuel to the fire abruptly ended in the early 1990s, when the government finally raised interest rates to cool the speculation.

The asset price collapse hit Japan’s banks hard and total loan losses are said to have amounted to USD $500-billion. Mitsubishi Bank suffered severe losses but still fared rather better than most rivals. As the Japanese government initially refused to let any bank go under, consolidation across the industry was encouraged instead. In 1994, the government brokered a deal under which the Mitsubishi Bank injected JPY 200-billion (USD $1.9-billion) into the ailing Nippon Trust Bank, raising its holding in Nippon Trust Bank from 5% to 69%.

In March 1995, Mitsubishi Bank and the Bank of Tokyo announced a merger agreement to form the Bank of Tokyo-Mitsubishi. The Bank of Tokyo was founded in 1880 as the Yokohama Specie Bank. In 1947, Yokohama Specie Bank was renamed the Bank of Tokyo. The bank specialized in overseas markets and had far more branches outside of Japan than within. In 1975, the Bank of Tokyo acquired a majority stake of the Southern California First National Bank and renamed it California First Bank. In 1988, California First Bank acquired UnionBancorp from Britain’s Standard Chartered plc and adopted the Union Bank name. Following the merger of parents Mitsubishi Bank and Bank of Tokyo in 1995, Mitsubishi’s Bank of California was combined with the Bank of Tokyo’s majority-owned Union Bank to form the UnionBanCal Corp.

In 2000, Bank of Tokyo-Mitsubishi, Mitsubishi Trust Bank and Nippon Trust Bank reached an agreement to combine their assets together under a new holding company called Mitsubishi Tokyo Financial Group (MTFG).

UFJ Holdings

Incidentally, UFJ Holdings was also first proposed in 2000 through the three-way merger of Sanwa Bank, Tokai Bank and Toyo Trust Bank. Of the three banks, Sanwa was the most important one.

Sanwa Bank can trace its earliest history to the 1877 founding of the Konoike Bank. Konoike Bank focused on providing personal banking to individuals in the Osaka area. In the early 20th century, as Japan’s industrial power expanded rapidly, banks such as Mitsubishi and Mitsui had the advantage as the designated banks of their respective zaibatsu groups. In order to expand its capital to compete with the zaibatsu banks, Konoike Bank in 1933 merged with Yamaguchi Bank and Sanjushi Bank and adopted the name Sanwa, meaning “tri-harmony” in Kanji Japanese.

Often shut out of the zaibatsu business, Sanwa Bank continued to focus on personal banking in the immediate post-World War II years, though in the 1950s it began to seriously break into the corporate banking market. The bank in 1959 sold its trust division to Toyo Trust & Banking, a bank that would be merged with Sanwa some 42 years later. In 1961, Sanwa created the Japan Credit Bureau (JCB), which eventually became Japan’s leading credit card issuer. (JCB eventually saw other Japanese financial institutions joining Sanwa as shareholders.)

In the 1970s, the bank expanded its international operations by establishing offices in Hong Kong, Singapore, Sydney and London, coinciding with Japan’s booming auto and electronics exports sector. The bank created the Sanwa Bank of California in 1971, and two years later bought California’s Charter Bank. Following the acquisition of Golden State Bank in 1978, Sanwa California renamed itself Golden State Sanwa Bank. In 1986, Golden State Sanwa Bank acquired Lloyds Bank California for USD $263-million, adding Lloyds’ 88 branches to its existing 29 offices. Outside of California, Sanwa’s international expansion in the 1980s concentrated in other Asian markets, with Hong Kong being the bank's most successful and profitable market in non-Japan Asia.

Like other Japanese banks though, Sanwa suffered heavy losses in the early 1990s when Japan’s speculative asset bubble burst. Due to the country’s lax accounting rules, banks were neither required to mark down the free-falling value of the repossessed properties and equities, nor to recognize the massive loan losses. The failure to face up and address the failing economy only deepened the deflation and prolonged the decade-long recession.

In 2001, in order to achieve better economies of scale, Sanwa Bank, Tokai Bank and Toyo Trust & Banking agreed to merge to form UFJ Holdings. UFJ supposedly stood for United Financial of Japan, though the bank never explained the initials.

Meanwhile, Sanwa Bank California merged with Tokai Bank of California to become United California Bank. Later in 2001, UFJ exited the American retail banking sector by selling United California Bank (with 117 branches) to BNP Paribas' U.S. subsidiary BancWest Corp. for USD $2.4-billion.

Recent transaction(s):

In July 2004, Mitsubishi Tokyo Financial Group agreed to buy the money-losing UFJ Holdings in a USD $29.0-billion friendly all-stock offer. In 2005, rival banking titan Sumitomo Mitsui Financial launched a competing offer with a similar value for UFJ. Mitsubishi Tokyo promised to inject JPY 700 billion (USD $6.3-billion) to strengthen UFJ’s balance sheet, whereas Sumitomo Mitsui committed to inject JPY 500-billion (USD $4.5-billion) into UFJ if its merger proposal was accepted. UFJ is said to have had JPY 3.95-trillion (USD $36-billion) in bad loans. In the end, UFJ favoured the earlier offer from Mitsubishi Tokyo Financial and the combination was finalized in 2005.
Following the merger, the parent company was renamed Mitsubishi UFJ Financial Group, but the retail banking arm was called the Bank of Tokyo-Mitsubishi UFJ, retaining the "Tokyo" part of the name Mitsubishi Tokyo but reversing the order. The value of the Mitsubishi Tokyo-UFJ Holdings merger was not clearly defined. While it was reported to be worth USD $29.0-billion at the time, some subsequent reports valued the transaction at a much higher USD $41.4-billion. The higher value appears to have been derived from simply summing up the market capitalization of both banks, which is not the conventional method of pricing an M&A.
In 2008, Mitsubishi UFJ Financial bought the 34.6% of UnionBanCal Corp. that it didn’t already own for USD $3.5-billion. Union Bank of California had 337 branches across California, Oregon and Washington states. Mitsubishi UFJ had owned a majority stake in Union Bank of California since 1996, which was formed when the Californian subsidiaries of the Bank of Tokyo and Mitsubishi Bank combined.
Following the burst of the U.S. housing bubble in 2007, losses from the collateralized debt obligations (CDOs) soared to hundreds of billions of dollars around the world, and the inter-bank credit market froze in the summer of 2008. Globally, banks that relied on the short-term credit market to finance their longer-term lending activities began to fail as their funding sources dried up. HBOS (Halifax Bank of Scotland), Fortis (Belgium and Netherlands) and investment bank Lehman Brothers all collapsed in September 2008. The panic rapidly spread to other highly-leveraged investment banks including Merrill Lynch and Morgan Stanley.
In a hastily-arranged deal, Mitsubishi UFJ Financial Group Inc. on 2008-09-29 agreed to inject USD $9.0-billion (JPY 935-billion) into Morgan Stanley in exchange for a 21% stake. The Japanese lender was to buy USD $3-billion of new common stock from Morgan Stanley, plus USD $6-billion of convertible preferred stock. With the USD $9-billion capital injection, Morgan Stanley's leverage ratio would drop from 27.6 to 22.1.
Subsequent to the original agreement, the global crisis worsened severely and at one point, Morgan Stanley’s entire market value fell to just USD $10-billion, making Mitsubishi UFJ's $9-billion investment for just 21% of the firm look ridiculous. The deal was re-negotiated and finalized on 2008-10-13. Under the new agreement, Mitsubishi UFJ would buy USD $7.8-billion of perpetual convertible preferred shares and USD $1.2-billion of perpetual non-convertible preferred shares. Both classes would pay a 10% interest annually.
On 2008-10-27, as Japanese stocks fell to their lowest level in 26 years, MUFG announced it would raise up to JPY 990-billion (USD $10.6-billion) of new capital from the market. The bank needed to replenish its capital depleted by a sudden and deep plunge in global securities prices, as well as to fulfil its commitment to invest USD $9-billion in ailing U.S. investment bank Morgan Stanley. Mitsubishi UFJ planned to sell JPY 600-billion of common stock and JPY 390-billion of non-convertible preferred stock with a yield of 4.6%.
In late 2008, Mitsubishi-UFJ agreed to buy NikkoCiti Trust and Banking Corp. from Citigroup for JPY 25-billion (USD $278-million).
In November 2009, the bank raised another JPY 1-trillion (USD $11.2-billion) in new capital by a massive securities sale.
Between April and June 2010, MUFG's U.S. subsidiary UnionBanCal took over the operations of Washington state's Frontier Bank and Northern Californian-based Tamalpais Bank from bankruptcy administrator FDIC. Frontier had 51 branches and Tamalpais had seven branches.

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Brazil Bank Mergers & Acquisitions (Unibanco Holdings)

2010-03-30T21:01:00.009-04:00

The Unibanco booth at the International Art Fair of São Paulo in 2008.
Photo credit: ArtExplorer.

You can view ArtExplorer's photostream via this link: http://www.flickr.com/photos/artexplorer/

Unibanco Holdings S.A.

[Unibanco Holdings was acquired by Banco Itaú Holding in 2008.]

Unibanco's predecessor, Casa Moreira Salles was founded in 1924 in southern Minas Gerais when local prominent merchant João Moreira Salles was granted a banking charter. The banking department became a formal bank named Casa Bancária Moreira Salles in 1931.

In 1940, Casa Bancária Moreira Salles merged with two other banks to form the Banco Moreira Salles. In 1941, a branch was opened in Rio de Janeiro, followed by another one in São Paulo. By 1945, Banco Moreira Salles had built a network of 63 branches.

In 1966, Banco Moreira Salles joined up with partners Deltec, Light & Power Co. and the Azevedo Antunes Group to form Banco de Investimento do Brasil (BIB), which specialised in the equity underwriting segment.

In 1967, Banco Moreira Salles and Banco Agrícola Mercantil do Rio Grande do Sul (Agrimer) merged and changed its name to União de Bancos Brasileiros, S.A. or UBB. In 1970, the bank acquired Banco Predial in Rio de Janeiro, a bank that specialized in consumer loans for low-income clients. Between 1972 and 1974, UBB bought out BIB’s minority shareholders and took full control of the bank. To unify its brands and marketing effort, the 15 financial institutions under the UBB umbrella were renamed Unibanco in 1975.

In 1983, Unibanco’s insurance subsidiary Unibanco Seguradora merged with insurer Sul América to form Sul América Unibanco Seguradora, combining Sul América’s industry leading products with Unibanco’s expansive branch network.

Recent transaction(s):

In 1995, Unibanco acquired the banking operations of Banco Nacional S.A., an insolvent bank that had been under state administration. The purchase increased Unibanco's branches to more than 1,400 nationwide.
In 1996, Unibanco acquired 50% of Fininvest, a specialist in consumer finance.
In 1998, Unibanco bought 50% of Banco Dibens, a bank that specialized in automobile financing.
In 2000, Unibanco acquired the remaining 50% interest in Fininvest for USD $245-million. Fininvest had 3 million clients and was one of Brazil's leading consumer finance companies.
Also in 2000, the bank acquired a majority stake in Credibanco from the Bank of New York for BRL 150-million. Credibanco was a small bank but a well-known asset manager.
Also in 2000, the bank acquired Banco Bandeirantes for BRL 1.2-billion from Portugal’s state-owned Caixa Geral de Depósitos, strengthening Unibanco's operations in São Paulo and northeastern Brazil. Banco Bandeirantes had about 500 offices in Brazil.
In 2003, Unibanco acquired Creditec, strengthening the bank’s consumer credit market share.
In 2004, the bank acquired HiperCard from Dutch supermarket chain Koninklijke (Royal) Ahold NV. HiperCard was a private-label credit card issuer in northeastern Brazil with over two million cardholders.
Also in 2004, the bank bought Banco BNL do Brasil from Italy’s Banco Nazionale del Lavoro. Financial terms were not disclosed.
In 2005, Unibanco acquired the rest of Banco Dibens.
In 2008, Banco Itaú Holding acquired Unibanco Holdings to form Brazil and Latin America’s largest bank. The deal was valued at BRL 26.5-billion (USD $12.3-billion). Existing Itaú shareholders would own 66% of the new entity, to be known as Itaú Unibanco Holding S.A., with Unibanco’s shareholders owning the rest. The combination was said to have been spurred by Banco Santander’s purchase of ABN AMRO Banco Real in 2007. Itaú Unibanco would leapfrog state-owned Banco do Brasil to become the nation’s largest bank with 4,800 branches and 30,000 ATMs serving 14.5-million clients.

