2Mes·

Invest in banking stocks with the aim to be acquired

After having invested before in $1COV (+0%) with the aim to be acquired by Adnoc/XRG and another investment in $ILTY Illimity Bank in Italy giving access to $IF (-1,47%) Banca IFIS with a 10% discount.

I'm now thinking to invest in further banking consolidation. Since there seems to be a wave of banking consolidations coming up both cross boarder and within individual European countries.

Italy shows:

$UCG (-1,73%) Unicredit stakebuilding in both $ALPHA (-1,91%) Alphabank & $CBK (-2,79%) Commerzbank and a failled attempt to acquire $BAMI (-2,66%) Banco BPM. We saw $BMPS (-2,36%) Monte dei Pachi acquire $MB (-2,07%) Mediobanca. $BPE (-3,35%) Bper Banca merge with $BPSO (-3,85%) and rumored to be on the wishlist of Unicredit.

Denmark is consolidating but could be still more ongoing:

A recent merger of $SYDB (-1,55%) Sydbank, Arbejdernes Landsbank & $VJBA Vestjysk Bank.

In Spain

We've seen a major but failed attempt to forget about the Spanish attempt of $BBVA (-1,81%) Banco Bilbao of $SAB (-0,21%) Banco Sabadell.

The Netherlands:

$ING (-2,58%) ING taking a substantial stake in $VLK (-1,59%) Van Lanschot Kempen.

$ABN (-2,23%) Doing several take overs in Germany and buying the trading app Bux and rumored to be bought themselves.

When thinking this through I see a potential for take over but, if it won't happen there is still good dividends to be earned. Therefore there is less of a need of a quick turn around.

I'm now looking for a "smaller" bank that traded and a likely take over candidate.

Where would you invest?

$BPE (-3,35%) - Bper Banca - Italy

$BAMI (-2,66%) - Banca BPM - Italy

$ABN (-2,23%) - ABN Amro Bank - Netherlands

$ALPHA (-1,91%) - Alpha Bank - Greece

$JYSK (-1,15%) - Jyske Bank - Denmark

$ALR (-3,23%) - Ailor Bank - Poland

Any other alternatives, or opinions about this idea, I'm happy to read!

4 Commenti

ynnxs@ynnxs

2Mes

The Italian government wants to see $BMPS merge with $BAMI so they can further reduce their stake in Monte dei Paschi. As of now I see this bank as a great turnaround candidate but I hope they don’t buy out Banco BPM until they fully integrated $MB because otherwise this could end in a disaster once again 🙈

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Frisian@frisian

2Mes

This I believe is a valid concern and when I investigated I also saw less of a match between Mediobanca and Banca Montei dei Paschi. And a better fit with Banco BPM.

My idea is to be on Acquired side so at point of integration, I have already cashed out.

Banco BPM is actually a good potential in my view because also in the background Credit Agricole has build up a large share. so a move of some sort seems imminent.

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ynnxs@ynnxs

2Mes

@frisian You’re right about the differences between the two banks. Monte dei Paschi does classical retail business while Mediobanca operates in wealth management. Also the working culture is different which could lead to „brain drain“. However, I see the different business models as an opportunity since it diversifies the income of Monte dei Paschi and wealth management brings more stable return because they are pretty much independent from interest rates (other than retail banking).

The idea is good but I wouldn’t want to rely on an acquisition especially if i’m not convinced of the company. If the acquisition fails, you paid a high premium on the actual value because usually the buyout price is 30-50% above the current price.

In my view the chances are high that Banco BPM will be acquired by another bank. For your investment strategy it doesn’t really matter who buys the company :)

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Frisian@frisian

1Mes

Just as a little update here I today bought 160x $BAMI especially after Credit Agricole got approval to increase it's holding above the 20% threshold

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