Banks, with Basel III discount on asset manager acquisitions
Reduced capital absorption if the insurance subsidiary buys. The example of Bnp, which acquired Axa's asset management via Cardiff
2' min read
2' min read
The new rules of Basel III open up unexpected growth opportunities for European banks. Not only in the insurance sector, thanks to the capital discounts introduced by the so-called 'Danish compromise'.
But also in asset management, provided the acquisition is made by the banking group's insurance subsidiary. Outlining the new regulatory scenario, with the consequent implications for the sector, was a detailed report by Mediobanca Research yesterday which, as Co-head Andrea Filtri summarises, 'highlights the potential opening of new and wider M&A frontiers for banks' thanks to the application of what analysts now refer to as 'the Danish compromise squared'.
The French shot
.The first to exploit and benefit from the new regulatory framework were the French Bnp Paribas, which a few weeks ago announced the acquisition of Axa Investment Managers from Axa for EUR 5.5 billion.
The purchase was not made directly by Bnp nor by Bnp Paribas Asset Management, but by the insurance subsidiary Bnp Cardiff. And thanks to the new Danish compromise rules, according to the estimates of Mediobanca Research, the maxi acquisition in asset management will determine for the group a capital absorption Cet1 of only 25 basis points or 2 billion (against the 65 points, or 5 billion, of reduction that there would have been in case of direct shopping by Bnp).
This is a considerable advantage, so much so that analysts point out that "banks that are not yet bancassurers should soon reconsider this choice" and aim "to acquire insurance companies and then, through these, purchase assets or wealth managers in transactions that before the new rules were considered unfeasible due to excessive capital dilution".