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Spain Bank Mergers & Acquisitions (Banco Santander)

2010-03-23T20:26:00.021-04:00

Photo: Banco de Santander's old head office building in Santander, northern Spain. Banco Santander celebrated its 150th anniversary in 2007.

With special thanks to Steve Wong for allowing me to use his photo. You can view his photo stream on flickr.com via this link: http://www.flickr.com/photos/wongoz/

Banco Santander, S.A.

(Formerly Banco Santander Central Hispano)

Banco Santander

Banco de Santander was established in the city of Santander in 1857 under a Royal Decree signed by Queen Isabel II. Banco Santander’s home market of Cantabria in northern Spain at the time had strong trading ties with Spain’s colonies in Latin America, and the bank flourished from trade financing between the two continents.

For much of the 20th century, however, Spain endured turbulent times: World War I disrupted the Spanish economy as it did to other European nations. Following the Great War, the Spanish economy recovered and entered a phase of rapid industrialization. But the 1929 Wall Street Stock Market Crash sent shock waves across the Atlantic and a number of major Spanish banks failed, though Banco Santander withstood the crisis. Just two years later in 1931, the Spanish monarchy was yet again replaced by a republic form of government, and political unrest boiled over between the Nationalists and the Republicans. In 1936, Spanish Civil War broke out and devastated the economy and social order that took the country decades to recover.

In 1939, Dictator Francisco Franco’s forces won the civil war and imposed strict political oppression and economic controls. Banks were banned from entering new areas of business but were allowed to merge with each other. Banco Santander acquired Banco de Ávila in 1942, gaining its first foothold in Madrid, and then acquired rival Santander-based Banco Mercantil in 1946. By 1957, Banco Santander’s 100th anniversary, it was the No. 7 bank in Spain.

Banco Santander’s international expansion began in 1960 with the purchase of Argentina's Banco El Hogar Argentino. In 1965, Banco Santander and Bank of America jointly founded the Banco Intercontinental Español (Bankinter). One year later, Santander bought the First Nacional Bank de Puerto Rico, followed by the 1982 purchase of Banco Español-Chile. During the 1980s, the bank established presence across Latin America, in such countries as Brazil, Costa Rica, Dominican Republic, El Salvador, Guatemala and Uruguay.

In 1987, the bank bought auto finance provider CC-Bank in Germany, representing its first acquisition in Europe outside of Spain. It also bought a stake in Portugal's Banco de Comercio e Industria.

By 1994, Banco Santander had built up a 60% stake in Spanish rival Banco Español de Crédito (known as Banesto, founded 1902). In 1995, it launched a major expansion in Latin America including Argentina, Brazil, Colombia, Mexico, Peru and Venezuela. In 1998, the bank took full control of Banco Español de Crédito (Banesto).

Banco Central Hispanoamericano

Banco Central was founded in 1919 in Madrid by several wealthy aristocrats. The new bank took advantage of the post-World War I economic growth and became a major force in financing Spain’s heavy industries such as coal, steel, iron, and shipping. In 1931, like many countries around the world, the Banco de España, formerly a joint-stock commercial bank, became Spain’s central bank and withdrew from the deposit-taking and lending business. Banco Central promptly filled the retail market void left by Banco de España.

During the 1940s and 1950s, Spain’s economy remained severely depressed and underdeveloped compared to most of Western Europe. In 1958, with the help from the International Monetary Fund and other agencies, Spain began to take steps to control its spending and debt, remove its price controls and wage freeze, while encouraging foreign investment. Banco Central once again relied on its expertise in providing long-term credit to finance hydro-electric and petroleum projects. A decade of economic reforms finally led to a gradual rise of the middle-class in the late 1960s. Banco Central then began to expand its retail banking business by offering chequing accounts and consumer credit.

Despite these changes, Spain’s banks, including Banco Central, were still considered smallish, bureaucratic, over-staffed and uncompetitive by international standards. In anticipation of EU’s adoption of the Euro and cross-border competition from other member nations, Spain’s banks entered a phase of frenzy consolidation beginning in the late 1980s.

In 1988, cousins Alberto Alcocer and Alberto Cortina, who were married to sisters Esther and Alicia Koplowitz, owners of Spanish construction giant Construcciones y Contratas (Conycon), attempted to gain control of Banco Central’s board by accumulating a 12% stake in the bank. Banco Central’s chairman then orchestrated a merger plan with Banco Español de Crédito (Banesto) in an attempt to dilute los Albertos’s stake and control. Los Albertos (as Alberto Alcocer and Alberto Cortina were nicknamed by the popular press) responded by buying up a stake in Banesto also to exert influence in both banks. After a nine-month deadlock, los Albertos agreed to sell their stake in Banesto providing that the Banco Central-Banesto merger be called off. In a bizarre twist of events, the Koplowitz sisters divorced their husbands in 1990 following a much publicized extramarital affair conducted by Alberto Cortina, and los Albertos lost their seats in Conycon and Banco Central. Both Banco Central and Banesto’s chairmen survived the assault and kept their positions. Banesto was eventually taken over by Banco Santander, which, following the merger with Banco Central Hispanoamericano, became today’s Banco Santander.

Recent transaction(s):

In 1991, Banco Central took over the ailing Banco Hispanoamericano (founded 1900). The merged bank became known as the Banco Central Hispanoamericano S.A. and promptly cut 10,000 jobs and closed 20% of the branches.
In 1996, Banco Santander acquired 93.4% of Banco de Venezuela from the Venezuelan government for about USD $351-million. Founded in 1890, the bank was nationalized in 1994 before being sold to Banco Santander. In 2008, Venezuela once again nationalized Banco de Venezuela.
In early 1999, Banco Santander bid USD $12.6-billion for Banco Central Hispanoamericano to form the new Banco Santander Central Hispano (BSCH).
Later in 1999, BSCH also bought Banco Totta & Açores and Crédito Predial Português, gaining a 10% market share (1999 figure) in Portugal. BSCH had intended to buy all four banks controlled by the Champalimaud Group, but its proposal was opposed by the Portuguese government. The European Union subsequently ruled against Portugal and forced it to approve the sale of Totta & Açores and Crédito Predial Português to BSCH.
In 2000, BSCH bought a 66.5% voting stake (33% economic stake) in Brazil's No. 3 bank Banco do Estado de Sao Paolo (known as Banespa) for USD $3.80-billion (Eur 4.38-billion). Within a few months, BSCH acquired the rest of Banespa for another USD $1.07-billion (Eur 1.20-billion), bringing the total cost to USD $4.87-billion (Eur 5.58-billion). Banespa had 577 branches in Brazil.
Also in 2000, BSCH bought 97% of Brazil's Grupo Financeiro Meridional S.A., consisting of Banco Meridional and Banco de Inversiones Bozano Simonsen.
Also in 2000, BSCH bought Mexico's Grupo Financiero Serfín from Mexico's government-controlled banking regulator Instituto para la Porteccíon al Ahorro Bancario (IPAB).
Also in 2000, BSCH acquired a stake in Chile's Banco Santiago.
Also in 2000, BSCH bought Venezuela's Banco de Caracas. BSCH then merged Banco de Caracas into its 97%-owned Banco de Venezuela to create the country's largest bank.
Also in 2000, BSCH bought 75% of Miami-based Internet-based brokerage company Patagon.com International for USD $529-million. Patagon.com specialized in the Spanish- and Portuguese-speaking markets in Latin America.
In 2002, BSCH bought a further 35.45% of Banco Santiago from the Chilean central bank for USD $685-million (Eur 772-million). BSCH subsequently merged Banco Santiago into its Banco Santander Chile subsidiary.
In 2002, BSCH sold 24.9% of Mexico's Grupo Financiero Santander Serfín to Bank of America for USD $1.60-billion.
In 2003, BSCH bought Italian consumer finance company Fincosumo from Italy's Sanpaolo IMI for Eur 140-million.
In 2004, BSCH made a surprise GBP 8.5-billion (USD $15.75-billion) bid for British mortgage bank Abbey National. This represented the first cross-border acquisition of a major British bank by a Eurozone bank. Back in 2001, the British anti-competition commission vetoed Lloyds TSB's bid to take over Abbey National.
In 2005, in a complex agreement, BSCH bought 19.9% of U.S. bank Sovereign Bancorp for USD $2.4-billion. In turn, Sovereign Bancorp took over Brooklyn, New York-based Independence Community Bank Corp. for USD $3.6-billion.
In 2006, BSCH's Abbey National plc subsidiary agreed to sell its life insurance businesses to Resolution plc for GBP 3.6-billion. The sale mainly consisted of Scottish Mutual Assurance plc, Scottish Provident Ltd. and Abbey National Life plc.
In 2007, BSCH sold its pension fund management business in Mexico, Chile, Colombia and Uruguay to the Netherlands' ING Groep for Eur 945-million (USD $1.3-billion). The business division sold to ING had more than Eur 13.8-billion (USD $19.9-billion) of assets under management. BSCH planned to use the proceeds to fund its share of the proposed Eur 71.1-billion (USD $98.1-billion) offer (with RBS and Fortis) for ABN Amro Holding NV (see below).
In June 2007, Banco Santander Central Hispano, S.A. changed its name to Banco Santander, S.A.
In October 2007, after a six-month battle with Barclays plc, Banco Santander SA, along with Fortis SA/NV and The Royal Bank of Scotland Group plc, won the control of ABN AMRO Holding NV with a Eur 70.0-billion (USD $101.1-billion) cash-and-stock offer. The deal was the world's biggest banking merger ever. The tri-bank consortium planned to break up ABN AMRO's global operations with Banco Santander taking over ABN AMRO's Brazilian and Italian operations, namely Banco ABN AMRO Real and Banca Antonveneta. Click here for a detailed timeline of the battle for ABN AMRO Holding.
In November 2007, in a surprise move, Banco Santander "flipped" ABN AMRO's Italian unit Banca Antonveneta to Italy's Banca Monte dei Paschi di Siena (MPS) for Eur 9.0-billion (USD $13.21-billion). Banco Santander, Fortis and the Royal Bank of Scotland (RBS) had just jointly bought out ABN AMRO Holding NV (including Banca Antonveneta) for Euro 70.0-billion (USD $101.1-billion) deal less than a month earlier.
In 2008, Santander and GE Money reached a deal to swap European assets worth Eur 2.0-billion (USD $3.16-billion) in total. Under the agreement, Santander obtained GE Money's German, Finnish and Austrian divisions, plus its credit card and automotive financing operations in Britain. In exchange, GE Money took control of Santander's Interbanca, the corporate banking unit of Italy's Banca Antonveneta that was purchased by Santander in 2007 as part of ABN AMRO Holding NV.
In 2008, Santander bought British mortgage bank Alliance and Leicester plc for GBP 1.26-billion (Eur 1.58-billion, USD $2.51-billion). Alliance and Leicester shares had been languishing since the U.S. housing bust and global banking crisis began in early 2007. With Alliance and Leicester's 254-branch network, Santander would have 959 branches in the United Kingdom and 7.6% of the market.
In 2008, Venezuelan de facto dictator President Hugo Chavez announced that the country would nationalize Banco Santander's local unit Banco de Venezuela.
British mortgage bank Bradford & Bingley plc became insolvent over the 2008-09-29 weekend, and was nationalized by the British government. Under a complex transaction, Banco Santander acquired Bradford & Bingley's client deposits and 197 branches for GBP 612-million (Eur 766-million, USD $1.11-billion). Banco Santander already owned Britain's mortgage lenders Abbey National and Alliance & Leicester. The Bank of England and HM Treasury provided GBP 19.1-billion (USD $34.5-billion) of guarantees to Santander to take over the lender. The British government would be left with Bradford & Bingley's mortgage loan, personal loan and other assets with a book value of GBP 50-billion. The government insisted that it would get the GBP 19.1-billion back by either slowly selling off Bradford & Bingley's loan portfolios, or when the borrowers repay their loans.
In October 2008, Santander privatized Sovereign Bancorp Inc. for USD $1.9-billion in stock. Santander first acquired 24.9% of Sovereign for USD $2.9-billion between 2005 and 2006, the current price of USD $1.9-billion for the remaining 75.1% highlighted how much bank valuation has dropped during the Great Banking Crisis of 2008.
In May 2009, the Venezuelan government and Banco Santander reached a deal regarding the nationalization of Banco de Venezuela. Venezuela paid USD $1.05-billion to Banco Santander in cash and promissory notes to take control of Banco Venezuela, the country’s No. 1 bank with more than 300 branches.
In October 2009, Santander sold 18.5% of its Brazilian unit Banco Santander (Brasil) S.A. in an IPO and raised BRL 14.1-billion (Eur 5.47-billion, USD $8.09-billion). Santander Brasil included the former Banespa and Banco Real, and had 3,612 branches and more than 21-million clients with a 10% market share.
In June 2010, Santander bought back the 24.9% of Santander Mexico held by Bank of America since 2003 for USD $2.5-billion. Santander was Mexico's No. 3 bank.
Also in June 2010, Santander bought a USD $3.2-billion (Eur 2.59-billion) auto loan portfolio from CitiFinancial Auto at 99% of the portfolio's face value.
In August 2010, Santander bought from the Royal Bank of Scotland 311 RBS branches in England and Wales, and 7 NatWest branches in Scotland for Eur 1.99-billion (GBP 1.65-billion, USD $2.63-billion). The 318 branches served 1.8-million clients. Following the the purchase, Santander would have over 1,600 branches in the U.K.
In September 2010, Santander agreed to buy the 70.4% of Poland's Bank Zachodni WBK S.A. and 50% of BZWBK AIB Asset Management held by Allied Irish Banks plc for Eur 3.09-billion (USD $3.97-billion). Bank Zachodni WBK was Poland's No. 3 bank and had 512 offices.
In February 2010, Santander made a public tender offer to buy out the 29.6% minority shareholding of Poland's Bank Zachodni WBK. The latest offer valued the entire Bank Zachodni WBK at PLN 16.58-billion (Eur 4.29-billion, USD $5.83-billion).

