French banking group Societe Generale has agreed to acquire Commerzbank’s equity markets and commodities (EMC) business for an undisclosed sum.
The EMC business offered €381m in gross revenues last year, Commerzbank said. Through the deal, Societe Generale will be handed over Commerzbank’s investment products, flow products, as well as global asset management operations, including associated market making, sales and structuring capabilities.
The operations to be acquired are based in Frankfurt, London, Hong Kong, Paris, Luxembourg and Zurich. The transaction excludes EMC’s cash equity brokerage and commodities hedging operations.
Under the agreement, Societe Generale will acquire EMC’s trading books, employees, clients and a portion of its IT infrastructure.
The deal is subject to regulatory nod, with integration of operations anticipated to start from the end of this year.
Societe Generale deputy CEO Severin Cabannes said: “Societe Generale and Commerzbank’s EMC franchises are complementary and present an important potential of synergies. This acquisition would further reinforce our Global Banking and Investor Solutions activities in line with our 2016-2020 strategic plan.
“In addition, while complementing Lyxor’s ETF franchise, this acquisition would be transformational for our activities in Germany as it would enable Societe Generale to reach a new scale in the leading Eurozone economy.”
Societe Generale expects the deal to positively affect its return on tangible equity (ROTE). The lender also expects the acquisition to have a limited impact on its core equity tier one ratio.
On the other hand, Commerzbank expects the sale to offer cost savings of €200m by the end of 2020.
Commerzbank CEO Martin Zielke said: “With this agreement, we are delivering a further milestone in the implementation of our ‘Commerzbank 4.0’ strategy. We are simplifying our business, we are contributing to our cost-cutting targets, and we are freeing up capital for the benefit of our core business with private and corporate clients.”