|Bid||0.0000 x 0|
|Ask||0.0000 x 0|
|Day's Range||4.0600 - 4.1400|
|52 Week Range||3.0900 - 7.5200|
|Beta (5Y Monthly)||1.84|
|PE Ratio (TTM)||5.13|
|Forward Dividend & Yield||N/A (N/A)|
|Ex-Dividend Date||May 23, 2019|
|1y Target Est||N/A|
Moody's Investors Service, ("Moody's") has today affirmed mBank S.A.'s (mBank) long-term deposit ratings at A3 and changed the outlook to stable from negative. This rating action follows the announcement made by Commerzbank AG (Commerzbank; Long-term Deposits A1 stable; BCA baa2) on 11 May 2020 that it terminated the planned sale of its majority stake in mBank. At the same time, Moody's has also affirmed the Baa2/Prime-2 issuer ratings of mBank Hipoteczny S.A. (MBH), a mortgage bank which is a subsidiary of mBank, and changed the outlook on the long-term issuer ratings to stable from negative.
Global stocks fell on Wednesday as fears about a second wave of coronavirus infections gripped financial markets. The New Zealand dollar slumped to a six-month low after the country's central bank doubled its quantitative easing programme and said it has asked commercial banks to be ready for negative interest rates by year's end.
Moving Is now Legal in England Real estate bounce in London? Maybe, maybe not. At least now it’s legal to buy, sell, and move houses again in at least some parts of the United Kingdom. That at least is a prerequisite for a market to function on a basic level. However, all this must take […]The post Market Morning: London Legalizes Moving, Congress and Fed Want More Spending, European Banks Fall appeared first on Market Exclusive.
(Bloomberg) -- Commerzbank AG took a 479 million-euro ($520 million) hit to deal with the fallout from the coronavirus crisis, joining peers in marking down assets and boosting reserves to deal with bad loans.The Frankfurt-based bank said on Wednesday that 185 million euros of its 326 million euros in credit provisions were directly related to the outbreak, while the crisis also caused a hit of 295 million euros in the value of customer derivatives. Commerzbank said credit provisions could reach 1.4 billion euros this year, making its goal of posting a profit “very ambitious.”The outbreak has added urgency to a four-year turnaround effort by Chief Executive Officer Martin Zielke that has failed to restore robust profitability. While he cut soured loans, a pivot toward retail and corporate lending in Commerzbank’s home market is leaving it exposed to negative interest rates and business disruptions. Zielke is now working on his third round of cost cuts and hired McKinsey & Co. to review his business model, Bloomberg has reported.“We’re looking into our costs again and we definitely want to increase our profitability target,” Chief Financial Officer Bettina Orlopp said in an interview on Bloomberg TV. “Indeed, corona has added some new lights on it and we will incorporate that and we will update you in the summer.”Bloomberg reported Tuesday that Commerzbank is considering deeper cuts to its vast branch network as the crisis forces more clients online, allowing Zielke to reverse course on a pledge that he would keep most branches. The CEO has come under pressure from his largest shareholders after his previous targets were widely seen as unambitious.“Customer behavior, especially the German one, is really changing,” Orlopp said. “We’re thoroughly analyzing the situation and also the impact on our business model and we will adapt to it.”Commerzbank Confronts Tough Choice as Virus Forces Zielke’s HandRisk provisions for the full year could rise to between 1 billion euros and 1.4 billion euros, the bank said. Orlopp said that prediction was based on the assumption of a u-shaped economic recovery, with no second lockdown.All European banks have reported higher credit provisions this earnings season though the increases have generally been much lower than the ones by peers in the U.S. European regulators have given lenders the leeway to take a longer-term view when forecasting how much of their loans may go bad, allowing the firms to consider the eventual recovery from the pandemic-induced slump.ABN AmroIn the neighboring Netherlands, ABN Amro Bank NV also on Wednesday reported credit provisions of 1.1 billion euros and said the figure could rise to 2.5 billion euros for the full year. Like Commerzbank, ABN Amro is still part-owned by its government after a bailout in the wake of the 2008 financial crisis, underscoring just how