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France Bank Mergers & Acquisitions (Crédit Agricole)

2010-03-14T17:14:00.016-04:00

Photo: Crédit Agricole is a major sponsor of the competitive cycling races. Seen here is crowd favourite Norwegian champion Thor Hushovd during stage 3 of the Amgen Tour of California competition in February 2007. Crédit Agricole’s stylized "CA" logos can be seen all over his team jersey.

With special thanks to Mike Norris for granting me the permission to use this photo. You can see more of Mike Norris' other photographs via this link: http://www.flickr.com/photos/mnorri/

Crédit Agricole S.A.

The present-day Crédit Agricole group can trace its history to three major financial institutions: the original Crédit Agricole group of agricultural credit unions, Banque Indosuez and Crédit Lyonnais.

Banque Indosuez (Banque de l’Indochine and Banque de Suez et de l’Union des Mines)

Banque de l’Indochine was established in Paris in 1875 to issue banknotes and to provide banking services in Indochina (Vietnam, then a French colony). From its Saigon (Ho Chi Minh City) base, the bank opened branches in Haiphong in 1885 and Hanoi in 1887. In China, the bank opened branches in Canton (Guangzhou), Shanghai, Tientsin (Tianjin) and Peking (Beijing) during the 1890s and 1900s, where the bank financed French-owned infrastructures, underwrote Imperial China’s sovereign debts, as well as provided trade financing. The bank began operating in Hong Kong in 1894 and Singapore in 1905, and also operated in other parts of Southeast Asia such as Thailand.

Outside of the Far East, the Banque de l’Indochine operated in Tahiti and New Caledonia, both French territories in the Pacific, as well as in French Somaliland (present-day Djibouti).

The Compagnie universelle du canal maritime de Suez was created in 1858 to build a maritime passage in Egypt to link the Mediterranean Sea with the Red Sea. The 160-km Suez Canal opened for business in 1869, greatly shortening the voyage between Europe and the Indian Ocean. In 1875, Egypt sold its 44% stake in the canal to Britain following an economic and fiscal crisis.

In 1956, a political crisis over the sovereignty and control of the Suez Canal led to its nationalization by Egypt. Having lost its investment in the canal, the Compagnie universelle du canal maritime de Suez transformed itself into the Compagnie Financière de Suez in 1958. A bank subsidiary was created by Suez one year later. In 1966, the Banque de la Compagnie Financière de Suez was renamed Banque de Suez et de l’Union des Mines.

In 1974, the Banque de l’Indochine and Banque de Suez et de l’Union des Mines merged to form the Banque de l’Indochine et de Suez, combining their Asian operations and corporate banking specialties together. The bank’s name was subsequently shortened to Banque Indosuez. Crédit Agricole acquired Banque Indosuez between 1995 and 1996.

Crédit Agricole

Crédit Agricole was created in 1894 by the French parliament to establish co-operative, agricultural credit unions to facilitate lending to small family farms. These private-sector co-operatives were created locally and owned mutually by their clients (members).

However, the mere creation of the agricultural credit unions failed to ease lending for the small farms. The credit unions were poorly-capitalized and the farmers often were too poor to make meaningful deposits to the banks, or lacked the appropriate collateral to obtain loans. Between 1898 and 1899, the French government requested the Banque de France to accept the discounted notes from Crédit Agricole’s credit unions, as well as to inject 40-million francs into the banks. Crédit Agricole then set up nine Caisses Régionales de Crédit Agricole Mutuel (the "regional banks") to co-ordinate and to manage the local credit unions.

In 1920, the Ministry of Agriculture created a national-level entity to act as the central, clearing bank for the caisses régionales and their local credit unions. In 1926, this public-sector entity was renamed the Caisse National de Crédit Agricole (CNCA). The credit unions provided loans to farmers, rural tradesmen, and during the 1920s and 1930s, financed the electrification of the French countryside. Throughout the Depression years, a number of agricultural credit unions encountered liquidity challenges and had to be bailed out by CNCA.

Following the end of World War II, Crédit Agricole opened thousands of new offices all over the French countryside and greatly expanded its retail deposit base. Gradually, Crédit Agricole's funding source moved away from the French state and became self-reliant. In 1959, for the first time the credit unions were allowed by the government to offer mortgage loans to all rural customers, regardless of their membership status in the co-operatives. It was only in 1991, however, when the last restrictions on Crédit Agricole's permitted activities (in terms of the ability to deal with both personal and corporate clients) were eliminated.

During the 1960s, in preparation for the creation of the Common Market (the predecessor of the European Union), the bank implemented a modernization plan in such aspects as management, corporate governance, as well as product lines. Crédit Agricole was finally given financial autonomy in 1966, and deposits were no longer required to pass through the French Treasury. CNCA was now solely responsible for the profits and losses of the caisses régionales.

In 1988, umbrella entity CNCA became a joint-stock company and was semi-demutualized (but not floated on the stock market). Ninety percent of CNCA’s shares were distributed to the caisses régionales in proportion to their total assets, with the rest of the shares distributed to the banks’ then and former employees. However, as the caisses régionales were still mutually-owned by their members, the CNCA group had a complex corporate structure where the umbrella entity was a joint-stock company owned and controlled by its subsidiaries, which were in turn mutually-owned by the members. At this point, CNCA still did not own any of the caisses régionales or the local credit unions that carried out the bulk of the business.

In 2001, CNCA was re-named Crédit Agricole S.A. and acquired 25% stakes in 38 of the 39 caisses régionales and the more than 2,000 local credit unions. At the same time, the caisses régionales sold part of their holdings in Crédit Agricole S.A. on the Paris stock exchange. With these manoeuvres, the mutually-owned caisses régionales and Crédit Agricole S.A. now cross-held each other. As of 2009, Crédit Agricole S.A. controlled 25% of 38 of the 39 caisses régionales, as well as all of Le Crédit Lyonnais. The caisses régionales in turn collectively held 55% of Crédit Agricole S.A., with the remaining 45% of Crédit Agricole S.A. shares in free float.

Crédit Lyonnais (Le Crédit Lyonnais)

Situated in southeastern France, Lyon was a major commercial centre during the Renaissance and its trade fairs were well-known across Europe. In the 18th and 19th centuries, Lyon’s businessmen turned the city into an important banking and silk-trading and manufacturing centre.

Crédit Lyonnais was established in 1863 as a deposit bank for the local businesses. In 1870, the bank moved some of its securities and physical assets to London for safekeeping due to the Franco-Prussian War, the London office became the bank’s first foreign branch. During the 1870s, the bank expanded rapidly in southeastern France as well as in Paris. By 1900, the bank had a network of 200 branches in France, and 20 overseas offices in Constantinople (Istanbul), Alexandria, Geneva, Madrid, Vienna, St. Petersburg and Moscow. In 1887, when Bismarck forced the German banks to curtail their lending to Russia, French banks, including Crédit Lyonnais, took over a large percentage of Russia’s foreign borrowing.

By the turn of the 20th century, Crédit Lyonnais had become the world’s largest bank in terms of assets. However, World War I changed everything for the bank. After the 1917 revolution, the Bolsheviks confiscated all foreign businesses in Russia, and refused to honour Russia’s debt incurred during the Tsarist era. France’s losses in Russia is said to have been USD $4-billion.

Crédit Lyonnais suffered, but survived, the difficult inter-war years and World War II. In 1946, however, the freshly-liberated France decided to nationalize the Banque de France, plus the country’s four largest commercial banks, including Crédit Lyonnais.

Under state control, ambitious overseas expansion began in the 1970s in Europe, Asia and the U.S. During the 1980s, French politics swung between socialist and right-wing ideology, and the privatization of Crédit Lyonnais was debated but did not materialize.

In the 1990s, however, a series of corporate scandals hit Crédit Lyonnais; the most infamous one involved the bank’s Dutch unit lending USD $1-billion to Giancarlo Parretti to take over Metro-Goldwyn-Mayer in 1990. MGM went bankrupt almost right away, causing a huge loss at the bank. The bank also suffered enormous losses from bad loans made to Olympia & York and other real estate developers. In 1995, Crédit Lyonnais sold its Brazilian unit Banco Francês e Brasileiro (BFB) to Banco Itaú (now Itaú Unibanco).

After a series of state-imposed reforms, Crédit Lyonnais was floated on the Paris stock exchange in 1999. In 2003, the bank was taken over by Crédit Agricole.

