China Construction Bank seeks acquisitions in Europe — report

Chinese lender China Construction Bank Corp (SHA:601939), or CCB, is interested in buying a European bank, or a minimum of 30% to 50% in one and has CNY100bn (USD15.8bn/EUR12.01bn) of cash available to finance a deal, according to chairman Wang Hongzhang, as cited by the Financial Times.

Hongzhang told the paper in an interview that CCB views UK, Germany or France as the most attractive markets in Europe for an investment, as it is looking to potentially buy a bank that covers all top countries and that would serve its strategy for international growth.

The executive did not wish to name any of the potential targets, but said that a suitable one should have a large enough international network instead of being focused on its home market and would not raise significant cultural issues.

Investment bankers point at European lenders partially nationalised during the financial crisis as good investment targets, the report said naming 82%-state-owned Royal Bank of Scotland Group Plc (LON:RBS) and Commerzbank AG (ETR:CBK) in which the German state holds 25%.

The British bank has a current market capitalisation of GBP17bn (USD28bn/EUR21.1bn), while the German peer is valued at EUR9bn (USD12bn).
Despite long-time predictions of analysts and bankers that Chinese companies with high market valuations could buy cheaper western lenders, there have been few such attempts, the paper said.

Guo Shuqing, former CCB chairman, said in 2011 that the price of a European bank would not be the only criteria for a potential acquisition, even if that would recommend them as good targets. With their shares declined significantly, such banks may not serve CCB’s development strategy, the Financial Times cited Shuqing as saying at the time.

Germany looks into planned merger of European defence giants EADS and BAE

The German government is currently looking into the details of the planned tie-up of European aerospace and defence group EADS NV (EPA:EAD) and British defence contractor BAE Systems Plc (LON:BA) and will give an answer within the deadline, Chancellor Angela Merkel told a news conference on Monday.

The two companies announced last week negotiations to combine their operations creating a world class international aerospace, defence and security group which would benefit from cost savings from procurement and sourcing efficiencies available to the enlarged group and ensuring significant new business opportunities, they have said.

Under the terms being discussed, EADS’ current shareholders would own 60% in the combined group, while the shareholders of BAE Systems would hold the other 40%, the companies said. The resulting group would have substantial manufacturing and technology excellence centres in France, Germany, Spain, the UK and the USA.

EADS and BAE Systems have started discussions with various governments about the effects of a potential merger and plan to issue special shares to each of the French, German and UK governments to replace the UK government’s stake in BAE Systems and the stakeholder concert party arrangements in EADS, the have said.

Merkel said the German government is evaluating the proposal and is talking with others on the planned deal.

According to industry sources cited by the Financial Times Deutschland earlier, EADS would be willing to give Germany a veto right and job guarantees in order to secure its approval for the deal.

The two companies have until October 10 to announce a deal, with BAE Systems saying it would file for an extension if talks continued beyond that date.

UPDATE 2: No problems with HSBC’s internet banking system

Banking giant HSBC has contacted Financial News and confirmed that there currently are no problems with the bank’s internet banking system.

Nigel Hinshelwood, UK Retail Bank Chief Operating Officer at HSBC said: “There are no problems with payments going through our internet banking system. All payments made are being processed, and within normal processing times.”

Earlier today, an HSBC business banking client told Financial News that the bank was unable to process internet banking payments and any payments that had been made this morning were currently trapped ‘in-limbo’ with HSBC unable to give customers any guidance on when the payments would be processed.

The source added that this was the explanation given by the designated HSBC relationship manager. The source contacted Financial News later and said that payments were again being processed around midday today.

The earlier Financial News story follows:

HSBC Bank plc have experienced an internet banking failure today (17 September, 2012).  The bank is currently unable to process internet banking payments and any payments that have been made this morning are currently trapped ‘in-limbo’ with HSBC unable to give customers any guidance on when the payments will be processed.

Customers are being told not to try and make any payments from their online banking until the problem has been resolved.  Members of the HSBC call-centre have ‘promised’ cutomers that the payments will go out today, although without any timescale being offered customers are quite correctly concerned at whether the bank will be experiencing the type of outage that NatWest and Ulster Bank experienced earlier in 2012.

What is is for certain is that this is another embarrassing online banking failure for a UK Bank and further shakes the now fragile confidence that the British public has in it’s financial institutions.

