M and A

Summary Of Wealth Management, Bank M&A – March 2023

Editorial Staff 19 April 2023

Summary Of Wealth Management, Bank M&A – March 2023

In a March that few in the industry will forget for some time, two large banks – Credit Suisse and Silicon Valley Bank – were taken over. Both of these deals were "shotgun marriages," to coin a phrase. In other, less stress-laden deals, M&A activity continued.

Here is a roundup of the main M&A deals that affected wealth management and private banking during March. Without any doubt, the collapse of Silicon Valley Bank was the biggest story – a “shotgun” wedding. The US side of the failed business was bought – via the FDIC – by First Citizens Bank, and the UK side of SVB was bought for a nominal price by HSBC. 

SVB, First Citizens Bank
The Federal Deposit Insurance Corporation agreed to let First Citizens Bank take over Silicon Valley Bank, which collapsed into the arms of the FDIC two weeks before. First Citizens Bank & Trust Company, to give its full name, is based in Raleigh, North Carolina. The FDIC statement said the 17 former branches of SVB will open as First Citizens. Depositors of SVB are automatically under the new bank. All deposits assumed by the firm continue to be insured by FDIC up to the insurance limit.

The FDIC said that as of 10 March 2023, SVB had about $167 billion in total assets and about $119 billion in total deposits. The First Citizens transaction included the purchase of about $72 billion of Silicon Valley Bridge Bank assets at a discount of $16.5 billion. Around $90 billion in securities and other assets remained in the receivership for disposition by the FDIC.

HSBC, Silicon Valley Bank UK
HSBC said that its UK ring-fenced subsidiary, HSBC UK Bank plc, had acquired Silicon Valley Bank UK Limited for £1 ($1.21). SVP UK was taken over by the Bank of England after its parent financial group collapsed in March. As at 10 March 2023, SVB UK had loans of around £5.5 billion and deposits of around £6.7 billion, HSBC said in a statement to the London Stock Exchange. For the financial year ending 31 December 2022, SVB UK recorded a profit before tax of £88 million. SVB UK's tangible equity is expected to be around £1.4 billion.

UBS, Credit Suisse
UBS intends to buy Credit Suisse for a total of SFr3 billion ($3.23 billion) in an all-stock deal. UBS said the combination of its business with Switzerland’s second-largest bank will create a business with more than $5 trillion in total invested assets. The deal will “further strengthen UBS’s position as the leading Swiss-based global wealth manager with more than $3.4 trillion in invested assets on a combined basis, operating in the most attractive growth markets,” it said. The transaction is not subject to shareholder approval. UBS has obtained pre-agreement from FINMA, Swiss National Bank, Swiss Federal Department of Finance and other core regulators on the timely approval of the transaction. The merger is expected to be consummated by the end of 2023, if possible.

State Street agreed to buy CF Global Trading, a global firm specializing in outsourced trading on an agency basis for a variety of asset classes including equities, listed derivatives and fixed income.

The transaction is expected to be completed by the end of 2023, subject to customary closing conditions. Financial terms are not being disclosed by Boston-based State Street. Founded two decades ago, CF Global Trading trades across multiple asset classes and will have execution desks in Hong Kong, London, New York and Lisbon (expected to be opened by the time this acquisition closes). 

Benchmark Capital, Kennedy Independent Financial Advice 
Benchmark Capital, which provides financial planning solutions and is part of UK-listed Schroders, wrapped up its purchase of Kennedy Independent Financial Advice, a firm based in Northern Ireland. The financial terms were not disclosed.

Business and staff at KFA became part of Benchmark Financial Planning, and will move to the firm’s new premises in Derry.

First Sentier Investors
First Sentier Investors entered a strategic partnership with European credit manager, AlbaCore Capital Group, by taking a minority stake. The financial size of the deal was not disclosed. Based in London and present in Dublin, AlbaCore has capabilities spanning various parts of the corporate credit spectrum including private credit, collateralised loan obligations, liquid credit and structured credit in Europe. Since its inception in 2016, the firm has grown to $9.5 billion in assets under management. Besides institutions, clients include high net worth individuals. The senior team at AlbaCore kept a minority ownership stake in the business and will continues to invest capital into funds.

Stratos, an aircraft investment specialist, acquired Magi Aviation Capital, an independent aircraft finance specialist and aircraft asset manager, and its various subsidiaries. The all-cash deal, which received regulatory approval from the UK Financial Conduct Authority, saw Stratos acquire Magi in its entirety. As part of the acquisition, Stratos inherited management contracts of four aircraft leased to Middle Eastern airlines. This took Stratos’ managed portfolio to over 60 aircraft worth $3 billion with annual rental receipts in excess of $300 million.

Droit, an international technology firm specialising in computational law and regulation, announced that it has closed a $23 million Series B investment in its latest funding round. The round was led by Pivot Investment Partners and UBS through its venture and innovation unit UBS Next. Goldman Sachs, an existing investor, is also participating in the financing round.

Following regulatory approval, Kingswood completed its acquisition of Moloney Investments Ltd, a financial advice firm based in Dublin, Ireland. Kingswood Holdings Limited is an AIM-listed international fully-integrated wealth management group with circa £11 billion ($13.2 billion) of assets under advice and management. It serves clients from a growing network of offices across the UK with overseas offices in South Africa and the US.

Stonehage Fleming, an international multi-family office, wrapped up its purchase of the business and assets of Rootstock Investment Management, an investment firm based in South Africa. Rootstock’s Worldwide Flexible Fund was rebranded as the Stonehage Fleming Worldwide Flexible Fund. Rootstock’s Global Equity Fund was amalgamated into Stonehage Fleming’s Global Best Ideas Equity Fund, which is managed in London by Gerrit Smit.

Stonehage Fleming was advised on the transaction by Stonehage Fleming Advisory and Stonehage Fleming Law.

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