New cycles in retail banking

Former NatWest banker Philip Augur this morning reflects on institutional memory as reformed banks leave state ownership and strike out independently once more.

“According to the law of financial cycles, a rule invented by the veteran City journalist Christopher Fildes, disasters happen when the final person able to remember the last one has retired.

It is an aphorism that the board of NatWest might consider as they plan for a future newly free of state ownership.” It’s not just NatWest. There’s lots of merger and acquisition news this week.

In particular, there’s talk of a Mediterranean revival with a wave of mergers and acquisitions happening in Portugal, Spain and Italy – which along with Ireland and Greece made up the unhappy PIIGS grouping – and a final exit from the miseries of the financial crisis.

US investor Lone Star Capital’s bank rescue model earned it a significant payout when agreed last week to sell its stake in Bank Novo, Portugal’s ‘bad bank’.

The sale marks another closed chapter in Europe’s financial crisis of nearly 20 years ago, as a variety of states sell off the remaining stakes in banks rescued following the crash.

“French banking group BPCE has agreed to buy US private equity fund Lone Star's 75% stake in NovoBanco in a deal that values Portugal's fourth-largest bank at €6.4 billion, following a wave of consolidation in European banking,” says RTE News.

“Novo Banco was created in 2014 from the collapsed Banco Espirito Santo (BES) after a state bailout, with Lone Star buying its stake in 2017 for €1 billion. Nicolas Namias, the chief executive of France's second largest domestic bank which operates under the Banque Populaire and Caisse d'Epargne brands, said in a statement that the Portuguese acquisition would allow his group to become a retail banking player in Europe.”