Swiss banks expect exodus as foreign tax authorities demand increased transparency

Swiss banks are expected to lose billions of francs in deposits and assets as cash-strapped European governments, struggling to balance their budgets, are applying pressure on Switzerland to introduce tighter rules to prevent foreigners from using secret accounts to avoid their local taxman.

In an interview with Schweizer Bank magazine, head of UBS wealth management Juerg Zeltner, said that hundreds of billions of francs would flow out of Swiss banks in the coming years.

Zeltner’s remarks are mirrored by German financial consultancy firm Zeb Rolfes Schierenbeck, which is forecasting that wealthy Europeans will withdraw as much as CHF200bn of funds and assets from Swiss banks by 2016.

The Swiss government has reached deals with Germany, UK and Austria to increase transparency and 11 Swiss banks are being investigated by US tax authorities.

Recently, a former UBS banker was paid $104m by the US Internal Revenue Service (IRS) for revealing systematic efforts by the bank to help rich Americans evade taxes in their home country, which resulted in UBS being fined $780m in the US.


Boots invests in Chinese pharmaceutical distributor Nanjing

Swiss pharmacy-led health and beauty group Alliance Boots GmbH said it would invest some GBP56m (USD91m/EUR69.2m) in Nanjing Pharmaceutical Company Ltd (SHA:600713) in exchange for a 12% stake in the Chinese pharmaceutical distributor, under a strategic alliance agreement.

The move will see Alliance Boots becoming Nanjing Pharmaceutical Company’s second largest investor with representation in the target’s board and operational management, the buyer said.

The alliance marks a step forward in Alliance Boots’ long-term strategy for China, its executive chairman Stefano Pessina said in a comment, adding that his company sees significant potential in working together with Nanjing Pharmaceutical to create a great healthcare distribution network.

In turn, Nanjing Pharmaceutical’s chairman Zhou Yaoping described the partnership with the Swiss group as a move of great significance given the slowdown in the global economy and the reforms in the Chinese medical and healthcare sectors. With Alliance Boots advanced supply chain management technology and experience, Nanjing Pharmaceutical will improve its management practices and boost performance, he added.

Nanjing Pharmaceutical, whose biggest shareholder is Nanjing Pharmaceutical Group Limited, claims to be China’s fifth largest pharmaceutical wholesaler, generating some GBP2bn in sales last year. Based in the Jiangsu province, the company runs distribution centres in 12 cities across eight provinces and one autonomous region.

Alliance Boots stepped into the Chinese pharmaceutical distribution market in 2008 via its joint venture Guangzhou Pharmaceuticals Corporation. The group is present in over 25 countries with more than 116,000 employees.

Completion of the deal is subject to various regulatory clearances.

Sponsor Carlyle secures a deal to acquire Landmark Aviation

US private equity firm Carlyle Group LP (NASDAQ:CL) has revealed a deal to buy Texas-based business aviation services provider Landmark Aviation from investors GTCR LLC and Platform Partners LLC.

Carlyle did not disclose the value of the deal, but said it would finance it with equity capital from its USD13.7bn (EUR10.4bn) buyout fund Carlyle Partners V.

The buyer said it would invest to further expand Landmark, modernise its fixed based operation (FBO) network and add new locations via acquisitions and greenfield projects.

Carlyle managing director and head of the Global Aerospace, Defence and Government Services division Adam Palmer welcomed the agreement, saying that the private equity firm will partner with Landmark’s management to step up the growth of company’s FBO network.

Dan Bucaro, Landmark president and CEO also expressed confidence that under the umbrella of Carlyle which has been investing in aviation of over 20 years, his company will be able to further grow its franchise.

Landmark runs one of the world’s largest FBO networks with 51 locations across the US, Canada and France and also offers aircraft maintenance, charter and management services.

Since 1987, Carlyle’s Global Aerospace, Defense and Government Services group has invested around USD4.2bn in over 40 aerospace and defence firms.

Morgan Stanley (NYSE:MS) Barclays Plc (LON:BARC) and Kirkland & Ellis LLP are advising the vendors. Evercore Partners Inc (NYSE:EVR) and Latham & Watkins LLP are acting as advisors to Carlyle.

Completion is expected in the fourth quarter of this year, subject to conditions, including regulators clearance.