Update: 11th Feb 2016
Shifted to the investment banking forum from asset management as its a broader discussion.
( i really want to change the title of the topic, but i can't seem to)
(edited for time line) 03 Feb 2016
This came up first -
http://www.swissinfo.ch/eng/wells-fargo-may-buy-c…
"EB 3, 2016 - 14:29
(Bloomberg) -- Wells Fargo & Co. is in talks to buy a large part of Credit Suisse Group AG’s securities unit in what may be one of the biggest banking deal since the financial crisis, Hedge Fund Alert reported, without saying how it obtained the information.
The banks are still discussing the terms of the deal, in a transaction that may involve Credit Suisse’s U.S. and European equities businesses, as well as merger advisory and capital markets, HFA said. Spokesmen at Credit Suisse and Wells Fargo declined to comment, when contacted by Bloomberg News."
Then this -
http://www.bloomberg.com/news/articles/2016-02-03…
Curious what DB and Barclays are thinking and planning.
Thoughts ? EU bank consolidation ?
Wells has been pretty strong lately, wouldnt be surprised
Man this would be huge for Wells. Surprising given Stumpf's stance on the IB side of things.
Agree with 99% of what you said. Wells is only trying to expand globally to the extent of supporting their existing U.S. clients (ie- international trade financing to corporate banking clients). I don't believe that they have any intention to have a European IB franchise for example.
90% of the assets from the GE acquisition are located in the U.S. and Canada so I wouldn't count this as expanding globally.....
Well, I think the culture clash is inevitable if a European bank were to be acquired be an American bank. The best example I can think of was, oddly enough, when DLJ was acquired by CS back in 2000. There was a huge clash in integrating the platform across the entire firm. This isn't necessarily a matter of risk tolerances and operational and strategic overlaps, but a question of cultural fit. The best line I heard in the CS/WFC Private Wealth "Executive Recruitment" Deal was:
It's not a knock on Wells, but one of the basic tenants of the deal (or any merger) that CS would do in offloading their business. You have a much more robust platform in place at CS than Wells, so what happens Wells tries to teach guys who have been doing things for just as long, if not longer, on an arguably more effective platform, or force CS to adapt to the Wells Platform instead of potentially keeping legacy systems in place (a la Bear and JPM back in '09)? It's going to create a lot of issues for everyone involved.
This has been speculated/thrown around for a while; not surprised it's come up again.
I'm torn. First, after the way both CS and WFC botched what should have been an easy sale of CS's Private Bank, I'm sure significant amounts of work will be thoroughly vetted and require significant hurdles to get done. I think that will hang heavy over this deal. Not just that, there are huge culture issues between CS and WFC, for which integrating the two will be an absolute nightmare. Plus, there are questions of account coverage if there are overlaps in account coverage because brokers are very territorial over that stuff. Just based on that, I don't think WFC will be able to make the acquisition. However, the only thing that works in the deal's favor is that the new CEO doesn't seem to care for businesses in the US.
Still, there are already reports that WFC and CS deny any talks are happening, so take that with a grain of salt.
any other thoughts, now im curious
bump
Clearly from all above ( thanks Frieds & Anonguytoibd) this deal has huge cultural clashes. Also, i don't think the board at CS would want to make a mistake like DLJ again. (http://www.morningstar.com/news/dow-jones/TDJNDN_2016020417201/credit-s…)
But like all myths and stories, there might be some truth lurking behind.
Given the recent chatter on EU banks ( DBK especially) , how would they restructure their shipping and energy lending businesses. Would J C Flowers be interested ?
http://www.cnbc.com/2016/02/08/european-banks-face-major-cash-crunch.ht…
Negative rate spectre : This is not new
http://ftalphaville.ft.com/2016/02/11/2153052/eurodollorous-carnage-as-…
http://ftalphaville.ft.com/2015/10/02/2141515/negative-rates-as-a-precu…
http://www.reuters.com/article/us-europe-banks-stocks-idUSKCN0VI1WL
Is there precedent of a bank denying rumors about acquiring another bank's IB department and then that transaction ending up occurring soon after?
camelboy69 It's more common than you think, but most of the time the deals are leaked, denied, denied and denied until a press conference saying the deal is happening. Not that the financial crisis of '07/'08 is a great indicator because deals were denied left and right until an actual deal was structured but news leaks. That's part of the process. If a deal were to happen, then it would be denied until announced as happening. Banking deals in particular, have so many moving parts that until there is a definitely proof in place, everyone involved will deny them.
Asdaf there might be more success in individual carveouts than there would be in banks actually being bought. It would make more sense for a firm like JC Flowers to buy an entire division vis-a-vis a spinout (ie spinout the energy unit into its own fund and then have Flowers buy the fund directly) instead of purchasing a whole bank or done through the purchase of a subsidiary unit (ie Flowers buying DB's USA unit or WFC buying CS's US Operations just for one or two smaller groups). There are significant amounts of hoops to jump through before even looking at culture to get a deal off the table, which is what makes the WFC/CS, BARC/Stifel and RayJay/DB-Alex Brown deals so interesting. One of the more interesting take on the Barc/Stifel deal was presented by anonymous advisers who spoke out which put one of the most interesting takes on fit being so important. BARC/Stifel was a clear carveout where both companies came out for the better. WFC/CS... well, now the lawsuits are coming in over deferred comp, holdout pay, and things like that. Contrast with the WFC/CS deal where there was a clear interest in avoiding all the hurdles by basically handcuffing the advisers to a deal by gunpoint. Using the DB Energy desk as an example, a 2 stage carve-out/buyout would give JCF enough leverage to buy the specific desk it wants whole without the requirements associated with running a bank and see slowly sell off units if needed, provided they are in fact leaving the US behind.
Deleniti necessitatibus cum occaecati. Sapiente maxime et laborum quia provident.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...