China targets troubled banks in the European market. And among these, the Italian Mps is also in the sights. Meanwhile, the first Chinese acquisition of a European investment bank was announced last week: Haitong Securities acquired Banco Espirito Santo de Investimento SA (BESI) from Novo Banco, the bank spun off from Banco Espirito Santo in the bailout last August, for 379 million of Euro.
A modest-sized operation for the second largest Chinese broker, but one that shows how the quality of shopping for Chinese financial groups is changing. Today, China wants controlling stakes and is scouring Europe for opportunities while avoiding deals that are too large in size. “Increasingly, Chinese financial groups are looking to close deals in which they secure control as a way to expand their global presence,” notes Mayooran Elalingam, head of Asia-Pacific M&A at Deutsche Bank.
“There are many distressed opportunities in eurozone economies and we expect China's financial services sector to be active in these environments,” he adds. Some M&A bankers are not ruling out the possible takeover of a European commercial bank. MPS itself could therefore attract offers, according to bankers in Hong Kong. Interest could also arise in Novo Banco, which the Portuguese authorities hope to sell in the first half of next year.
Such deals can help Chinese banks acquire valuable European banking licenses as well as expertise, especially in fixed income, that can be transferred back home. This year, according to investment bankers, the government has begun encouraging stock brokers and financial groups to go international. “As regulators liberalize China's financial sector, banks, insurers and intermediaries will be interested in asset managers, private banks and wealth managers,” Goldman Sachs' Bernard Teo points out.
