French co-op bank bids to take full control of Natixis

French co-operative bank BPCE has made a formal offer to take full control of Natixis, the corporate and investment bank in which it already owns a majority stake.

Talks between the pair collapsed last summer but have since resumed. Natixis board met on Tuesday to discuss BPCE’s cash offer of €3.7bn to buy out minority shareholders in the bank. That would give the group a market value of €12.3bn.

Natixis suspended trading in its shares on Tuesday morning in advance of an announcement.

The takeover would see Natixis insurance and payments businesses brought within BPCE’s retail division, while the remaining investment bank, asset management and wealth management businesses would join together in a global financial services unit.

“The offer . . . represents an attractively priced liquidity opportunity for Natixis’ shareholders, at a time when regulatory and structural factors, which have already impacted the sector’s profitability levels, will likely bear a lasting effect on banks,” said Laurent Mignon, chief executive and chairman of BPCE.

BPCE said it would file a public tender offer with the French financial regulator, the AMF. Should it gain approval, BPCE would then proceed with a mandatory squeeze-out of minority shareholders.

The move by BPCE follows an exploration of the plan last year, which was first reported by the Financial Times in July. It comes as a series of crises at Paris-headquartered Natixis have called parts of its business into question.

BPCE, which is unlisted and owns 70 per cent of Natixis, denied the plan at the time, saying “it does not intend to file a draft tender offer on the Natixis shares”.

The six-month lock-up period that restricted BPCE from selling shares in Natixis following their aborted talks ended on January 17.

François Riahi, Natixis chief executive, left the group soon after talks with BPCE collapsed, citing “strategic differences regarding the options of Natixis future plan”. One disagreement was over the takeover, said people familiar with his thinking, which was supported by Laurent Mignon, who heads BPCE.

Riahi was replaced as Natixis chief by Namias, the former head of finance and strategy at BPCE.

Natixis released its fourth-quarter results on Tuesday after market close. The bank recorded €323m of net income, its best quarterly performance in two years. The group achieved positive net income for the full year, despite losses in the first six months.

Like other European banks, earnings at Natixis have suffered from the impact of negative interest rates and the pandemic. Its shares have rallied recently, up 32 per cent this year, and have almost doubled since late October.

Its risk management has been put under the microscope by investors following large losses on equity derivatives — including a €260m loss linked to South Korean derivatives that emerged in late 2018 and more recently as companies cancelled dividends owing to Covid-19 — and at one of its prominent asset management subsidiaries, H2O.

Natixis was repeatedly questioned about its H2O subsidiary since the Financial Times revealed in 2019 that it had put more than €1bn of investors’ money into illiquid bonds linked to Lars Windhorst, a controversial German financier.

In November, Natixis said it was seeking to sever ties with the under-fire investment boutique and last month said it would sell its majority stake back to H2O’s management.