Rebirth of England

"Europe needs stronger banks to help it grow its economy and compete with other large economies..."

This was the speech delivered by Christine Lagarde, President of Continental United Bank (CUB), at this year’s European Banking Conference.

In fact, Lagarde’s statement has been recognized by many people.

In terms of market value alone, look at the top banks: Wells Fargo, close to US$250 billion; JPMorgan Chase, close to US$220 billion; Bank of America, close to US$170 billion; Citibank, close to US$150 billion...

Among European and American banks with a market capitalization of over US$100 billion, the only non-American banks are HSBC Holdings and Standard Chartered-Merrill Lynch.

However, British banks are often not regarded as European banks. After all, British banks have always sought to maintain a certain degree of independence in banking supervision and are unwilling to integrate into Europe in this regard.

Because London is a global financial center, Britain does not want it to be regulated by Europe.

Calculated in this way, BNP Paribas, UBS, and Deutsche Bank, which are relatively powerful among European banks, are all considered "younger brothers" compared with Bank of America.

In fact, before the subprime crisis, European banks including UBS, Deutsche Bank, and BNP Paribas were still important competitors of Bank of America...

But after that, until Barron was reborn in his previous life, it can only be said that European banks are getting more and more stretched.

But now that Christine Lagarde, the president of Continental Bank, which was formed just last year from the merger of French bank Natixis and Commerzbank, has said this, people will inevitably think about whether Continental Bank is interested in another bank. Are you ready to make an acquisition?

After all, Christine Lagarde was known for her aggressive and tough behavior in her previous resume, especially when she served as French Finance Minister.

"We are still sorting out the merged business, and are transforming Continental Bank's business, deepening existing business, and expanding non-interest business income..."

In response, Lagarde replied:

"As for acquiring other banks or businesses to expand our scale, it is not within our short-term considerations. Everything needs to be done after we are ready..."

As President of Continental United Bank, Lagarde completed the merger of the two banks last year. The development plan she formulated for Continental United Bank is to focus on retail business and develop a balanced development of wholesale business and wealth management business.

The so-called retail business, also known as community banking business in banks, mainly provides a series of financial services including savings, investment, insurance, trust, etc. to ordinary consumers and small and medium-sized enterprises (annual sales less than 5 million US dollars). products and services.

Wholesale banking business mainly provides investment banking, cash management and other services to large and medium-sized enterprises (annual sales greater than 5 million US dollars), institutions and social groups.

The wealth management business uses planning methods to provide customers with a series of financial products and financial consulting services.

Therefore, at present, Continental Bank mainly uses the business outlets of the two original banks and expands them to deepen its retail banking business as the basis for its development.

Of course, this does not mean that Continental Bank will give up or shrink their wholesale banking and wealth management business.

After all, before this, NM Rothschild Bank, which was first acquired by Natixis Bank, had a very good foundation in these businesses, especially the private banking business for high-net-worth individuals.

Moreover, in some of the previous acquisitions made by Barron's industry in Europe, such as O2 Telecom's acquisition of E-Plus, the German subsidiary of Dutch KPN, and a series of acquisitions by Alstom Group, Continental United Bank participated in them and provided loans. , these businesses can bring good profits to Continental United Bank.

Although Lagarde publicly responded to the media, it does not mean that Continental Bank really has no plans to continue the acquisition. It is just that they need to complete the integration of the previous two banks' businesses and solve some problems before they can proceed with these acquisitions. plan.

For example, Continental United Bank has cooperated with Cavendish Asset Management to sell the non-performing assets they previously owned involving real estate mortgage loans to supplement their own liquidity.

After the initial success of the cooperation, the two parties also expanded the scope of cooperation. So far, the non-performing assets involving real estate mortgage loans caused by Eurohypo, a real estate bank owned by Commerzbank, during the subprime mortgage crisis have been cleared out. Among them It also includes some "toxic assets" contained in the Dresdner Bank previously acquired by Commerzbank.

This has also greatly reduced the non-performing asset ratio of Continental United Bank, and the bank's capital adequacy ratio has reached the required standards.

In fact, among the two large banks controlled by Barron, Standard Chartered Bank belongs to the current Standard Chartered-Merrill Lynch Group. Although its headquarters is still located in London, through the merger with Merrill Lynch, Standard Chartered-Merrill Lynch Group has changed its behavior , closer to Wall Street capital.

And Barron's is also consciously weakening the country to which Standard Chartered-Merrill Lynch belongs, that is, the attribute of British capital, and developing in the direction of global capital, or closer to Wall Street capital.

After all, only in this way can Standard Chartered-Merrill Lynch Group better develop its business in North America, especially Merrill Lynch Investments, to which its wealth management business belongs. It has become one of the three giants of global wealth management together with BlackRock and Vanguard.

Since this is the case, the other bank he controls, Continental Bank, will naturally highlight its "European bank" attributes and will also serve as one of his main financing channels for future expansion and mergers and acquisitions in Europe.

As for the other bank he controls, the United Bank for Africa, it is not yet a "large bank" and will mainly conduct business in Africa. It is still different from Standard Chartered Bank and United European Bank.

"Five years have passed since the subprime mortgage crisis, and the European real estate industry is showing signs of recovery. We still need to develop Eurohypo into the best real estate bank in Europe and once again enter the field of housing mortgage loans..."

It can be said that after the outbreak of the subprime mortgage crisis, many banks had a large amount of non-performing assets. This has also led to some banks becoming more conservative in their market strategies for entering the housing mortgage loan market in recent years.

However, Lagarde believes that one cannot stop eating because of choking. She once said to Ashley Weber:

"Our first priority after completing the merger is to improve asset quality and steadily increase capital adequacy ratio. But after that, we still need enough profits to maintain expansion. As can be seen from the development of the banking industry in the United States, the banking industry's Acquisition and integration are very necessary. This is a story about running. Those who run slowly will exit the market or be acquired. "

“I have studied Wells Fargo, which has grown rapidly in recent years, and they pointed out that no financial product is as important to Americans and relevant to financial security as home mortgage loans. In fact, this is also true for Europeans. …”

Under Lagarde's persuasion, Continental Bank is still preparing to enter the housing mortgage loan market in a major way through its real estate bank Eurohypo, not only to meet customers' housing mortgage loan needs, but also to meet their mortgage-related financial service needs.