Takeover appetite increases among Belgian luxury bankers
With profits under more pressure than ever, a new wave of mergers and acquisitions seems inevitable among Belgian private banks and asset managers. “Everyone talks to everyone.”
Swearing doesn't really suit the champagne atmosphere that people usually associate with private banking, the financial services market and asset management for customers with 1 million euros or more. But it is only natural that Belgian asset managers, stock exchange houses and private banks railed against Mario Draghi last week. The President of the European Central Bank (ECB) announced on Thursday that Frankfurt is willing to keep its interest rates low longer than many market watchers had planned.
A serious letdown in the accounts of many bankers. They had counted on finally getting some more oxygen if interest rates picked up again. The annual reports published by independent Belgian asset managers, stock exchange houses and private banks in recent weeks show that they could use that extra oxygen. While the major banks performed relatively well last year, medium-sized and smaller private banks and asset managers were far from able to present good figures for 2018.
Tough year
Degroof Petercam, the largest player in the private banking market after the four major banks, saw its profit a third lower in 2018 at 57 million euros. Bank Nagelmackers, the country's oldest bank, went into the red for almost 30 million euros last year. The Brussels stock exchange house Leleux reported a 41 percent lower net profit of 1.4 million euros. At Antwerp private bank Dierickx Leys, the net profit even fell by more than 67 percent to 2.2 million euros. Although that is partly because that group was able to benefit from an exceptional windfall in Luxembourg the year before.
Bankers have been complaining stone and bone about the impact of low interest rates and fickle investors on their results for years. But in particular, the necessary investments to keep up with digitization and the stricter regulations imposed on the sector are taking bigger and bigger bites out of profit, it sounds.
That's also the first thing Koen Hoffman from Value Square mentions when we ask him why the Ghent asset manager saw its net profit fall by 46 percent last year. “Of course, there is no more money to be made on bonds and, in a difficult stock market environment, we lose customers who seek security in real estate investments,” he says. “Nevertheless, we did well operationally. Our lower profit is mainly because we have invested in new software and people to cope with changing regulations. Reaching the Olympic minimum is no longer enough there. That is of course a good thing and we will reap the benefits later. But now it weighs on profitability. '
Since the crisis, the rules of the game have been thoroughly shaken up. Banks and asset managers should not only set up larger buffers to absorb any shocks. In recent years, they also had to do everything in their power to meet the new MiFID rules, the European Consumer Directive, which, among other things, requires them to inform customers in detail about the costs they charge. At the same time, anti-money laundering legislation has been tightened, new privacy guidelines have been introduced and financial institutions must be much better equipped to protect themselves against new risks, such as cyber attacks. For many smaller players, that's a lot to swallow all at once.
Deceptive rest
“Sometimes I don't know which hat to wear first,” says Herman Hendrickx, the chairman of the management committee of Antwerp private bank Dierickx Leys. “Do I have to be the money laundering expert first when I bring in a new customer? A tax specialist? Or just a banker? ' It forced Dierickx Leys, originally a stock exchange house, to focus more on the much broader private banking activities. “In the past, you could still distinguish yourself by quickly carrying out customer transactions. But today, customers often regard that as a standard service,” says Hendrickx.
Just to be able to bear all the costs associated with regulations and digitization, more and more institutions are looking for extra scale. Last year, the Dutch ABN AMRO took over Société Générale's Belgian private banking branch to quickly gain importance in our country. With the exception of a few smaller deals, new mergers and acquisitions have remained silent since then.
But that peace is deceptive, says Koen Hoffman of Value Square. “Everyone talks to everyone.” That which is brewing became clear at the end of April when reports suddenly surfaced that Degroof Petercam would end up in the shop window. At the same time, there is also plenty of speculation in the sector that Nagelmackers will soon be sold by its Chinese owner Anbang. Duet, Merit Capital's British shareholder, also announced at the end of last month that it was on a takeover path.
“We also noticed a lot of interest from larger parties,” says Nicolas van de Put, a board member at the small Antwerp private bank Van de Put & Co. “We've always said no to that so far. As a small family player, we are clearly in our own niche, and that works well. We will continue to attract customers, mainly people who come from large and medium-sized players. The smaller houses that fail to do this should be put on display. Even because the regulations here barely make a distinction between large and small players. In countries like the UK, Germany and France, that's what's made and you have a lot more diversity. '
Herman Hendrickx from Dierckx Leys: “There have also been several knocks at our door. But we are sticking to our independent course. But supervisors must ask themselves what kind of landscape they want here. Should we all end up in large-scale stories, with Deutsche Bank scenarios? Or are we just opting for a playing field where several healthy players can work?
DISCLAIMER
- Source: De Tijd
- Author: Peter Suy, Entrepreneurship Editor
- URL: https://www.tijd.be/ondernemen/banken/overnamehonger-neemt-toe-bij-belgische-luxebankiers/10135242.html
