Friday, May 21, 2010

Hindujas to buy Belgian banking arm for euro 1.35 bn

S Kalyana Ramanathan / London May 22, 2010

The Hinduja Group has acquired KBL epb, the private banking arm of Belgian banking and insurance group KBC, for euro 1.35 billion (Rs 7,918 crore) in an all-cash deal. With this acquisition, the Hinduja brothers plan to grow KBL's private banking business in India, West Asia and the rest of Asia.

KBL epb (European Private Bankers) is one of Europe’s largest onshore private banking groups, with affiliated local banks at 55 locations across 10 European countries, including France, Germany and United Kingdom.

Speaking to Business Standard, Hinduja Group’s 76-year old hairman, Srichand P Hinduja, said KBL’s business model, with its local banks in several European countries, was unique and would augur well for its venture into the Indian banking sector.

Of the several bidders for KBL, only two were left in the final round. Exor, an investment firm controlled by Italy's Agnelli family, lost the final round to the Hindujas.

“We plan to invest further in the business, maintaining each of the subsidiaries, while also providing KBL epb with access to the fast-growing markets of the Middle East, the Indian subcontinent and Asia,” Srichand Hinduja said.

“In this way, we hope to address the private banking needs of clients internationally and facilitate capital flows between fast-growing economies and established Western financial markets.”

At the end of 2009, KBL epb had assets under management worth euro 47 billion, assets under custody worth euro 37 billion and, through a 52.7 per cent stake in EFA (European Fund Administration), assets under administration worth euro 103 billion. The sale of KBL epb was mandated by the European Commission as a restructuring plan for KBC in return for a euro 7-billion state aid.

The closing of the transaction is subject to customary regulatory approvals and is expected to be completed in the third quarter of 2010.

In a joint press statement, KBC and the Hinduja Group said the transaction comprises the sale of KBC’s entire interest in KBL epb and includes all the private banking subsidiaries as well as the custody and life insurance businesses. The KBL epb brand, management team and operations will be maintained in their entirety and KBL epb will continue to be headquartered in Luxembourg.

KBL epb operates a unique private banking business model focused on local client service supported by centralised operations. This model has its global hub based in Luxembourg with control functions such as audit, compliance and risk management of the entire group. The local banks of the KBL count among the most prominent banks in the markets they operate in.

Theodoor Gilissen Bankiers in the Netherlands, Merck Finck & Co in Germany, Puilaetco Dewaay in Belgium and Brown Shipley & Co in United Kingdom are among 11 such banks with presence across Europe. The group employs 2,661 staff, 466 of whom are private bankers.

The Hinduja Group said the deal would further strenghten its presence in the banking sector that already has two banks under its belt -- Geneva-based Hinduja Bank Ltd, established in 1978, and IndusInd Bank in India, set up in 1994. IndusInd in India has two million customers, 1,225 outlets and a balance sheet of $8 billion, the group said.

The Hinduja brothers -- Srichand, Gopichand, Prakash and Ashok Hinduja -- are one of the wealthiest families in Europe and have strong presence in India through their interests in automotive, energy, hydrocarbon chemicals, information technology, media,and entertainment, infrastructure and project development, real estate, healthcare, trading and banking and finance.

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