slow European lenders have been to rebound.Commerzbank fell 2.8% at 9:04 a.m. in Frankfurt, bringing losses this year to 43%. ABN Amro slumped 4.4% in Amsterdam and is down 61% so far in 2020.Commerzbank on Monday scrapped its plan to sell its Polish subsidiary mBank SA after it was unable to get a good price for it. Zielke had planned to sell the unit to fund a restructuring of Commerzbank’s domestic operations. He later said a better-than-expected capital cushion had reduced the rationale for the deal.Commerzbank lowered the full-year target for its common equity Tier 1 ratio -- a key measure of capital strength -- to at least 12.5%, citing lower regulatory requirements. The metric stood at 13.2% at the end of the first quarter.More details from Commerzbank’s first-quarter earnings:1Q revenue EU1.85 billion, estimate EU1.97 billion1Q loss EU295 million, estimate loss EU217.9 million1Q operating loss EU277 million, estimate loss EU169.5 million1Q pretax loss EU233 million, estimate loss EU157.7 million1Q common equity Tier 1 ratio 13.2% vs. 12.7% y/y(Adds CFO interview starting in fourth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- The year started well for Pacific Investment Management Co., the fixed-income asset manager owned by German insurer Allianz SE. After pulling in 83 billion euros ($90 billion) of fresh cash from investors in 2019, the firm continued to attract new money in January and February. Then the global pandemic struck. Investor withdrawals equaled almost half of last year’s inflows, leaving Pimco with net outflows of 43 billion euros in the first quarter.Exhibiting masterly understatement, Chief Financial Officer Giulio Terzariol told Bloomberg Television, “March was a tough month.” Retail investors abandoned the market as the novel coronavirus threatened to trash the global economy.Beneath the headline decline in assets under management — Pimco’s worst drop in the five years since the surprise departure of bond maestro Bill Gross, as noted by my Bloomberg News colleagues — the firm’s recovery continues apace. That means Allianz will be dealing from a position of strength if it finally takes the plunge and decides to expand its asset-management business by buying a rival player. In the current beleaguered environment, the one variable that asset managers are able to control is their costs. As Pimco’s overall revenue grew by 18.4% in the year, to more than 1.3 billion euros, the firm was able to shave almost a percentage point from its cost-to-income ratio, extending a trend of parsimony that’s been in place for at least the past five years.Moreover, the margin Pimco is able to charge for managing other people’s money has been remarkably stable, particularly given the fee compression that the rest of the active management industry has endured amid increased competition from low-cost index-tracking products. While its first-quarter margin of 37.3 basis points was down a tad from December, it actually improved from 36.1 basis points in the year-earlier period.A year ago, Pimco’s parent toyed with the idea of buying DWS Group GmbH, when Deutsche Bank AG was mulling offloading its remaining 80% stake in the fund manager as part of its ultimately doomed attempt to merge with Commerzbank AG.In the end, neither transaction happened. But Allianz has given notice that it intends to be part of any industry consolidation. At some point, the German insurer might want to bolster its fund-management defenses against the rise of the index trackers by buying a specialist in passive strategies. With a market share of more than a quarter of Europe’s exchange-traded products, DWS may still prove attractive — if it ever comes up for sale.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Mark Gilbert is a Bloomberg Opinion columnist covering asset management. He previously was the London bureau chief for Bloomberg News. He is also the author of "Complicit: How Greed and Collusion Made the Credit Crisis Unstoppable."For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Global shares fell on Friday, hit by delays to an agreement on divisive details of the European Union's stimulus package and doubts about progress in the development of drugs to treat COVID-19. European stocks were 0.3% lower, with London's FTSE 100 shedding 0.6% as data showed UK retail sales crashed in March. "It's a negative session," said François Savary, chief investment officer at Swiss wealth manager Prime Partners.
