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Selling Banks' Private Equity Businesses | Advantage Europe

Europe must have been tired of being buzzed by a dozen nefarious headlines every 12 hours last month, May taking its toll on BP with three alternatives already declared failure and US having shutdown offshore drilling businesses granted licences in its wake. Greece and Spain remain in the picture and while May kept the lights firmly on for French Banks like SocGen and the German Landesbanks with their dubious models, June is likely to bring back attention to the dangerous company we keep in London.

London’s trading friendly Prime banks were let off easy after accounting techniques that created the patent 105 transactions from Lehmans were easily forgiven by the market for Citi and HSBC. The frozen dungeons of London are still alive with more draconian strategies as far as the hopeless diamonds of RBS, Barclays and Lloyds are concerned. RBS is selling its PE business to a Dutch Pension fund for $560m The competition commission guys sre need to work out that conflict of interest. RBS’s sale of 318 branches to Santander/BBVA/NAB is however based on the Competition Commissions long list which has already resulted in a loss of 2600 jobs this month

Though for new banks there is not much opportunity, online banks havent been doing badly in Euro bereft UK while the Euro plunger streams through the traditional risk knights of the city dungeons..Pardon the imagery though, Camelot may not be fun in the weather. However it seems according to the FT, RBS’s PE was a pay to play option bought at the height of the leverage era while ML has sold its own $1.5 bn fund to AXA PE in France.  Citi and Lloyds are still in process to sell their PE outfits.

Barclays and RBS are getting ready to carve out their PE businesses and those of my colleagues in London who would have been following the good bank bad bank break up with interest laughing at our continuing winning ways with the final deals..the AIG transaction for Prudential has also broken down as has any thoughts of removing chunky revenues from the banks jettisoing their highly profitable PE businesses. Barclays is apparently close to keeping all the three current funds and hence the $560m in fees annually from them while the breakaway Barclays PE will be bought out by the management which will earn advisory fees from the bank while processing a new fund launch ( $1.5 billion) any discussions of valuation are highly suspctas it also depends on the quantum of cash bank will pay them back annually in the future making it seem more like a broken pension plan in valuation terms than anything else..

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This entry was posted on June 2, 2010 by in Banking, Financial Markets, Financial Services, Global, Retail Lifestyle and tagged , , , , , .

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