Caixabank makes new bid to take control of Banco BPI

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Caixabank makes new bid to take control of Banco BPI

7:47 CAT | 18 Apr 2016

In File Club of Mozambique / Isabel dos Santos

Caixabank has made a new offer worth nearly $2 billion for Banco BPI in another attempt to take full control of the Portuguese bank from Angolan billionaire Isabel dos Santos.

The deal, if it goes ahead, aims to help Banco BPI to reduce its exposure to Angola, for which it would have to make hefty provisions under new European rules.

Caixabank, already BPI’s largest shareholder with 44 percent, has been trying for more than a year to buy the rest of BPI, but has been thwarted by dos Santos, BPI’s second largest shareholder with 18.6 percent.

Dos Santos, the daughter of Angola’s president Jose Eduardo dos Santos, has large investments in Portugal, including a shared controlling stake in the country’s second largest mobile phone company, NOS.

She has been able to resist Caixabank’s takeover attempt because of a 20 percent limit on any single shareholder’s voting rights. But Portugal late on Sunday removed the shareholder voting limit, helping to clear the way for the new offer.

The government’s intervention followed the collapse of an earlier deal between the Spanish bank and dos Santos at the weekend.

The new bid, of 1.113 euros per share, values BPI at around $1.8 billion. It is 16 percent lower than a bid launched in February 2015 which Caixabank had to withdraw when dos Santos opposed removing the 20 percent voting rights cap.

Caixabank said it had several options to fund the deal, including selling assets and raising capital.

Analysts believe Caixabank’s latest offer is more likely to succeed because the European Central Bank and the Portuguese government are keen to find a solution for BPI, which is heavily exposed to Angola and grappling with low profitability at home.

“In our view, this time the chance of success is much higher than in 2015 for two reasons: the need of BPI to comply with the regulatory requirement to reduce its exposure to Angola (and) the fact that the Portuguese government already approved a decree which eliminates the possibility of establishing voting caps,” Mirabaud analyst Fabio Mostacci said in a note.

Portugal’s Prime Minister Antonio Costa said on Monday he hoped the conditions were now in place for the ECB to accept that BPI was working to reduce its exposure to Angola, where it owns 50.1 percent of Angolan bank BFA.

New European banking rules that took effect this month require BPI to make full provision for BFA’s lending risks or face big daily fines.

Dos Santos holds 49.9 percent of BFA via Unitel, the Angolan telecoms firm she controls jointly with state oil company Sonangol.

Caixabank expects the deal to hit its core capital solvency ratio by between 0.97 and 1.46 percentage points, depending on acceptance levels.

The bank reiterated it would maintain a core capital ratio goal of over 11 percent of assets following the takeover, in line with its 2015-2018 strategic plans

It said it expected annual cost benefits from the deal of around 85 million euros by the third year and revenue benefits of 35 million euros per year. It estimated restructuring costs of around 250 million euros.

Shares in BPI have been suspended since April 8, when they closed at 1.191 euros. Caixabank’s shares were down about 3 percent.

Source: Reuters