(Bloomberg) -- SAP SE Co-Chief Executive Officer Jennifer Morgan, appointed in October to the top executive post alongside Christian Klein, will abruptly leave the German software company at the end of April, after the Covid-19 pandemic caused problems with its leadership structure.Klein, 39, will remain in the CEO role, SAP said late Monday in a statement. He joined the company as a student in 1999 and had been chief operating officer since April 2016 before his October promotion, with Morgan, to replace Bill McDermott in the top job. Klein has been a member of SAP’s executive board since 2018.The company said it is shifting to a lone CEO model now to provide a clearer leadership structure in the face of business challenges posed by the Covid-19 pandemic. SAP also posted its first quarter results on Tuesday, stating business activity in the first two months of the quarter was “healthy” but as the spread of the coronavirus intensified a significant amount of new business was postponed.SAP fell 2.4% to 111 euros at 9:49 a.m. in Frankfurt on Tuesday. The stock has declined 7.8% this year.“Jen and I really started with a joint agenda,” said Klein in a call with reporters. “The reason we decided to come back to a sole CEO model was because of the outbreak of the pandemic. There was no exact date to when SAP would have come back to a sole CEO model but in these turbulent times we thought now was the right time.”SAP had been committed to the co-CEO structure, but when the coronavirus hit, it became clear that having two people in charge was no longer tenable, according to a person with knowledge of the matter. Morgan is the first female chief executive of a DAX-listed company.The leadership structure was “disorganized and, at times, chaotic,” said the person, who asked not to be named discussing the company’s internal dynamics. It took longer to get some things done because, in certain instances, managers needed sign off from two different CEO offices, this person said. “It was driving people crazy.”Over time, two distinct power centers emerged, the person said. One was based in the U.S. under Morgan, who is American. The other, under Klein, was anchored in Germany, the site of the company’s headquarters, its greatest sphere of influence and Klein’s homeland, said the person. Klein also benefited from his close ties to Chairman and co-founder Hasso Plattner, this person said.“The leadership model has many benefits,” an SAP spokeswoman said. “But the current environment requires the company to take swift and determined action.”SAP also said that due to current uncertainty regarding the duration and severity of the Covid-19 pandemic, it can’t predict whether its response will be effective in mitigating the impact of the virus on its business and results of operations. On Tuesday it reported:Total revenue in 2020 will be 27.8 billion euros ($30.1 billion) to 28.5 billion euros, down from a previous forecast of as much as 29.7 billion euros, SAP said on 8 April in its preliminary resultsCloud revenue increased 27% to more than 2 billion euros for the first quarter of 2020 while total revenue was up 7% to more than 6.5 billion eurosSAP is not planning on applying for state wage support or requesting governmental aid amid the pandemic, Luka Mucic, chief financial officer, said on the call with reportersMorgan, 48, joined SAP in 2004 and had been president of the software giant’s cloud business group before being named co-CEO. She became the first American woman appointed to SAP’s executive board in 2017 when she was named president of the Americas and Asia.“The market has never really appreciated the co-CEO structure, though we believe SAP will lose a dedicated cloud sales person with Jennifer,” Florian Treisch, analyst at Commerzbank AG wrote in a note Tuesday.McDermott’s departure last year was unexpected, but the new co-CEOs had been on investors’ “short list” to take over in future, Citigroup analysts including Walter Pritchard said in a note at the time of their appointment.(Updates with shares in fourth paragraph, analyst comment in penultimate)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
As Germany rolls out a 750 billion-euro economic stimulus package, officials and experts are discussing whether German lenders, including Deutsche Bank AG and Commerzbank AG, will be able to weather the economic fallout of coronavirus without state help. Interviews with more than a dozen people, including government officials and senior bankers, show some officials fear that if the crisis persists, weakened lenders would choke off credit to the economy and worsen the situation. For now though, several sources said Chancellor Angela Merkel's government is focusing on propping up non-financial companies under the stimulus package and no action is expected on banks in the near term.
