Belgium’s largest independent private bank, Degroof Petercam, is considering a major reshuffle of its ownership structure that could potentially lead to a new majority shareholder. Some of the existing owners, mainly Belgian noble families but also undefined «financial partners», have indicated they want to sell their shares.
A deal could be worth more than one billion euro. Belgian state-controlled financial group Belfius, Credit Agricole, ING Groep and Royal Bank of Canada are reported as being possible bidders.
Degroof Petercam, which manages about 43 billion in assets, nearly half of which via its Luxembourg branch, said that it has appointed an investment bank to investigate how such changes could best benefit the firm.
Degroof currently is majority owned by a group of Belgian shareholders, including Guimard Finance, CLdN Finance, and Belgium’s Philippsson, Siaens, Schockert, Haegelsteen, Peterbroeck and Van Campenhout families. Together they control more than 72 percent of the firm, while a group of unidentified “financial partners” owns about 22 percent.
First reported by Reuters
Degroof issued a statement following a report by Reuters which cited a number of people familiar with the discussions. The news agency reported on Friday that Degroof is being courted by Belgian rival Belfius, as well as French bank Credit Agricole and ING Groep from the Netherlands. Belgian daily De Tijd added that Royal Bank of Canada, already collaborating in Luxembourg with Belfius, was also interested in Degroof.
“The board of directors of Degroof Petercam has been informed that certain existing shareholders are looking to reinforce their stake in the company and that other existing shareholders may re-evaluate their current position,” Degroof said. “In this respect, a mandate has been given to an investment bank to analyze how the ownership restructuring would benefit the interests of the company.”
The statement is particularly noteworthy given that the firm in recent years never commented on market talk about a possible sale.
“This exercise has no impact whatsoever on the future development of Degroof Petercam as a successful and solid investment house with strong growth prospects,” it said, adding that it would refrain from issuing further comments.
Non-compliance with AML obligations
Degroof Petercam’s history dates back to 1871 and employs some 1,400 people - a good 400 of which work from Luxembourg. The firm was created in 2015 through the merger of Degroof and Petercam. Its board of directors since then has comprised representatives of the families that owned stakes, including the likes of Baron Alain Philippson, whose grandfather founded Degroof in 1871 and who stayed with the firm for more than 45 years. Although he retired in 2020, 1939-born Alain Philippsson still acts as pater familias, giving him a major say in his family’s finances including shares in the bank.
Although it remained profitable, Degroof in recent years has struggled to comply with increasingly stringent anti-money money laundering requirements in an increasingly competitive landscape that is pressed by stringent regulation. Luxembourg’s financial supervisor CSSF in December issued a fine of 1.56 million euro after it found the firm to be in “non-compliance with its professional obligations”. The fine still is the second-largest on record issued by CSSF.
Too many players
Degroof Petercam CEO Hugo Lasat told Investment Officer Belgium in 2021 that he sees further consolidation taking place in the asset management sector given the need to deal with increasing costs of regulation and pressure to grow revenues. He also said there are too many players in the market.
“In the asset management industry, mergers will increase sharply in the coming years,” Lasat said in a podcast interview at the time. “There is a great diversity of players. Moreover, there are also just too many players if you set that against the private and institutional savings available. We will therefore see mergers or acquisitions, not only because of the potential synergies along the cost side, but also on the revenue side.”
From Luxembourg, Degroof Petercam had some 19 billion euro in assets under management at the end of 2021, compared to 16 billion a year earlier. The bank employed 273 people in the grand duchy at the end of 2021, according to its latest annual report, filed on 8 June last year with the Luxembourg business register. Its 2022 annual report is not yet available.
A spokesman for ING in the Netherlands said the bank does not comment on market rumours. Belfius, Credit Agricole and Royal Bank of Canada did not immediately react to an email request for comment.