Recent transaction(s):

In July 1995, Crédit Agricole acquired 51% of Banque Indosuez from the Suez group for FFr 6.3-billion. In December 1996, Crédit Agricole bought the remaining 49% of Banque Indosuez for FFr 5.6-billion. The entire Banque Indosuez cost about USD $2.2-billion. Crédit Agricole’s investment banking and capital market operations were combined with those of Banque Indosuez to form Crédit Agricole Indosuez.
In 2001, Crédit Agricole bought 81% of Poland's Lukas S.A. and Lukas Bank. Lukas Bank had about 100 branches in the country.
Crédit Agricole first took a 10% stake in fellow French bank Crédit Lyonnais in 1999 when the latter was privatized. By 2002, both BNP Paribas and Crédit Agricole were actively buying up shares of Crédit Lyonnais in an attempt to gain control. Crédit Agricole, then holding a 17.4% of Crédit Lyonnais, offered Eur 16.0-billion (USD $16.5-billion) for the 82.6% shares it didn't yet own, and eventually received approval from the French government in 2003 to acquire all of Crédit Lyonnais. The French government was said to favour Crédit Agricole's offer over BNP Paribas' proposal because the government was still upset by BNP's very public and hostile takeover battle with Société Générale for Paribas in 2000. Crédit Lyonnais was subsequently re-branded as Le Crédit Lyonnais (LCL).
In 2004, Crédit Agricole merged Crédit Agricole Indosuez with Crédit Lyonnais' investment banking division to form a new company named Calyon, combining the CA initials with the “lyon” part of Crédit Lyonnais. In 2010, Calyon was renamed Crédit Agricole Corporate & Investment Bank.
In 2005, Crédit Agricole bought 71% of Serbia’s Meridian Bank AD.
In 2006, the bank bought in 50/50 partnership with Portugal's Banco Espirito Santo life insurer Tranqulidade Vida for Eur 900-million.
In 2006, the bank acquired JSC Index Bank of Ukraine for USH 1.33-billion (Eur 220-million). JSC Index had more than 200 offices in the country.
In 2006, Crédit Agricole made an offer to acquire all outstanding shares of Greece’s Emporiki Bank for Eur 25 per share. The offer valued the entire Greek bank at Eur 3.3-billion. Emporiki had 370 branches in Greece and dozens more in the Balkans. Crédit Agricole eventually gained about 72% of the bank.
In 2006, Banca Intesa agreed to sell 652 branches in northern Italy to Crédit Agricole for Eur 6.0-billion (USD $7.52-billion) as compensation for the French bank's loss of influence over Banca Intesa. Crédit Agricole's 18% stake in Banca Intesa would be diluted to just about 10% after the Intesa-Sanpaolo IMI merger. As Crédit Agricole was determined to maintain a significant presence in Italy, it agreed to support Banca Intesa's purchase of Sanpaolo IMI in exchange for some Italian branches and clients.
In 2006, Crédit Agricole approached British mortgage bank Alliance & Leicester for a possible acquisition. Rumours at the time suggested that Crédit Agricole offered GBP 5.2-billion to 5.8-billion for Alliance & Leicester. However, the British bank spurned the offer and the French bank walked away. Just merely two years later, Alliance & Leicester was in such financial distress during the global credit crisis that it accepted a much lower GBP 1.26-billion offer from Spanish bank Banco Santander in July 2008.
In 2007, the bank acquired an additional 14.99% stake in Spain's Bankinter SA for Eur 809-million (USD $1.20-billion). Following the purchase, Crédit Agricole would own 19.53% of Bankinter SA. Bankinter was founded in 1965 by Banco Santander and Bank of America as an industrial bank. Bankinter gained independence from the two founding banks in 1972 when it was listed on the Madrid stock exchange. Bankinter has since expanded into the retail banking sector and had a network of 347 branches. However, some analysts criticised the high price Crédit Agricole paid for Bankinter.
In July 2008, Crédit Agricole raised Eur 5.9-billion from the market by issuing preferred securities.
In October 2008, the French government injected Eur 10.5-billion to the banking system in the form of subordinated debt during the global credit crisis. Banque Populaire obtained Eur 950-million from the state; BNP Paribas obtained Eur 2.55-billion; Caisse d'Epargne obtained Eur 1.1-billion, Crédit Agricole obtained Eur 3-billion; Crédit Mutuel obtained Eur 1.2-billion; Société Générale obtained Eur 1.7-billion.
In early 2009, Crédit Agricole and rival Société Générale agreed to merge their asset management operations into a new firm called Amundi Asset Management. Crédit Agricole would own 75% of Amundi and Société Générale would own the rest. Amundi would have Eur 638-billion (USD $827-billion) under management and would become the fourth biggest manager in Europe. The two French banks agreed to maintain their stake for five years, but planned to launch an IPO eventually.
In October 2009, Crédit Agricole repaid the Eur 3-billion (USD $4.46-billion) in state aid it received from the French government.

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Australia Bank Mergers & Acquisitions (Commonweath Bank of Australia)

2010-03-14T16:52:00.007-04:00

Photo: The Commonwealth Bank Building in Sydney, Australia.

With special thanks to Jeffrey Lee of Sydney, who kindly gave me permission to use his photo here. You can see more of his photographs via this link: http://www.flickr.com/photos/jeffrey_lee/

Commonwealth Bank of Australia

The Commonwealth Bank of Australia (CBA) was established by the Australian government under legislation in 1911. The bank was fully backed by the Australian government, the sole bank in the country with such a federal government guarantee.

In 1920, the Commonwealth Bank gained even more power when the Note Issue Board was created under the bank to assume the responsibility to issue the Australian currency on behalf of the Federal Treasury. The Commonwealth thus gained the characteristics of both a central bank as well as a savings bank. During the Great Depression, the bank expanded greatly when it took over the State Savings Bank of Western Australia and State Savings Bank of New South Wales.

Between the 1900s and 1940s, national governments around the world gradually separated central banking functions (issuance of currency, control on interest rates, management of national debt, and regulation of the banking sector etc.) from commercial banking activities (savings, lending and cash transactions for the general public). The Commonwealth’s full government guarantee and its de facto central bank status gave it unfair advantages over other pure commercial banks. After much scrutiny and controversies, the Commonwealth Bank Act and the Reserve Bank Act were passed in 1959, resulting in the creation of The Reserve Bank of Australia, which took control of all central banking functions in 1960. The Commonwealth Bank was now purely a state-owned savings and loan bank.

In 1989, the Commonwealth acquired 75% of New Zealand's ASB Bank Ltd. An important milestone in Commonwealth's history happened in 1991 when the bank was re-structured as a public company and ceased to be part of the government in the form of a statutory authority. Between 1991 and 1996, the Australian government sold off its entire holdings in the Commonwealth to the public.

Recent transaction(s):

In 1991, the Commonwealth Bank merged with the State Bank of Victoria.
In 2000, the Commonwealth Bank acquired Colonial Ltd. (including the Colonial National Bank) for AUD $9.0-billion.
In 2007, the Commonwealth bought Australia's No. 3 on-line stockbroker IWL Ltd. for AUD $373-million (USD $320-million).
In 2008, CBA acquired Australia’s BankWest (Bank of Western Australia) and insurer and asset management firm St. Andrew’s Australia Pty. Ltd. from ailing Britain’s HBOS plc for AUD $2.1-billion (GBP 808-million, USD $1.4-billion) in cash. HBOS had been close to financial insolvency and had just agreed to a sale to rival Lloyds TSB Group weeks earlier. HBOS plc would also receive AUD $360-million from a return of excess capital in BankWest, raising the total sale proceeds to AUD $2.5-billion (GBP 963-million, USD $1.66-billion).
In late 2008, CBA announced it would buy up to AUD $4-billion (USD $2.7-billion) of mortgage loans from a General Electric Co. unit called Wizard Mortgage Corp. The loan portfolio is 100% insured. General Electric’s Wizard already sold its brand and 160-branch network to Aussie Home Loans, a mortgage provider that is 33% owned by Commonwealth Bank. Terms of the transaction were not disclosed.
In March 2010, CBA sold its St. Andrew's insurance division to the Bank of Queensland for an undisclosed amount. St. Andrew's had about 165,000 policyholders.

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Australia Bank Mergers & Acquisitions (National Australia Bank)

2010-03-14T16:40:00.010-04:00

National Australia Bank Group

National Bank of Australasia was founded in 1858 but it failed in the 1893 Banking Crisis when the Australian real estate bubble burst. Later in the same year, the bank re-emerged as National Australia Bank Ltd. Today, the initials NAB are commonly used.

In 1987, National Australia Bank purchased Scotland's Clydesdale Bank (founded in 1838) and Northern Ireland's Northern Bank (founded in 1809) from Britain's Midland Bank. Clydesdale Bank is one of the three banks authorised to issue Pound Sterling banknotes in Scotland, whereas Northern Bank is one of the four authorised to issue Pound Sterling banknotes in Northern Ireland.

In 1990, National Australia purchased England's Yorkshire Bank (founded in 1859) for GBP 976-million, and this was followed by the acquisition of the Bank of New Zealand (founded in 1861) in 1992.

Recent transaction(s):

In 2001, National Australia sold Michigan National Bank in the U.S. to ABN AMRO Holding NV for USD $2.75-billion.
Also in 2001, National Australia sold its mortgage finance division HomeSide and wrote down its investment by AUD $3.5-billion.
In 2005, National Australia Bank sold its Irish and Northern Irish banking operations (National Irish Bank and Northern Bank) to Denmark's Danske Bank A/S for GBP 967-million.
In 2007, NAB bought Sioux Falls, South Dakota-based Great Western Bancorporation for AUD $ 900-million (USD $798-million). Great Western is privately-owned and had over 100 branches in South Dakota, Iowa, Nebraska, Kansas, Missouri and Arizona. NAB said that the purchase would be an important move for its expansion in the farm financing area.
In 2009, NAB bought Aviva plc's Aviva Australia Holdings for AUD $825-million (GBP 403-million), plus up to another AUD $100-million in adjustments after the completion of the deal.
In August 2009, NAB bought the mortgage unit of Challenger Financial Services for AUD $385-million (USD $316-million). The unit had AUD $4-billion worth of loans.
In December 2009, NAB offered to take over AXA Asia Pacific Holdings Ltd. for AUD $13.3-billion (Eur 8.22-billion, USD $11.83-billion) in cash and NAB shares, on the condition that French insurance giant AXA S.A. agreeing to buy AXA Asia Pacific's operations in Hong Kong, China, Thailand, Malaysia, Singapore, Indonesia, the Philippines and India for AUD $8.69-billion. That would leave NAB with AXA Asia Pacific's Australian and New Zealand operations at a net cost of AUD $4.61-billion. AXA S.A. currently owned 54% of AXA Asia Pacific, with the rest of the shares being publicly-traded. Earlier, AXA S.A. and Australian insurer AMP had agreed to acquire AXA Asia Pacific for AUD $12.85-billion in cash and AMP shares, with AMP keeping the Australian and New Zealand units and selling the rest of the Asian operations to AXA S.A.
In April 2010, Australia's competition watchdog unexpectedly blocked NAB's plan to take over AXA Asia Pacific, opening the door for AMP to renew its expired bid. NAB formally terminated its bid for AXA Asia Pacific in September 2010 after failing to appease the competition authority's opposition.

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Australia Bank Mergers & Acquisitions (Bank of Queesland, Bendigo & Adelaide Bank)

2010-03-14T16:33:00.005-04:00

Bank of Queensland Ltd.

Bank of Queensland was established in 1874 as The Brisbane Permanent Benefit Building and Investment Society. In 1887, the building society converted to the commercial bank form. The name Bank of Queensland was adopted in 1970, though it wasn’t until 1985 that the bank’s first branches outside of Brisbane – in Cairns and Townsville – were opened. Between 2001 and 2004, BOQ entered into a phase of rapid expansion and opened 55 branches within the state of Queensland, and launched an initiative to expand outside the state.

Recent transaction(s):

In 2006, Bank of Queensland (BOQ) acquired Mackay, Queensland-based Pioneer Building Society for AUD $50-million. Pioneer operated a network of branches in central and northern Queensland.
In 2007, BOQ bought Home Building Society for AUD $592-million. The purchase gave Bank of Queensland a major network in Western Australia.
In 2007, Bank of Queensland made a hostile offer to purchase Bendigo Bank Ltd. for AUD $2.5-billion (USD $2.0-billion). Bendigo Bank was founded in 1858 near the Bendigo goldfield to offer banking service for the gold miners. The combined bank would have had a network of 575 branches in Australia; however, Bendigo Bank’s management rebuffed Bank of Queensland’s proposal. Later in 2007, Bendigo Bank agreed to take over Adelaide Bank to form the Bendigo and Adelaide Bank, and Bank of Queensland’s proposal failed.
In March 2010, BOQ acquired St. Andrew's insurance business from the Commonwealth Bank of Australia for an undisclosed amount. St. Andrew's had about 165,000 policyholders.

Bendigo and Adelaide Bank Ltd.

Bendigo Bank was founded in 1858 near the Bendigo goldfield to offer banking service for the gold miners.