(Bloomberg Opinion) -- Governments are helping businesses survive the debilitating effects of the coronavirus by allocating state funds to various rescue packages to keep companies alive and preserve as many jobs as possible. With unprecedented amounts of economic stimulus planned to combat an unparalleled situation, it’s essential that the authorities spare at least some attention to what a post-pandemic exit strategy might look like. Once the virus is subdued and the lockdowns end, governments should convert a chunk of the aid they’ve distributed into equity stakes in the recipients, with the ensuing portfolio of holdings assembled into sovereign wealth funds.Norway currently has the world’s biggest sovereign wealth fund, overseeing about $945 billion and funded by the nation’s oil revenue. Singapore has had a wealth fund for more than four decades. Egypt, Senegal and Turkey have all set up wealth funds in recent years to manage their state-owned companies, with South Africa saying earlier this year that it plans a similar move.Countries in Europe have toyed with the idea in the past. In August, a draft proposal for a “European Future Fund” suggested an initial 100 billion-euro ($110 billion) pot could be set aside to invest in strategic industries in the European Union. But as my colleague Ferdinando Giugliano argued at the time, the EU is not a sovereign state, and such a fund would just divert existing budget resources rather than tapping a pool of wealth.In the U.K., the May 2017 Conservative Party manifesto proposed what it called Future Britain funds, which would “hold in trust the investments of the British people, backing British infrastructure and the British economy.” The pitch said the money would come from “shale gas extraction, dormant assets and the receipts of sale of some public assets.” Almost three years later, there’s still no sign of those plans being enacted. (That’s probably just as well given their paltry financial underpinning; as myself and my colleague Marcus Ashworth wrote at the time, those sources would have provided a minuscule capital base, even before fracking was banned in Britain.)But the current crisis provides an opportunity for individual countries to make good on those vague promises by setting up wealth funds that are big enough to count as full-blown assets to society, given the scale of financial assistance that’s likely to be required to get through these dark days.They could start by assigning existing state investments to wealth funds. The U.K. government, for example, still owns about 60% of Royal Bank of Scotland Group Plc, more than a decade after bailing out the ailing lender to the tune of more than 45 billion pounds ($56 billion) as part of a wider rescue of the domestic banking industry. The German government has a stake of almost 16% in Commerzbank AG, while Belgium and France have control of Dexia SA, split 53% to 47%.The global financial crisis made many banks wards of their states. Formalizing those stakes in wealth funds would be a way to start building state-owned asset portfolios. During normal times, governments could be sleeping equity partners. But in times of crisis — like now — governments would have a more direct pathway to influence lenders to help borrowers weather any economic storm. For the U.K., creating a wealth fund would solve the issue of preserving vital domestic infrastructure without handing free money to foreign conglomerates. The owners of Heathrow Airport, for example, include Qatar Holding, the government of Singapore’s GIC Pte Ltd., and the China Investment Corp. By making aid conditional on receipt of equity, Britain would be getting a stake at current distressed values in return for bailout funds.Today’s situation demands aid packages for a swathe of industries feeling the pain, including automakers and travel companies. If having such a broad range of stakes feels too interventionist, wealth-fund holdings could be restricted to infrastructure that’s vital to the economic functioning of a country. Though that could prove to be a tough distinction; given initial lockdown experiences, an argument could be made that suppliers of internet broadband and food delivery should qualify.For those who still insist the state should stay out of private enterprises, note that governments are already effectively telling companies how to run their affairs in return for aid. Earlier this week, Germany asked companies seeking help to suspend their dividends, with France also asking the same from firms that defer tax liabilities. German Economy Minister Peter Altmaier also wants senior executives to “contribute in emergencies, especially with respect to bonus payments,” according to an interview with the Frankfurter Allgemeine Zeitung at the weekend.One of the new realities of the post-virus economy will be increased state involvement in business. Companies are likely to come under pressure to shorten their supply chains and bring more manufacturing back home, wherever home may be. The lines of production will become shorter, as regional ties replace at least some of the worldwide outsourcing that has been a keystone of the globalized economy. That will be easier to enforce if governments’ holdings give them seats on corporate boards.Shareholdings would give governments additional clout to influence better corporate behavior as more nations embrace their responsibilities to the future of the planet. Until now, asset managers have long been leading the drive to force firms to give greater emphasis to environmental, social and governance issues.A decade ago, a key complaint about the rescue of the global financial system was that public