Dealwatch: Banking M&A

While bank write-downs and CEO shake-ups top headlines, banking M&A continues.

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The latest deal came March 3, when Barclays plc unveiled a $745 million deal for Russia's Expobank. The deal comes nearly five months since Barclays lost out to a Royal Bank of Scotland Group plc-led consortium in the bidding for ABN Amro Bank NV, a $100 billion deal and the largest-yet bank merger. For more, see below.

Meanwhile, Societe Generale SA offered March 4 to buy out minority shareholders in Russia's OAO Rosbank, which it controls, offering 194.09 roubles ($7.68) per share, reports said. SocGen earlier held a 20% stake before a $1.7 billion deal in December gave it another 30% and elevated its status to the biggest foreign bank in Russia. The bank had indicated that once it exercised this call option, it would make the mandatory offer to minority shareholders, which could boost its stake to 57.8%.

Despite its dealmaking, SocGen has been cast as a target. A quick recap:

The beleaguered French bank reported a $4.9 billion fourth-quarter loss Feb. 21 and acknowledged more sub-prime related write-downs could be coming. The news came a day after the committee set up to investigate a trading scandal at France's No. 2 bank issued its report, which found that SocGen failed to act on 75 warnings over two years related to the activities of index futures trader Jerome Kerviel, which led to 4.9 billion euros ($7.1 billion) in losses that the bank disclosed Jan. 24. To cover the trading-related losses, SocGen launched a share sale Feb. 11 with plans to raise $8 billion. The bank sold shares at a 39% discount to its closing share price ahead of the sale.

Speculation over bids for France's No. 2 bank surfaced shortly after the losses were revealed. The bank's two main French rivals, BNP Paribas SA and Credit Agricole SA and Europe's largest bank HSBC Holdings plc, could make a move for the lender. (Activist investor Knight Vinke Asset Management LLC in October leaned on HSBC to consider selling its investment banking division or seek out another "radical solution" to boost its value as much as half, The Deal's Paul Whitfield noted.)

SocGen said Feb. 1 it had hired a group that includes J.P. Morgan, Merrill Lynch & Co. and Rothschild as its rivals lie in wait.

THE CANADIAN WAY

Meanwhile, Canadian banks, which have gone largely unscathed given the current lending turmoil, have continued their acquisition spree across the Americas.

Canada's second-largest lender Toronto-Dominion Bank topped headlines back in October 2007 with an $8.5 billion deal for Cherry Hill, N.J.-based Commerce Bancorp Inc., adding to a host of U.S. East Coast-based lenders it has lassoed in recent years. Commerce shareholders approved the deal, according to a TD statement Feb. 6. The deal value has dropped to $7.7 billion, given a decline in TD's share price, The Deal's Peter Moreira noted, and earlier in January, two Commerce shareholders went to court to try to block a settlement on suits against the acquisition.

The same day TD and Commerce announced deal plans, Canada's No. 1 bank, Royal Bank of Canada Ltd., made a $2.2 billion play for Trinidad and Tobago-based RBTT Financial Group, 20 years after retreating from the Caribbean market. The deal suggested RBC is stepping up its game in the region against rival lenders Canadian Imperial Bank of Commerce and Bank of Nova Scotia, which both have a strong Caribbean presence,

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