ACQUIRING A BANK
Basic legal framework for acquiring bank in EU
is laid down by EU Directive 2007/44/EC
as regards procedural rules and evaluation criteria
for the prudential assessment
of acquisitions and increase of holdings in the financial sector.
There are many issues that arise during the process
and acquiring a bank requires a team
of very experienced advisors
that have the power to bring the project to a successful completion.
Our latest transaction was concluded in April 2012. EUR 10.6 million sale of 70% of Versobank (Estonia) from Laiki Bank (Cyprus) to Ukrselhozprom (Ukraine)
OUR APPROACH ACQUIRING A BANK
At any time H2B will have knowledge of between 10-20 banks in Europe that are for sale. Usually a potential acquirer will have a specific target country in mind. If we do not have information about banks on offer in that country we will find a bank for sale that meets with the initial criteria of the acquirer if such a bank is at all available.
SIGNING AN ENGAGEMENT LETTER WITH THE ACQUIRER
After it has been established that a target is available, the next step is signing an engagement with the acquirer – which lays out the scope of our work, responsibilities and fee’s.
ANALYZING THE TARGETS
We analyze the potential Targets one or more and make an acquisition strategy with the acquirer.
ANALYSIS OF THE ACQUIRERS ABILITY AND STRATEGY BEHIND THE PLANNED ACQUISITION
Steps 3 and 4 are actually made jointly and draft documents made for analysis of the potential buyer in regards of background, experience in financial sector, financial standing, reputation etc.
STARTING PREPARATION ON APPLICATION DOCUMENTS TO FINANCIAL SUPERVISORY AUTHORITIES
The application documents take considerable time to prepare and we like to start preparing these documents at the early stages of the process to minimize delays because delays can be very costly for the acquirer and can put the transaction in jeopardy.
NEGOTIATIONS WITH SELLERS
Arranging meetings and start negotiations with the Sellers is the next step but before we start such negotiations we will prepare a strategy for the negotiations and have identified key issues that need to be negotiated.
HIRING LOCAL WELL RESPECTED LEGAL AND FINANCIAL DD TEAMS
In depth search on local high reputation legal service providers, meetings with potential legal offices and choosing the most respectful and appropriate partner forthe legal due-diligence, preparation of documents in local language and contacts and correspondence with FSA. Choosing the local partner (branch of big 4 auditing company) for the financial due-diligence, review of the business plan and adaptation of the plan for the specific expectations of FSA
SIGNING OF HEAD OF TERMS WITH THE SELLERS
We prepare a draft Head of Terms with the local legal team that we have chosen and negotiate terms with the Seller.
PRESENTATION FOR THE FSA OF THE PLANNED TRANSACTION
After the Head of Terms have been signed we have a presentation of the planned transaction and have a short informal meeting where we make an introduction on the acquirer to the FSA
FINANCIAL AND LEGAL DD OF THE TARGET
Usually we will get an informal feedback from the FSA on how they view the planned transaction and if that is not negative financial and legal Due-diligence on the Target is made. The results will form the bases for the Sales-and Purchase Agreement as well as estimating financing needs of the Target in the nearest future. The DD results are also the starting points for the business plan preparations that needs to be presented to the FSA. The result of the DD could also be that the acquirer decides to not go ahead with planned acquisition and decides that we should look at another Target instead.
APPLICATION TO THE FSA INCLUDING A BUSINESS PLAN AND STRATEGIC PLAN
During the process – since stage 2 H2B has been preparing application documents to be submitted to the FSA for approval of the planned transaction. These documents need to be reviewed by the legal team before submission – all the required documents should be submitted at the same time including a business plan and a strategic plan for the bank moving forward. The document volume is very extensive and needs to be completely consistent. The business plan before submission will have been reviewed by the “Big 4”we had selected for the financial DD.
ADDRESSING POSSIBLE QUESTIONS FROM THE FSA
The FSA will during the process ask questions in regards to the documents submitted, usually for clarification of some issues or requesting additional information. These questions need to be answered promptly and information provided.
NEGOTIATIONS AND SIGNING OF THE SPA
The Sales-and Purchase Agreement will be based on the Head of Terms, previously signed, DD results and negotiations on reps and warranties and other issues that might have arisen during the process.
AFTER APPROVAL FROM THE FSA – CLOSING
As soon as the approval from the FSA has been granted the parties immediately go for closing. Payments and hand-over of shares.
H2B offers private banking services from one of the leading banks of the Principality of Monaco