Recent transaction(s):

In 2007, after rebuffing Bank of Queensland's AUD $2.5-billion (USD $2.0-billion) offer to merge, Bendigo Bank Ltd. agreed to acquire Adelaide Bank Ltd. for AUD $1.9-billion (USD $1.6-billion). The new bank was renamed Bendigo and Adelaide Bank Ltd. Adelaide Bank's 25 branches would be added to Bendigo's 357-branch network.

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United States Bank Mergers & Acquisitions (Wells Fargo & Co.)

2010-03-04T18:02:00.009-05:00

Photo: An Overland Stage Coach offering tours to visitors is seen outside a former Wells Fargo & Co. and Overland Mail store in Virginia City, Montana.

With special thanks to Nancy Sharp for the use of this photo. You can view her photos on-line via this link: http://www.flickr.com/photos/8665131@N04/527965300/

Wells Fargo & Co.

Of all American banks, Wells Fargo & Company probably has the most storied past. Thanks to countless Western cowboy tales, the name Wells Fargo is immediately associated, not just in America but around the world, with images of gun-shooting bandits chasing down thundering horse-drawn coaches in the Wild Wild West, where whoever had the bigger gun was the law.

First Interstate Bancorp

First Interstate Bancorp, which in later years became part of Wells Fargo & Co., was initially related to both Transamerica Corp. and Bank of America. In 1904, Amadeo P. Giannini established the Bank of Italy in San Francisco, which eventually became the Bank of America. In 1930, Mr. Giannini acquired other banking and insurance interests in both the East and West Coasts and placed them under a holding company called Transamerica Corp.

In 1956, the passing of the Bank Holding Company Act prohibited a holding company from owning both bank and non-bank businesses. Transamerica decided to focus on the insurance business and spun off its banking operations consisting of 23 banks in 11 states as FirstAmerica Corp., as well as California’s Bank of America. In 1961, FirstAmerica changed its name to Western Bancorporation to reflect its strong West Coast focus.

In 1981, Western Bancorporation decided to de-emphasize its regional identity and once again changed its name to First Interstate Bancorp.

Norwest Corporation

Norwest Corp.'s history goes back to 1929, when the Northwestern National Bank of Minneapolis and several small Midwestern banks joined forces to form the Northwest Bancorporation. This was one of the two banking co-operatives established in Minneapolis in 1929, the other being the First Bank System Inc., which later became U.S. Bancorp. Northwest Bancorporation, commonly known as Banco, soon acquired more affiliates and by 1932, there were 132 member banks. Banco was one of the three banks exempted from the McFadden Act of 1927, the law that prohibited banks based in one state from opening branches out-of-state. The other two banks exempted from the McFadden Act were the First Bank System (present-day U.S. Bancorp) and Western Bancorporation (name subsequently changed to First Interstate Bancorp) which eventually also became part of Wells Fargo & Co. in 1996.

During the 1930s Depression, Banco was able to quickly redeploy capital from the healthier member-banks to those in financial distress and as a result, not a single Banco member-bank went under. During the 1970s, the largely autonomous members under the Banco umbrella began to unify and integrate their strategic planning, marketing, data processing, fund management and loan syndication efforts. By the late 1970's, Banco consisted of 85 member banks stretching across seven states: Minnesota, Wisconsin, Iowa, Nebraska, North and South Dakotas, and Montana.

In 1983, Northwest Bancorporation changed its name to Norwest Corporation, curiously dropping any reference to its core business of banking. In the same year, Norwest bought Iowa-based Dial Corp., a consumer loans company with operations in 38 states. Further expansion in the 1990s saw Norwest moving into the Indiana, Illinois, Colorado, New Mexico and Texas markets. Countering the 1990s trend towards ATM and telephone banking, Norwest stuck to branch-banking, emphasizing on building personal relationships with its clients, and on cross-selling financial products from basic banking accounts to mortgage and consumer loans.

Wells Fargo & Co.

Back in the 1830s, the Western frontier of the U.S. was wild, lawless, and undeveloped in many aspects. Everything from money and currency to foods, clothes, furniture, utensils and tools, and machineries and building materials were in short supply. Settlers often needed to import these “luxury” items from the East Coast, where the society was much more advanced and organized.

Unbeknownst to many, Wells Fargo & Co. was related to the American Express Co. In 1841 Vermont native Henry Wells established the Wells & Co. to provide express service between New York City and the upstate port of Buffalo. In 1850, Wells & Co. joined forces with rivals Livingston, Fargo & Co. and Wasson & Co. to form the American Express Co. At this point, American Express’ focus was sill in the U.S. Northeast, with limited service to the Midwestern states of Illinois, Ohio and Iowa. Foreseeing the great potential of the West Coast market, Henry Wells and William G. Fargo soon proposed expanding American Express’ service to California, but the company’s other directors balked at the risky move. Undaunted and determined, Mr. Wells and Mr. Fargo left American Express and New York for San Francisco to launch their own Wells, Fargo & Co. in 1852, offering gold trading (gold dust, bullion and coins), safekeeping as well as freight forwarding and delivery services.

Before long, Wells, Fargo appointed agents in other towns and gold mining camps in the West Coast. The company gained a reputation of trust by dealing rapidly and securely with clients’ money and goods. It also offered basic financial services like money orders, travellers’ cheques, and transfer of funds by telegraph.

Wells, Fargo was also known to deploy the fastest mode of transport whenever possible, whether it was stagecoach, steamship, railroad, pony rider or telegraph. In the 1850s and 1860s, the firm was involved with the Overland Mail Company (the famous Butterfield Line) as well as the Pony Express. Rolling across 2,700 miles of open land, deserts, mountainous passes, and crossing rivers, Wells Fargo delivered goods and gold from St. Louis to Los Angeles and San Francisco twice a week on a 25-day journey.

Following the completion of the transcontinental railway in 1869, Wells, Fargo’s overland trans-continental network was dismantled as the railway offered a much faster alternative. However, localized stagecoach services continued where the railroad did not reach. Wells, Fargo established itself as the first nationwide express company connecting 2,500 communities in 25 states. From the urban and industrial Northeast to the transportation hubs of Chicago and St. Louis, the agricultural Midwest, the ranches in Texas, the mining communities in Arizona and lumber mills in the Pacific Northwest, Wells, Fargo picked up and delivered goods of all sorts, and issued and cashed bank drafts, travellers cheques, conducted fund transfers by telegraph, and safe-guarded gold and other valuables.

In 1905, “Wells Fargo & Co.’s Bank, San Francisco” was formally separated from Wells Fargo & Co. Express. Wells Fargo & Co’s Bank then merged with Nevada National Bank to form the Wells Fargo Nevada National Bank. The bank’s building, however, was destroyed in the 1906 San Francisco Earthquake, but the bank’s vault and precious metals reserves were left intact, and the bank survived the disaster.

Wells Fargo Nevada National Bank acquired the Union Trust Co. in 1923 and in 1960 acquired the American Trust Company, a northern Californian bank with an extensive branch network. Following a few name changes, the name Wells Fargo Bank was adopted in 1962. In 1968, the bank switched from a state charter to a national one.

Federal legislation changes in the 1980s allowed the bank to provide state-wide banking by expanding into southern California. In 1986, Wells Fargo acquired Crocker National Bank for USD $1.1-billion from Britain’s Midland Bank. Just two years later, it acquired Barclays Bank of California.

Further banking reforms in the 1990s finally permitted Wells Fargo to return to other Western, Midwestern and Eastern states, some 80 years after its express business was nationalized in 1918.

Recent transaction(s):

In 1996, Wells Fargo & Co. bought First Interstate Bancorp for USD $12.31-billion. However, the integration of Wells Fargo and First Interstate proved challenging: Wells Fargo had been at the forefront of high-tech banking and indeed was the first major bank to offer Internet banking back in 1995; meanwhile, First Interstate had always prided its personal, relationship banking offered at the branch level. Computer glitches during the integration soon led to "lost" customer deposits, bounced cheques, and long line-ups. Customers in droves left Wells Fargo for other banks.
In 1998, as Wells Fargo was weakened due to its much-criticized integration issues, Norwest Corp. acquired Wells Fargo & Co. for USD $34.61-billion but decided to keep the Wells Fargo name as well as its San Francisco headquarters. Learning from the Wells Fargo-First Interstate lesson, the Norwest-Wells Fargo integration proceeded much more smoothly.
In 2000, the new Wells Fargo acquired small banks in Michigan, Texas, Alaska and Nebraska.
In 2000, Wells Fargo acquired Utah's largest bank First Security Corp. for USD $2.9-billion.
In 2007, the bank bought Sacramento-based Placer Sierra Bancshares, a California bank with 50 branches, for USD $645-million.
Also in 2007, the bank bought Greater Bay Bancorp for USD $1.5-billion. Greater Bay was a holding company and operated 41 branches in the San Francisco Bay area through subsidiaries Santa Clara Valley National Bank, Mid-Peninsula Bank, Peninsula Bank of Commerce and Mount Diablo National Bank.
During the summer of 2008, the global credit bubble burst and banks around the world suffered billions of losses from bad mortgage and consumer loans. As institutional investors withdrew from the short-term money market, banks found themselves short of the capital needed to finance their lending activities. Wachovia Corp. was believed to be on the brink of collapse when the Federal Deposit Insurance Corp. (FDIC) brokered a deal on 2008-09-29 under which Citigroup would buy Wachovia's banking operations and branches for USD $2.16-billion in stock. Citigroup would take over a USD $312-billion loan pool from Wachovia, and be responsible for the first USD $42-billion of potential losses from the pool; the FDIC would absorb any potential losses beyond the first USD $42-billion. Citigroup would also take over Wachovia's customer deposits. Not included in the sale were Wachovia's AG Edwards and Evergreen divisions.
Merely fours days later, in a bizarre twist of events, Wachovia rescinded the sale to Citigroup and agreed to a USD $15.1-billion buyout from Wells Fargo & Co. Under the new agreement, for each Wachovia share, shareholders would receive 0.1991 share of Wells Fargo, valuing each Wachovia share at about USD $7. Wells Fargo’s offer did not require any financial guarantee from the FDIC, and would also assume all of Wachovia’s preferred stock and debt. Wells Fargo said it expected to incur USD $10-billion in integration charges, and would raise USD $20-billion from issuing new securities to maintain its capital position.
In the days following the new sale agreement, Citigroup and Wells Fargo engaged in a brief legal battle for the right to acquire Wachovia, but Citigroup on 2008-10-08 accepted the fait accompli, essentially ending its challenge to Wells Fargo. When the deal closed in December 2008, Wells Fargo’s offer for Wachovia was valued at USD $12.68-billion.
Following the lead of Britain’s GBP 37-billion (USD $64-billion) partial nationalization of The Royal Bank of Scotland Group, HBOS and Lloyds TSB Group, the U.S. government unveiled a similar plan on 2008-10-14 under which the U.S. Treasury invested USD $250-billion in nine major U.S. banks. The nine banks that issued new preferred stock in exchange for USD $250-billion in funds were: Bank of America, Citigroup, JPMorgan Chase, Wells Fargo, Goldman Sachs, Morgan Stanley, Merrill Lynch, Bank of New York Mellon, and State Street. All nine banks’ preferred stock would pay 5% dividends annually in the first five years, and 9% thereafter. The funds were disbursed under the name Troubled Asset Relief Program (TARP). Wells Fargo received USD $25-billion from TARP.
In December 2009, Wells Fargo raised USD $12.25-billion from a stock issue to help repay the USD $25-billion state aid it received from the U.S. government under TARP in October 2008.
In November 2010, Well Fargo and Citigroup settled out of court over the acquisition of beleaguered bank Wachovia Corp. (see entry in 2008). Under the terms of the settlement, Wells Fargo paid Citi USD $100-million and both banks terminated their legal challenges against each other.