money was used to compensate for private risk taking gone awry. While this crisis is undoubtedly different, there’s still a danger that as governments pledge billions of dollars, euros and pounds to businesses, public support will wane as the scale of the financial challenge becomes apparent. Building equity stakes that belong to the nation will help offset voter mistrust about the wisdom of such largess, allowing everyone to participate in the economic recovery that the disbursements are designed to facilitate.As the saying goes, never let a serious crisis go to waste.This column does not necessarily reflect the opinion of Bloomberg LP and its owners.Mark Gilbert is a Bloomberg Opinion columnist covering asset management. He previously was the London bureau chief for Bloomberg News. He is also the author of "Complicit: How Greed and Collusion Made the Credit Crisis Unstoppable."For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- Financial regulators are applying all of the lessons of the 2008 credit crisis at record speed. In the past few weeks, they’ve worked with central banks to pump liquidity into markets and to make it easier for banks to lend. It’s essential now that lenders keep providing money to companies and households whose incomes have evaporated in the Covid-19 lockdowns. If the banks stop functioning, what hope for the rest of the economy?The next chapter in European regulators’ crisis playbook is ensuring that the banks don’t hand much of their excess capital to investors or keep paying hefty bonuses to senior staff. Supervisors are trying to make sure that financial firms remain solid by easing their capital rules, thereby freeing up hundreds of billions of dollars — that places a heavy burden on the banks to act responsibly. Shares in British banks, including HSBC Holdings Plc and Barclays Plc, fell sharply on Wednesday after they halted dividends at the Bank of England’s request.Regulators are also preempting a popular backlash by discouraging cash bonuses to bankers. This makes perfect sense, given the support that lenders have already received by way of looser regulation and state loan guarantees.As we’ve heard from supervisors and banking executives in recent weeks, banks — for now — remain part of the solution to the unprecedented economic shock, rather than the problem. This isn’t 2008.The excessive banker pay that fueled the risk binge in the run-up to the Lehmans meltdown is still fresh in people’s minds. What’s more, during the global financial crisis, banks often took too long to suspend dividends and buybacks, leaving themselves thinly capitalized as losses piled up and hastening the need for government bailouts. Excessive pay during and soon after the crisis, including at bailed-out institutions, rightly infuriated the taxpayers that were left footing the bill.More than a dozen years after the financial crisis, a number of Europe’s biggest lenders — Royal Bank of Scotland Group Plc, ABN Amro Bank NV and Commerzbank AG — are still at least partly state owned. Little surprise then that the U.K. regulator “expects banks not to pay any cash bonuses to senior staff, including all material risk takers,” while the European Banking Authority is urging firms to pay conservative bonuses and consider deferring awards for a longer period and in shares.It could be worse. While bankers won’t be able to cash in on their deferred compensation from previous years’ share awards after stocks plunged, they will have already received their 2019 variable cash compensation by now, and they’ll have plenty of time to prepare for next year.Take the 1,700 traders and bankers at Barclays, who’ll be affected by the measures. About 45% of their average pay of 825,000 pounds ($1 million) consists of fixed pay, 22% comes from share awards, and 23% is a cash bonus (of which 58% is deferred), according to Citigroup Inc. analysts. While cash is king — especially during an economic crisis — getting more of that pay package in shares wouldn’t necessarily be a disaster, even if people had to wait a few years to sell. Assuming stocks don’t bounce back too far from their current levels, bankers might be getting a lot of very cheap stock in 2021.And however painful the hit, regulators are probably just insisting on something that the markets will probably take care of over the rest of the year anyway. The first quarter may have been a bumper three months for trading in financial markets because of all of the volatility, activity could well be subdued over the coming quarters as the recession really hits. That would depress bonuses anyway. The very best financiers will expect to see their fixed pay rise to sweeten the blow, but for most of the thousands of bankers and traders fortunate enough to keep their jobs, lavish compensation will be a thing of the past. The crisis will be as Darwinian for investment banking as it is for every other pocket of the economy. Hanging on to your chair will be your 2021 bonus.This column does not necessarily reflect the opinion of Bloomberg LP and its owners.Elisa Martinuzzi is a Bloomberg Opinion columnist covering finance. She is a former managing editor for European finance at Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
MILAN/MADRID/FRANKFURT, March 24 (Reuters) - Corrado Sforza Fogliani is on the frontlines of European efforts to keep the region's economy alive amid the coronavirus pandemic. Buried in paperwork and with Rome and banking lobbies still at odds over who should be on the hook for defaults when a six-month debt holiday ends, Banca di Piacenza's loan officers have only been able to process a fraction of the 1,000 applications they have received.
