SocGen buys Commerzbank markets unit

Bloomberg

Societe Generale SA is acquiring the Commerzbank AG business that includes the German lender’s exchange-traded products and market-making operations as it seeks expansion in Europe’s largest economy.
The French bank will take over investments products, flow products and asset management businesses based in Frankfurt, London, Paris, Hong Kong and Zurich, according to an e-mailed statement on Tuesday. While it didn’t disclose financial details, it did say the acquisition will have a positive effect on return on tangible equity after integration and a limited impact on capital.
SocGen had faced competition from other bidders including Goldman Sachs Group Inc. for the unit, which generated more than 350 million euros ($406 million) of revenue last year, and said that the acquisition will boost its position in derivatives and investment products across asset classes. Commerzbank had put its Equity Markets and Commodities business up for sale as it scales back trading and focusses on retail and corporate lending.
“It’s a good complement to our existing activities,” SocGen deputy chief executive officer Severin Cabannes said by phone. “It’s a real strengthening of our franchise and completes our German set-up.”
SocGen rose 1.2 percent to 36.5 euros as of 11:04 a.m. in Paris, while Commerzbank climbed as much as 2.4 percent in Frankfurt. The deal is “marginally positive” for both banks, Lorraine Quoirez, a banks analyst at UBS Group AG, said in a note to investors. It allows Commerzbank to deliver on its cost reduction program and SocGen “to consolidate market share in its core businesses at a reasonable price,” she said. SocGen and rivals are seeking to increase their presence in Germany. That’s prompted speculation they could be interested in a larger part of Commerzbank after years of restructuring at the German lender draws to an end.