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Great Britain Bank Mergers & Acquisitions (Standard Chartered)

2010-02-19T22:10:00.011-05:00

Photo: Hong Kong has been Standard Chartered's most profitable market for well over 100 years. This is a (Standard) Chartered Bank's HKD $10 banknote from the early 1980s. The bank's Hong Kong headquarters featured in the banknote, sadly, has since been re-developed.

Standard Chartered plc

Standard Chartered Bank came into being in 1969 when the Chartered Bank of India, Australia and China merged with the Standard Bank of South Africa.

The Chartered Bank of India, Australia and China

James Wilson, a Scot and free-trade advocate who launched The Economist magazine back in 1843, was granted a Royal Charter by Queen Victoria in 1853 to establish The Chartered Bank of India, Australia and China. As the name suggests, the Chartered Bank has always focused in Asia. The bank opened its first branches in Calcutta (now Kolkata) and Shanghai in 1858. It expanded to Hong Kong and Singapore in 1859. In 1862, the Chartered Bank was authorized to issue Hong Kong's banknotes, a privilege it still enjoys today along with HSBC and the Bank of China (Hong Kong) Ltd.

The Chartered Bank appointed an agency in Jakarta in 1863, in Manila in 1872, and opened a branch in Penang, Malaysia in 1875. With trade flourishing following the 1869 opening of the Suez Canal and the telegraph cable connection between Europe and the Far East in 1871, the bank was well-positioned to provide trade financing between Asia and Europe. Cotton, indigo and tea from India, rice from Burma and China, sugar from Java, hemp from the Philippines and silk from Japan formed the bulk of trade that the Chartered Bank built its business upon.

Throughout the 1900s and 1910s, the Chartered Bank appointed agencies across Africa and the Middle East. In 1923, the bank became the first foreign bank to be granted a branch license in New York.

In 1957, the Chartered Bank acquired the Eastern Bank, expanding the bank’s branch network into the Middle East. The Eastern Bank had the distinction to be the very first bank in Bahrain (1920) and in Qatar (1950).

Standard Bank of South Africa

John Paterson founded the Standard Bank of British South Africa in 1862 in the Cape Province of South Africa. The bank was prominent in financing the diamond mines of Kimberley from 1867 onwards. It expanded to Johannesburg where gold was discovered there in 1885. The Standard Bank is said to have handled half the output of the second largest gold field in the world on its way to London.

The Standard Bank of South Africa opened a branch in Botswana in 1897. In 1911, the bank opened a branch in Kenya, followed by another one in Tanzania in 1916. By 1953, the bank had 600 offices across Southern, Central and Eastern Africa.

In 1962, the bank’s name was shortened to Standard Bank Ltd. In 1965, Standard Bank took over the Bank of West Africa (founded 1894 in London as the Bank of British West Africa), giving the bank a network of 60 branches in Nigeria, nearly 30 in Ghana and others in Sierra Leone and the Gambia.

Standard Chartered plc

As size became increasingly important to manage the risk of ever-expanding loans, the Chartered Bank and the Standard Bank decided to merge in 1969 to create the Standard and Chartered Banking Group, combining their Asian and African networks under one parent company. As part of the merger, a new holding company for the South African operations called Standard Bank Investment Corporation (now Standard Bank Group Ltd.) was created in 1969. Then in 1970, Standard & Chartered Bank floated part of Standard Bank Investment Corp. on the Johannesburg Stock Exchange. By 1980, Standard Chartered’s holding in Standard Bank Investment Corp. had fallen to 58%, and this stake was to be reduced to below 50% by 1986 as required by the South African government.

Following the 1969 merger, the bank also began an ambitious expansion into the U.S. and Europe. Ironically, it was only in 1970 that the bank, which had started as the Chartered Bank of India, Australia and China more than 100 years earlier, was permitted to open a representative office in Australia. In 1975, the bank's name was shortened to Standard Chartered Bank.

Between 1968 and 1973, the bank acquired Hodge Group, a British financing firm specializing in installment credit and industrial leasing. Hodge Group was renamed Chartered Trust Ltd. in 1979. In the same year, Standard Chartered took over the Union Bank of California, gaining 60 branches and becoming the No. 5 bank in the state. An interesting fact about Standard Chartered is that it's the only bank in the Falkland Islands, having opened a branch in 1984 following the end of the Falkland Islands War between Argentina and Britain two years earlier.

Throughout the 1980s, South Africa’s white minority establishment and its discriminatory policies against the black majority population came under increasing criticism and scrutiny. Great Britain, South Africa’s largest foreign investor and trading partner, faced mounting pressure to join the anti-Apartheid boycott and to sever economic and political ties with the white-controlled South African government. After years of controversies, Standard Chartered Bank in 1987 divested its remaining 39% stake in Standard Bank Investment Corp. for USD $254-million to local South African interests. Standard Chartered Bank had the dubious reputation to be the last foreign bank to leave South Africa. The sale was the largest divestment by a foreign company at the time.

In 1986, Standard Chartered became the takeover target of British banking giant Lloyds Bank Ltd., when Lloyds launched a USD $1.95-billion bid for the bank. After enlisting the help from several Asian tycoons to buy up its shares, the bank was able to defeat the unwelcome advances from Lloyds. However, loan losses from the Third-World debt crisis in the late 1980s forced the bank to sell off most of its U.S. and European operations. In 1988, subsidiary Union Bank was sold to California First Bank for USD $750-million. California First Bank was a subsidiary of the Bank of Tokyo. Then in 1990, the bank sold its Austrian, Belgian, Danish, French, German, Italian and Dutch operations to Westdeutsche Landesbank (WestLB).

Recent transaction(s):

In 1999, Standard Chartered acquired 75% of Nakornthon Bank in Thailand for TBK 12.4-billion (USD $313-million). Nakornthon had 67 branches in Thailand.
Also in 1999, the bank acquired 89% of Lebanon’s Metropolitan Bank.
In 2000, Standard Chartered bought the Hong Kong retail banking and consumer card businesses from Chase Manhattan Bank for HKD $10.3-billion (USD $1.32-billion, GBP 825-million).
In 2000, the bank sold its Chartered Trust leasing and auto finance business to Lloyds TSB Group for GBP 627-million.
In 2000, the bank bought Grindlays Bank's South Asia and Middle East business from Australian and New Zealand Banking Group (ANZ Banking Group) for USD $1.34-billion (GBP 848-million). The purchase included 116 branches across 13 countries in the region.
In 2004, Standard Chartered and PT Astra International Tbk jointly acquired 63% of Indonesia’s PermataBank for USD $355-million.
In 2005, the bank acquired Korea First Bank for KRW 3.4-trillion (USD $3.3-billion). Korea First had 400 branches and more than 3.2-million retail clients in the country.
Also in 2005, the bank acquired a 19.99% stake in China's Bohai Bank for USD $123-million.
In 2006, Standard Chartered and PT Astra International acquired another 26% of PermataBank for USD $193-million, bringing to total ownership to 89%.
In 2006, the bank purchased 80.9% of Pakistan's Union Bank for PKR 24.9-billion (USD$ 416-million).
In 2006, the bank acquired Taiwan's 7th largest private-sector bank Hsinchu International Bank for TWD $39.40-billion in cash (USD $1.19-billion, GBP 636-million). Hsinchu's 83 branches would join Standard Chartered’s three-branch network.
In 2007, Standard Chartered bought 49% of India stockbroker UTI Securities Ltd. for GBP 18-million (USD $36-million).
In 2007, the bank bought American Express Bank Ltd. from American Express Co. for about USD $823-million (GBP 414-million). American Express Bank served 10,000 clients and provided services to financial institutions and affluent individuals. It operated 75 offices across 47 countries. Standard Chartered said the deal would strengthen its private banking operations, double the size its USD clearing business, as well as expand into the Euro- and yen- clearing markets.
In 2008, the bank sold its Standard Chartered Trustee Co. Private Ltd. and Standard Chartered Asset Management Co. Private Ltd., both based in India, to Infrastructure Development Finance Company (IDFC) for USD $205-million in cash.
In 2008, the bank raised its stake in Vietnam’s Asia Commercial Bank to 15%. Standard Chartered first acquired an 8.84% stake in Asia Commercial in 2005.
In 2008, Standard Chartered agreed to acquire insolvent Taiwanese bank Asia Trust and Investment Corp. Asia Trust provided credit card services through its seven branches. Many Taiwanese banks had suffered devastating losses due to an explosion of consumer credit loans that had gone sour. As part of the agreement, Standard Chartered would receive a TWD $3.35-billion (USD $104-million) subsidy from the Taiwan government to take over Asia Trust’s operations.
In November 2008, Standard Chartered raised GBP 1.8-billion from a rights issue.
In December 2008, Standard Chartered raised its stake in India’s UTI Securities to 74.9%.
In February 2009, Standard Chartered bought Cazenove Asia Ltd. from JPMorgan Cazenove.
In August 2009, Standard Chartered announced that it was raising another GBP 1.0-billion (USD $1.7-billion) from its second rights issue with a year.
In October 2010, Standard Chartered once again issued rights to raise GBP 3.26-billion (HKD $40.1-billion, USD $5.16-billion) in fresh capital in order to meet Basel III capital rules.

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Switzerland Bank Mergers & Acquisitions (UBS)

2010-02-06T10:49:00.011-05:00

Photo: When the Swiss Bank Corp. and Union Bank of Switzerland merged in 1998, management decided to keep the UBS name, but retained Swiss Bank Corp.'s logo. Shown above is an old Swiss Bank Eurocheque with a UBS Bank (Canada) advertisement in 2006, both featuring the same tri-key logo.

UBS AG

UBS AG was formed in 1998 when the Swiss Bank Corporation and the Union Bank of Switzerland merged. Domestically, UBS is a universal bank offering retail, corporate and investment banking, and asset management services. It also provides private banking for the wealthy. Abroad, the bank concentrates on commercial and investment banking activities for corporate clients, as well as private banking for wealthy individuals.

Swiss Bank Corporation

Swiss Bank Corporation (also Schweizerischer Bankverein; Société de Banque Suisse; Società di Banca Svizzera) can trace its history to 1854 when six private bankers in Basel joined forces to form the Bankverein. Like other Swiss banks, Bankverein participated in financing the country’s railway networks and manufacturing industry. In 1872, Basel-based Bankverein merged with Frankfurter Bankverein to form the Basler Bankverein, becoming a joint-stock bank in the process. Following a series of takeovers, the bank adopted the new name Schweizerischer Bankverein in 1896. In addition to the Basel head office, the bank now had offices in St. Gall and Zurich. In 1898, the bank opened its first international branch in London.

During World War I, Switzerland maintained neutrality and did not participate in the war. Still, Swiss banks suffered losses from the collapse of Swiss exports and a number of major industrial companies. Swiss Bank Corporation overcame the wartime slump relatively well as it didn’t incur major losses abroad. In 1917, the English name of the bank was changed from Swiss Bankverein to Swiss Bank Corporation.

The Depression in the 1930s was difficult times again for Switzerland. Just before the onset of World War II, however, the bank received a massive influx of foreign funds and bullion for safekeeping. In 1939, Swiss Bank Corporation opened an office in New York to store some of these assets for fears that even neutral Switzerland might be invaded by the Nazis.

In 1945, Swiss Bank Corporation took over the ailing Basler Handelsbank. Throughout the 1950s, the bank expanded exponentially due to the rebuilding boom in Europe. By 1962, SBC became the second largest bank in the country. Overseas offices were opened in the U.S., Canada, Japan, Hong Kong and Luxembourg between 1965 and 1975. In 1978, SBC took a majority interest in Geneva-based private bank Ferrier Lullin & Cie., S.A.

In 1982, SBC, Union Bank of Switzerland and Credit Suisse formed Premex AG to offer precious metals brokerage service to reinforce bullion trading in Zurich, as competition from other financial centres like New York and Hong Kong heated up.

Despite acquiring a few brokerages and investment banks in Britain and France in the late 1980s, SBC’s international operations remained weak as a result of its traditional Swiss conservatism. In 1992, however, SBC bought Chicago-based options specialist O’Connor & Associates to participate in the burgeoning derivatives market. Then in 1994, SBC bought U.S. fund manager Brinson Partners for USD $750-million. Brinson Partners had USD $36-billion of assets under management. Despite these acquisitions, however, SBC continued to suffer from mediocre profitability in the 1990s as a result of the global recession.