European banks took heart from the Bank of England's plan to defend Britain's economy from the effects of the coronavirus outbreak, pushing stock prices up and the cost of insuring against default down. The move raised expectations for a similar response from the European Central Bank on Thursday, driving the euro zone banks index 1.5% higher and putting them on track for their first gain in two weeks. Britain's finance minister, Rishi Sunak, said he would do whatever it took to protect the UK economy from the global epidemic, shortly after the BoE slashed interest rates and gave banks permission to tap capital reserves in a stimulus package aimed at thwarting recession.
(Bloomberg Opinion) -- Italian banks embarking on a round of consolidation was always a matter of when, not if. Meager profitability, a fragmented industry and a desperate need for investment are obvious ingredients for M&A. Lenders have rid themselves of most of the bad loans that crippled Italy’s banks after the financial crisis, so dealmaking should be unhindered.Intesa Sanpaolo SpA’s surprise $5.3 billion offer for a smaller Italian rival in a four-way carve-up may not have been what investors had in mind. Intesa is already Italy’s biggest bank and its target, Unione di Banche Italiane SpA — the country’s fourth-largest — was seen as more of an acquirer of weaker rivals than a target.But the deal may provide the jolt the European industry needs. Almost a year has passed since the failed effort to combine Germany’s Deutsche Bank AG and Commerzbank AG through a more complex, risky deal. The completion of a simpler union could embolden chief executives elsewhere in the continent too.Intesa’s unsolicited all-stock bid, at a 25% premium to the closing price, would make it one of the biggest European banking mergers since the Lehman crisis. UBI, which hasn’t commented on the approach, was caught off guard. Just hours earlier in London, it presented its strategy as a standalone company.A deal would move Intesa into the group of top 10 European lenders, measured by operating income. Though UBI investors could argue for juicier terms, the strategic and financial rationale for a deal is compelling. The European Central Bank’s initial positive feedback on the merger should improve Intesa CEO Carlo Messina’s chances of persuading his UBI counterpart.A takeover would create a joint business with a market share of about 21% in loans and deposits, 23% in asset management and 19% in life insurance. To avert antitrust concerns, Intesa has agreed to sell as many as 500 branches to a regional lender and to dispose of insurance activities too. The banks have similar business models and the 5,000 anticipated job cuts are expected to be voluntary (3,400 job losses have already been announced by the banks). The deal would bring 510 million euros of cost savings and 220 million euros of revenue synergies, according to Intesa. The buyer is promising to pay a cash dividend of 0.2 euros per share for 2020, and higher from 2021, above current consensus estimates. To cover the deal’s cost, Intesa expects to benefit from about 2 billion euros of negative goodwill to help pay for integration expenses and a deeper clean-up of bad loans.Investors like what they’re hearing. A bond UBI sold five weeks ago has delivered an impressive 12% return, making it the best-performing bond in Europe this year. UBI shares rose as much as 29% on Tuesday, above the offer price; Intesa shares rose as much as 3.6%.Some investors had hoped that Intesa would make a bolder move to diversify its business away from Italy and to reduce its reliance on lending income. But support from the ECB for the UBI approach would at least show the regulator is willing to countenance much-needed M&A in Italy, and Europe.Messina’s unexpected move might inspire a broader consolidation. As sub-zero interest rates persist and economies sputter, European banks’ low profitability is unlikely to improve. Cross-border deals are still complicated by different national insolvency laws and the absence of a common European deposit-insurance scheme. At least Messina is doing something.To contact the author of this story: Elisa Martinuzzi at email@example.comTo contact the editor responsible for this story: James Boxell at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Elisa Martinuzzi is a Bloomberg Opinion columnist covering finance. She is a former managing editor for European finance at Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- Jupiter Fund Management Plc is getting something of a bargain in its purchase of Merian Global Investors, based on the post-announcement pop in the acquiring firm’s share price. Odd, then, that the deal has a clause that could see a dramatic drop in the takeout price if the target firm stumbles in the next two years.Jupiter is paying 370 million pounds ($482 million) for Merian, which is owned by TA Associates Management. The Boston-based private equity firm agreed to pay 600 million pounds for Merian a bit more than three years ago, backing its managers in a buyout from Old Mutual Ltd. So it’s taking a hit on its initial investment.Moreover, Jupiter has secured what it calls “downside protection” if Merian’s assets under