Frankfurt-based Renell Bank AG, which publicly announced the acquisition of Belgium’s Merit Capital last October, remained silent on Monday on the demise of the Antwerp-based brokerage firm whose trading licence is being revoked.
Marc Renell, CEO of the German private bank, told Investment Officer that he is unable to comment. “I cannot speak about this topic. Go ask Merit in Antwerp,” he said when answering the bank’s general number listed on its website, before hanging up the phone.
Phone calls to Merit Capital’s offices in Antwerp went unanswered on Friday and Monday, leaving many of the broker’s 3500 clients in doubt about the status of their investments. Belgian media reports indicate that May will become a crucial month for Merit Capital, which is said to have some 1.25 billion euro in assets under management. Several legal procedures are being applied and Merit is understood to be biding for time to find a way out.
Brokerage licence revoked
Last week, Merit Capital lost its Belgian brokerage licence. According to a judgement by Belgium’s Council of State published on 26 April, Merit Capital has been struggling for years with its governance model and profitability.
Having its licence revoked casts a cloud over its arrangement with Frankfurt-based Renell Bank, which announced in October it had agreed to acquire Merit subject to conditions. Renell Bank said it had signed an agreement on 30 September to acquire Merit but that a final deal, due to be completed by January 2022, at the time was subject to conditions and approval by Belgian supervisors.
“The takeover brings many synergies and an acceleration of our strategic goals. We are happy to have reached this milestone,” Marc Renell was quoted as saying at the time of the announcement.
Renell has made no further announcements in regards to Merit Capital since then.
Horses and politics
Meanwhile in Belgium, Merit Capital, described as a brokerage firm with close ties to Belgium’s liberal political establishment and to the country’s equestrian community, is reportedly looking for time so that a potential buyer can consider bailing it out.
Flemish daily De Standaard on Friday reported that a Belgian business court, at the request of Merit Capital, has appointed two receivers to prepare for an orderly liquidation of the brokerage firm, giving it time to find a suitor until the end of May. Without this appointment the National Bank of Belgium, NBB, could have initiated the liquidation from 3 May.
In its court filings Merit has accused NBB of abuse of its oversight powers. Belgium’s Council of State has rejected these claims and upheld NBB’s decision to revoke Merit’s brokerage licence.
Caceis ordered to serve Merit’s fund
One specific challenge for Merit and its receivers is to find a way out for its Merit Global Investment Fund, currently managed by French asset services firm Caceis, part of French banking group Credit Agricole. A court decision has ordered Caceis to support the fund at least until 17 May.
Back in Frankfurt, Renell Bank was granted a licence for financial portfolio management by German supervisor Bafin in June last year. The German private bank at the time said it was planning to launch two investment funds before the end of 2021.
‘Specialised investment strategy’
On its website, Renell Bank said it was founded in Frankfurt in 1985 and has been an owner-managed private bank ever since. It is authorised and regulated by BaFin, Deutsche Bundesbank and FINMA (Switzerland). The bank is also a member of the Compensatory Fund of Securities Trading Companies (EDW). The original main business segment was price fixing in securities (shares, bonds, funds) on stock exchanges. Since 2020, the bank has focused on corporate finance and since last June also financial portfolio management. Renell said its first funds would be aimed primarily at institutional investors with a specialised investment strategy.
Merit Capital, as a limited liability company, has 3,500 clients and 1.25 billion euro under management.
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