Union Bank of Switzerland

Union Bank of Switzerland (also Schweizerische Bankgesellschaft; Union de Banques Suisses; Unione di Banche Svizzere) was created in 1912 through the merger of the Bank in Winterthur (founded in 1862) and Toggenburger Bank (founded in 1863). Interestingly, the Bank in Winterthur back in 1872 participated in transforming the Basel’s Bankverein to the Basler Bankverein, which later became Swiss Bank Corporation.

Initially, the Schweizerische Bankgesellschaft had nine branches in eastern and northeastern Switzerland. In 1921, the English name of the bank was changed from the Swiss Banking Association to the Union Bank of Switzerland, conforming to the French version.

Like former rival SBC, UBS struggled through the turbulent times from the onset of World War I to the end of World War II. After losing its European assets outside of Switzerland during the wars, UBS purposely avoided the foreign market for 20 years. In 1945, it took over the insolvent Zurich-based Eidgenössische Bank. In the same year, UBS moved its dual-headquarters from St. Gall and Winterthur to Zurich, as the latter rose to become a prominent financial centre.

Despite opening an office in New York in 1946, UBS’ expansion in the 1950s and 60s otherwise focused on the domestic front, and a number of small banks were acquired. By 1962, UBS had 81 branches in Switzerland and had become the largest bank in the country.

In 1973, UBS acquired the remaining 20% of gold refiner Argor S.A. UBS had owned 80% of Argor since 1960.

UBS' international expansion happened rather later than SBC and Credit Suisse, with the first truly operational branches opening in London and Tokyo in 1967 and 1972 respectively. In 1970, UBS set up American UBS Corp. in New York to enter the massive American securities underwriting market. The bank also opened representative offices in Buenos Aires, Hong Kong, Sydney and Melbourne in 1969. Beginning in the 1970s, the bank actively pursued its expansion in the international private banking business and many offices were upgraded to full branches.

In 1984, UBS acquired 29.9% of British brokerage and fund manager Phillips & Drew, one of the largest in London. The year 1986 was a busy one for UBS: first, the bank bought the rest of Phillips & Drew; then it acquired Deutsche Länderbank; lastly, it sold 25% of its gold refiner Argor S.A. to Germany’s W.C. Heraeus. Argor was then renamed Argor-Heraeus S.A.

Recent transaction(s):

In 1993, rival Credit Suisse outbid Union Bank of Switzerland in a battle for Schweizerische Volksbank. UBS then ended up acquiring five small Swiss banks in a consolidation wave in 1994.

In 1995, Swiss Bank Corporation acquired British merchant bank S.G. Warburg plc for GBP 860-million (USD $1.37-billion), forming SBC Warburg.

In 1996, SBC acquired Standard Chartered Bank’s international private banking business, propelling SBC to the No. 2 wealth manager in Asia.

In 1996, reports surfaced that both Switzerland and its banks collaborated with Nazi Germany during World War II, and that dormant bank accounts left behind by Holocaust victims were never disclosed to the potential survivors and estates. Following a firestorm of protests from Jewish leaders as well as threats by the U.S. to boycott Swiss banks, the Swiss National Bank, Credit Suisse, SBC and UBS contributed CHF 270-million into the Humanitarian Fund for the Victims of the Holocaust. Then in 1998, UBS (which included the old SBC) and Credit Suisse agreed to a USD $1.25-billion (CHF 1.8-billion) settlement with the claimants of the Holocaust class-action lawsuits.

In 1997, Swiss Bank Corporation bought U.S. investment bank Dillon, Read & Co. for USD $600-million.

In late 1997, Swiss Bank Corporation and Union Bank of Switzerland merged and adopted the new corporate name UBS AG.

In 1999, UBS sold its international trade finance business to Standard Chartered plc for CHF 300-million.

In 1999, UBS sold its 75% stake in precious metals refiner Argor-Heraeus to W.C. Heraeus, which already owned 25% of the UBS subsidiary.

In 2000, UBS bought U.S. investment bank Paine Webber Group Inc. for USD $11.8-billion.

In 2006, UBS bought the private-client business from Piper Jaffray for USD $500-million.

Also in 2006, UBS bought Brazilian investment bank Banco Pactual for USD $2.6-billion. UBS had planned to use Pactual's platform to expand its investment bank business in Latin America. UBS paid USD $1.0-billion upfront for Banco Pactual, and agreed to pay as much as USD $1.6-billion further by 2011 if certain conditions were met. (See later entry.)

Also in 2006, UBS bought McDonald Investments, an investment advisor with 51 branches from KeyCorp for USD $280-million.

In 2008, UBS bought France's Caisse Centrale de Réescompte Group for Eur 387-million (USD $574-million) from Commerzbank AG. Caisse Centrale de Réescompte was an asset and wealth management firm with more than Eur 13.3-billion (USD $19.7-billion) of assets under management.

Also in 2008, UBS sold a portfolio of distressed U.S. mortgage assets with a nominal value of USD $22-billion to BlackRock for USD $15-billion. The USD $7-billion loss had already been written down previously. As part of the agreement, UBS actually lent USD $11.25-billion to BlackRock to finance the sale, with BlackRock financing the remaining USD $3.75-billion on its own. BlackRock's investors were liable for the first USD $3.75-billion in potential losses from the portfolio. Any additional losses would be borne by UBS. UBS was essentially swapping its direct equity exposure to the sour mortgage assets for debt exposure in the form of the loan to BlackRock.

On 2008-10-16, UBS reached an agreement with the Swiss government to raise CHF 6-billion (USD $5.28-billion, Eur 3.93-billion) of new capital, as well as unload CHF 60-billion (USD $52.8-billion, Eur 39.3-billion) of bad assets. The Swiss Confederation bought CHF 6-billion of mandatory convertible notes with a return of 12.5%. When fully exercised, the Swiss government would own 9.3% of UBS. UBS and the Swiss National Bank (SNB) also agreed to transfer CHF 60-billion of soured assets into a separate fund with CHF 6-billion of equity capital funded by UBS and a CHF 54-billion loan provided by the SNB. The interest rate on the SNB loan to UBS would be 250 basis points above the one-month LIBOR rate. SNB would be entitled to share the profits if the bad assets were eventually sold above costs.

In late 2008, UBS sold its 1.3% stake in Bank of China for USD $808-million. UBS first acquired the stake in 2005 for USD $491-million.

In 2009, UBS sold Brazil’s Banco Pactual to Andre Esteves, the former head of business, for USD $2.5-billion. UBS would book a small loss on the sale but would free up capital needed to restore its capital reserves following massive losses in 2008 and 2009.

In June 2009, UBS raised CHF 3.8-billion (Eur 2.51-billion) in new capital from a common stock issuance.

In August 2009, the Swiss government sold its CHF 6-billion investment in UBS for about CHF 5.4-billion (Eur 3.56-billion, USD $5.07-billion) one day after UBS reached an agreement with the U.S. Internal Revenue Service on releasing information on American clients suspected of tax evasion. In addition to the sale proceeds, the Swiss government also received CHF 1.8-billion in interest payments from UBS.

In September 2011, UBS lost USD $2.3-billion (GBP 1.48-billion, CHF 2.05-billion) from unauthorized transactions by a rouge trader. The latest loss dealt a major blow to UBS' creditibility as the bank had repeatedly reassured its clients and investors that new measures had been in place to monitor and reduce its risk profile following USD $50-billion of write-downs during the credit crisis. UBS also saw its clients pulling some CHF 400-billion of funds, or 20% of the total client assets, out of the bank's accounts between 2008 and 2010.

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Switzerland Bank Mergers & Acquisitions (Credit Suisse Group)

2010-01-29T20:22:00.009-05:00

Photo: Credit Suisse' head office in Zurich/ Zürich.
Photo credit: Credit Suisse. Copyright: Credit Suisse

Credit Suisse Group

Credit Suisse

Credit Suisse began life as Schweizerische Kreditanstalt (SKA, literally, the Swiss Credit Institution) in 1856 in Zurich. The bank was established by Alfred Escher, a prominent politician in the young Swiss Confederation and also the managing director of Nordostbahn (literally, Northeast Rail). By creating a local bank, Mr. Escher hoped to rely on Swiss capital rather than French capital in building a Swiss rail system. Throughout the next 40 years, SKA played a significant role in financing the construction of the Swiss rail network. During the period, the bank also helped create other financial companies, including insurer Swiss Re in 1863.

In 1870, Vienna and New York became the locations of the bank’s first international offices. Beginning in 1905, domestic branches were opened outside of Zurich for the first time when the bank took over a number of regional banks.

During the 1890s, SKA participated in the founding of a host of international banks: including Dreyfus & Co. in Frankfurt, the Zürcherisch-Amerikanische Trustgesellschaft, and perhaps most notably, the Banca Commerciale Italiana in 1894, which evolved into today’s Intesa Sanpaolo group.

In the 1900s, the bank turned its attention to financing the construction of the electric grid network and other industries. Meanwhile, the bank’s Paris office opened in 1910. In 1940, the bank established an American subsidiary to underwrite securities. In that same year, the French, Italian and English names were introduced for the first time, including the name Credit Suisse.

World War I and World War II devastated Europe and Credit Suisse’ international operations. As a neutral country, however, Switzerland escaped physically unharmed, and the bank fared far better than other European banks. Many clients also transferred their assets to Switzerland for safe-keeping during World War II. Detailed revelations that Credit Suisse’ and other Swiss banks’ role in financing the Nazi war machine only surfaced some 50 years after the end of the war. Meanwhile, it was also discovered that a number of Swiss banks including Credit Suisse concealed information about dormant bank accounts left by many European Jews who perished during World War II.

Credit Suisse opened a representative office in London in 1954, three years after an office was opened in Montreal. In 1969, the bank expanded its operations to Hong Kong. The bank bought 80% of precious metals refiner Valcambi in 1967, and the rest in 1980. However, the Valcambi subsidiary was subsequently divested.

In 1976, Credit Suisse acquired Schweizerische Bodenkreditanstalt, further bolstering its domestic operations. The bank became a member of the New York Stock Exchange in 1982, greatly expanding its trading capacity and product lines. In 1989, CS Holding became the parent company of Credit Suisse.

First Boston Corp.

First of Boston Corp. was created in 1932 as the investment banking subsidiary of the First National Bank of Boston. In 1933, the Glass-Steagall Act in the United States forced all banks to separate their investment banking activities from traditional personal and commercial banking to ensure risky investment losses could not harm deposit-taking banks. The First National Bank of Boston in 1934 spun off First of Boston Corp., which was re-named First Boston Corp. Until 1969, First Boston was America's only publicly-traded major investment bank.

Credit Suisse' long association with the First Boston Corp. began in 1978 when the Credit Suisse’s 76%-owned subsidiary Credit Suisse et de White Weld took a 25% interest in First Boston Corp. in stock. Credit Suisse et de White Weld then named itself Financiére Crédit Suisse-First Boston, which was now 46% owned by Credit Suisse, 31% owned by First Boston Corp. and the rest by management and other minority holders.

Despite their long partnership, however, relationship between Credit Suisse and First Boston had been rocky. This could be partly blamed on the complex web of cross-holdings between all three companies: Credit Suisse, First Boston and CS First Boston. Managing all three separate but related businesses was cumbersome and worse still, they competed against each other.

After First Boston suffered severe losses in the 1987 Black Monday stock crash, a major restructuring in 1988 merged First Boston into CS First Boston, which was now 44.5% owned by a new parent company called CS Holding. However, business remained poor and by 1990, Credit Suisse had to pumped USD $300-million into CS First Boston, raising its stake to 73%. This marked the first time a foreign bank had obtained majority control over a major Wall Street underwriter.