management decline by the end of 2021. The purchase price falls by 20 million pounds if assets decline by 15%, by 40 million pounds if the drop is 25%, and the full 100 million pounds if Merian manages 40% less money. Reductions between those levels will be applied proportionately, while Merian’s management can earn an additional 20 million pounds by increasing revenue.It’s a smart hedge for Jupiter, given the inability of many active fund managers to stop money from walking out of the door. Jupiter itself has had seven consecutive quarters of net outflows, and saw customers withdraw 4.5 billion pounds last year, so the value of its assets under management was only defended by rising global market values.And Merian had 25.7 billion pounds under management at the time of its buyout in December 2017; based on Monday’s offer documents, it’s down to a bit more than 22 billion pounds now.Once the deal is completed, TA Associates will end up with about 16% of Jupiter, while Merian’s management will own about 1% of the firm. It’s a case of back to the future for the buyout firm. In 2007, TA Associates backed Jupiter’s managers and took a 22% stake in the London-based firm when it was spun off from Commerzbank AG. It maintained a stake in Jupiter until 2014, when it offloaded its final 10.6% holding. So the private equity outfit still has skin in the U.K. active management game, which is a vote of confidence of sorts.The deal will mean Jupiter has more than 65 billion pounds of assets under management, an boost of more than 50% from the 43 billion pounds it currently has. The transaction offers “substantial cost efficiencies,” which Jupiter says will eventually allow Merian to deliver an operating margin of at least 50%, handily outstripping the 43% margin Jupiter generated in 2019.Jupiter’s shares jumped as much as 10.4% in the wake of the deal’s announcement, driving them to their highest since July 2018. But it’s hard to shake the suspicion that the insurance clause Jupiter has included in the transaction — and which the vendor has accepted — suggests that takeovers alone can’t fix what ails the active fund management industry. What’s needed is a solid period of outperformance against benchmarks. Otherwise investors will continue to vote in favor of low-cost passive products, and will be right to do so.To contact the author of this story: Mark Gilbert at email@example.comTo contact the editor responsible for this story: Melissa Pozsgay at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Mark Gilbert is a Bloomberg Opinion columnist covering asset management. He previously was the London bureau chief for Bloomberg News. He is also the author of "Complicit: How Greed and Collusion Made the Credit Crisis Unstoppable."For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Today we'll take a closer look at Commerzbank AG (ETR:CBK) from a dividend investor's perspective. Owning a strong...
Deutsche Bank AG has delayed raises to fixed pay compensation at the German bank by three months until after April 1, citing the need to further improve cost management, according to a memo seen by Reuters on Tuesday. "After thorough discussions, we on the Management Board have taken the decision that, from 2020, any fixed pay adjustments in connection with the annual review or promotion process will be effective April 1 (not retroactively effective as of January 1)," Christian Sewing, the bank's chief executive, wrote in the memo. The memo added that the bank will continue to review fixed pay at regular intervals and make adjustments as necessary.
Women held 22.8% of supervisory board seats at banks and 22.2% of those at insurance companies, down from 23.2% and 22.5% respectively the year before, according to the study by the German Institute for Economic Research, or DIW. The decline contrasts with other industries, where women had an overall 28.2% share of seats, an improvement on the previous year's 26.9, DIW said.
Ideally, your overall portfolio should beat the market average. But even the best stock picker will only win with some...
Rating Action: Moody's assigns definitive ratings to nine classes of notes issued by Bosphorus CLO V Designated Activity Company. Global Credit Research- 12 Dec 2019. Frankfurt am Main, December 12, 2019-- ...
Commerzbank <CBKG.DE> managers are keeping employees in the dark about the German lender's overhaul plans, a union representative said on Wednesday. The state-backed bank earlier this year announced plans to restructure after a failed merger attempt with Deutsche Bank <DBKGn.DE>.
Announcement of Periodic Review: Moody's announces completion of a periodic review of ratings of mBank S.A. Madrid, November 22, 2019 -- Moody's Investors Service ("Moody's") has completed a periodic review of the ratings of mBank S.A. and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers.
Rating Action: Moody's assigns provisional ratings to nine classes of notes to be issued by Bosphorus CLO V Designated Activity Company. Global Credit Research- 19 Nov 2019. Frankfurt am Main, November ...
Moody's Investors Service ("Moody's") has completed a periodic review of the ratings of Commerzbank AG and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future.