Recent transaction(s):

In 1990, Credit Suisse bought Switzerland’s oldest bank, Bank Leu (founded 1755).
In 1993, Credit Suisse outbid rival Union Bank of Switzerland and bought Schweizerische Volksbank, the country's 5th largest bank, for CHF 1.6-billion (USD $1.1-billion).
In 1995, Credit Suisse bought Neue Aargauer Bank, a regional lender in Switzerland.
In 1996, reports surfaced that both Switzerland and its banks collaborated with Nazi Germany during World War II, and that dormant bank accounts left behind by Holocaust victims were never disclosed to their potential survivors and estates. Following a firestorm of protests from Jewish leaders and threats from the U.S. to boycott Swiss banks, the Swiss National Bank, Credit Suisse, SBC and UBS contributed CHF 270-million into the Humanitarian Fund for the Victims of the Holocaust. Then in 1998, Credit Suisse and UBS further agreed to a USD $1.25-billion (CHF 1.8-billion) settlement with the claimants of the Holocaust class-action lawsuits.
In 1997, parent company CS Holding was renamed Credit Suisse Group.
In 1997, Credit Suisse bought Swiss insurer Winterthur Insurance Co. for CHF 13.37-billion (USD $8.8-billion). Following years of mediocre profitability, Credit Suisse sold Winterthur to France's AXA S.A. in 2006.
Also in 1997, Credit Suisse bought Barclays de Zoete Wedd’s (BZW) European investment banking operations from Barclays plc for about GBP 100-million.
In 1998, Credit Suisse bought Brazil's Banco de Investimentos Garantia SA for USD $675-million.
In 1999, Credit Suisse bought Warburg Pincus Asset Management from Warburg, Pincus & Co. for USD $650-million, gaining USD $22-billion in assets under management.
In 2000, Credit Suisse bought U.S. investment bank Donaldson, Lufkin & Jenrette Inc. (DLJ) from France's AXA S.A. for USD $13.6-billion. The purchase was ill-timed, as a major global bear market started in 2001.
In 2003, Credit Suisse sold its British non-life insurance operations, Churchill, to the Royal Bank of Scotland for GBP 1.1-billion. Churchill had 7.5-million clients.
Also in 2003, Credit Suisse sold Winterthurs’s Italian operations to Unipol Assicurazioni SpA for Eur 1.46-billion.
In 2003, Credit Suisse sold its Pershing unit to the Bank of New York Co. for USD $2-billion. Pershing also repaid a USD $480-million subordinated loan to Credit Suisse.
Also in 2003, Credit Suisse sold its precious metals refiner Valcambi S.A. to European Gold Refineries Holding S.A. (EGR).
In 2005, Credit Suisse First Boston was fully integrated into Credit Suisse.
In 2006, Credit Suisse sold its insurance subsidiary Winterthur to France’s AXA S.A. for CHF 12.3-billion.
In 2007, the bank’s four private banks Clariden, Bank Leu, Bank Hofmann and Banca di Gestione Patrimoniale were consolidated into the new Clariden Leu.
In 2007, Credit Suisse bought 50% of Brazilian asset manager Hedging-Griffo, for BRL 635-million (CHF 421-million, USD $364-million).
Following heavy losses suffered during the global credit meltdown in 2007 (loss of CHF 7.76-billion) and 2008 (loss of CHF 8.2-billion), Credit Suisse raised CHF 10.4-billion of fresh capital in October 2008 by issuing treasury shares, convertible bonds and other hybrid securities.
In December 2008, Credit Suisse sold part of its Global Investors asset management business in return for up to 23.9% of the enlarged Aberdeen Asset Management. Value of the asset swap was estimated to be GBP 250-million (CHF 381-million).
In December 2010, Credit Suisse sold a soured commercial property loan portfolio with a book value of USD $2.8-billion for USD $1.2-billion to Apollo Management.

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Great Britain Bank Mergers & Acquisitions (Barclays)

2010-01-24T20:40:00.011-05:00

Photo: Musicians are seen performing outside a Barclays branch in Whitby, North Yorkshire, on a summer weekend. Photo was taken in September 2007.

Barclays plc

Barclays Bank can trace its history back to 1690 when two London goldsmiths named John Freame and Thomas Gould started a private bank to offer loans and safety deposit services for wealthy merchants. In 1736, James Barclay, who had married John Freame's daughter, became a partner. This was the first time the name Barclay became associated with the bank.

In 1896, 20 such private banks led by the Barclay and Company amalgamated into a joint-stock bank called Barclay & Co. Ltd. with 182 branches. Barclays acquired the London Provincial and South Western Bank in 1918, becoming one of Britain’s Big Five banks. In doing so, it inherited that bank’s ownership in the Colonial Bank, a British overseas bank founded in 1836 that had a near-monopoly in the Caribbean for much of the 19th century and also operated in British West Africa (Nigeria).

In 1925, following its acquisitions of the ailing National Bank of South Africa, Barclays restructured its various overseas holdings Colonial Bank, Anglo-Egyptian Bank and National Bank of South Africa into Barclays (Dominion, Colonial, and Overseas). Anglo-Egyptian Bank, of which Barclays had owned a majority interest since 1921, had operations in Egypt, Gibraltar, Malta, Sudan and Palestine. In 1954, Barclays (Dominion, Colonial & Overseas) was renamed Barclays (D.C.O.). In 1971, it became Barclays Bank International.

Barclays Bank pioneered the first credit card in Britain when the Barclaycard was launched in 1966. One year later, the bank installed the world's very first ATM bank machine, allowing clients to withdraw cash outside of a branch and during off hours.

In 1968, Barclays, Lloyds and Martins Bank announced a three-way merger that would have created a mega bank with 45% of the total deposits in England. At this point the British Monopolies Commission intervened and vetoed the merger plan. But in 1969, Barclays came back again and acquired Martins Bank, which was approved by the government. The acquisition further strengthened Barclay's position as one of U.K.'s largest financial institutions.

Throughout the 1970s and 1980s, political pressure from the now independent nations in the Caribbean and Africa led to the divestments of a number of local operations by Barclays, which became the now locally-owned Republic Bank in Trinidad and Tobago, the Union Bank of Nigeria, the Guyana Bank of Trade and Industry, the National Commercial Bank Jamaica and the First National Bank in South Africa etc.

In 1986, in preparation of the deregulation of the British securities market, Barclays Merchant Bank, de Zoete & Bevan and Wedd Durclacher Morduant & Co. merged to form Barclays de Zoete Wedd (BZW), a new investment banking concern. BZW subsequently was re-organized into today’s Barclays Capital.

Recent transaction(s):

In 1996, Barclays bought San Francisco-based Wells Fargo Nikko Advisers and merged it with its own BZW Investment Management unit to form what became Barclays Global Investors. Barclays Global Investors was divested in 2009 to BlackRock (see later entry).

In 2000, Barclays bought British mortgage lender Woolwich for GBP 5.40-billion (USD $8.10-billion).

In 2003, Barclays bought Spain's Banco Zaragozano for Eur 1.14-billion.

In 2005, Barclays acquired 60% of South African bank Absa for GBP 2.90-billion (USD $5.60-billion).

In 2007, Barclays bought U.S. sub-prime mortgage lender EquiFirst Corp. from Regions Financial for USD $76-million (GBP 38.7-million). The purchase price was lowered from the original USD $225-million due to the U.S. sub-prime meltdown.

On 2007-04-23, Barclays and Netherlands' ABN AMRO Holding NV agreed to merge in a deal that valued ABN AMRO at Eur 67.0-billion (GBP 45.4-billion, USD $91.0-billion). However, the Barclays-ABN AMRO merger proposal died in October when The Royal Bank of Scotland, Belgium's Fortis and Spain's Banco Santander won ABN AMRO with a Eur 70.0-billion (USD $101.1-billion) cash-and-stock offer. Click here for a detailed account of the battle for ABN AMRO.

In 2008, Barclays agreed to buy Russia's ExpoBank for GBP 373-million (USD $745-million) from Petropavlovsk Finance. ExpoBank operated 32 branches in Moscow and St. Petersburg, and had one of the biggest ATM networks in Moscow. This was Barclays' first foray into the Russian retail banking market.

In June 2008, Barclays raised GBP 4.469-billion (USD $8.79-billion) to replenish its capital reserve depleted by the global credit crisis, as well as to prepare the bank for future expansion. The massive stock sale was subscribed by the Qatar Investment Authority (GBP 1.764-billion), Sheikh Hamad Bin Jassim Bin Jabr Al-Thani's Challenger Universal Ltd. (GBP 533-million), Japan's Sumitomo Mitsui Financial (GBP 500-million), China Development Bank (GBP 136-million), Singapore's Temasek (GBP 200-million) and other institutional and private investors (GBP 1.336-billion).

Also in 2008, Barclays sold its life insurance unit Barclays Life to Swiss Reinsurance Co. (Swiss Re) for GBP 753-million (CHF 1.55-billion, USD $1.47-billion, Eur 951-million). The unit sold had 760,000 life insurance and pension policies and annuity contracts, representing GBP 6.8-billion in invested assets.

In September 2008, Lehman Brothers Holdings Inc. went bankrupt after both Barclays and Bank of America walked away from rescuing it. Barclays, however, returned a few days later and acquired Lehman Brothers' North American investment banking, fixed-income and equities sales, trading and research divisions at a fire-sale price of USD $250-million (GBP 140-million). The divisions employed about 10,000 people. Barclays also acquired Lehman Brothers' mid-town Manhattan head office building and two data centres for another USD $1.5-billion (GBP 843-million). During the height of the stock market and real estate boom in early 2007, Lehman Brothers had a market value of USD $45-billion. Lehman's risky mortgage portfolios and credit default swaps derivatives were not part of the sale to Barclays.

In 2008, Barclays bought the Italian residential mortgage business of Australia’s Macquarie Bank. Financial terms were not disclosed but the mortgage portfolio had an outstanding balance of Eur 1.1-billion (GBP 884-million, USD $1.41-billion).

In October 2008, Barclays raised GBP 7.05-billion in new capital from Middle Eastern institutional investors, after Britain’s FSA demanded various British banks to raise an additional GBP 25-billion in capital.

In April 2009, Barclays agreed to sell its iShares exchange-traded fund (ETF) unit to private equity firm CVC Capital Partners Ltd. for USD $4.4-billion (GBP 3.0-billion). The sale was part of Barclays’ aim to bolster its capital reserves to avoid a government bailout. iShares had GBP 266-billion under management as of 2008-12-31, and was the largest exchange traded fund manager in the world.

In June 2009, Barclays rescinded the agreement to sell its iShares ETF unit to CVC Capital Partners Ltd., and reached a new agreement to sell the entire Barclays Global Investors to BlackRock for USD $13.5-billion (GBP 8.2-billion). Under the deal, Barclays would receive USD $6.6-billion in cash and USD $6.9-billion of BlackRock shares. The bank would end up holding a 19.9% economic interest in the newly-named BlackRock Global Investors, but only a 4.9% voting stake. Barclays then paid a USD $175-million break fee to CVC Capital Partners. The unit sold by Barclays managed USD $1.5-trillion of assets.

In 2009, Barclays bought PT Akita, a small Indonesian bank with 10 branches.

In October 2009, Barclays bought the banking assets of Standard Life plc for GBP 226-million (USD $369-million) to expand its British savings and mortgage business. Standard Life Bank had GBP 5.5-billion of deposits and GBP 8.8-billion of mortgage loans.

In June 2010, Namibia's central bank blocked Asba Bank's attempt to buy 70% of Capricorn Investment Holdings for NAD $1.5-billion (USD $185-million) on concerns that the last locally-owned Namibian bank would into Anglo-South African control. Asba was majority-owned by Barclays. Capricorn Investment owned 72% of Namibia's Bank Windhoek (with 39 branches) as well as 88% of Botswana's Bank Gaborone.

In October 2011, Barclays sold its Russian retail and commercial banking operations to an investor group led by Orient Express Bank's owner Igor Kim. Financial terms of the deal were not announced but the price is said to be much less than the GBP 373-million that it paid for ExpoBank in 2008.

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