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Industry roundup: 21 December

Canada’s Bank of Montreal pays US$16.2bn for Bank of the West

Canada’s BMO Financial Group, aka Bank of Montreal, has emerged as the buyer for Bank of the West, the US arm of France’s BNP Paribas, after agreeing a price of US$16.3bn for the acquisition.

The all-cash deal, expected to close in 2022, promises to accelerate BMO’s expansion into the US, where it has been developing a presence in recent years. Combined, the purchase gives BMO around 500 branches and offices and the two banks combined will have around US$870 billion in assets.

The sale enables BNP Paribas to exit US retail banking, where it struggled to compete with larger rivals and focus its expansion plans on Europe, where in the past two years it has taken on equity and prime broking businesses from Deutsche Bank and Credit Suisse.

The French bank will use proceeds from the sale to fund more share buybacks and to finance bolt-on acquisitions in Europe. “This is a value accretive transaction for all sides, which emphasises the quality of the Bank of the West franchise,” commented BNP Paribas CEO Jean-Laurent Bonnafe. More details on the bank’s strategic plans will be announced early in 2022.

Bank of the West was established in 1874 and was bought by BNP Paribas in 1979, which subsequently merged it with French Bank of California. It was the French bank’s largest business outside of Europe.

Clairinvest fund manager Ion-Marc Valahu, who owns BNP Paribas shares, said that the deal was logical: “Bank of the West was not that strategic for them. They were never going to be a major retail bank in the US, and they can focus more on their European investment banking, where they make more profits.”

BMO said the acquisition will add nearly 1.8 million to its customer base and extend its banking presence in the US through 514 additional branches and commercial and wealth offices in key. growth markets. It will also give the Canadian company around US$56 billion in loans and US$89 billion of deposits.

Vegan firms assessed ahead of Veganuary

Despite supply chain issues in 2021, the global plant-based meat market is still expected to average annual growth of 18.9% over the next five years to reach £13 billion (US$17.2bn) by 2026, reports UK financial services firm Hargreaves Lansdown.

In its assessment of the market ahead of “Veganuary” next month, it considers vegan players such as Microsoft, Apple, Intel and Visa as well as major names in the food and drink sector.

The firm notes that the past year has often been difficult for “some of the headline acts on the vegan billboard” and investors may need to be patient before they realise any significant returns. “Larger more diversified food producers, muscling in on the vegan space have been more resilient, offering greater strength through diversity of product ranges, and with more advanced supply networks and pricing power,” it adds.

Hargreaves Lansdown says that Microsoft is among the technology companies held by its Vegan Climate Exchange Traded Fund (ETF) as none of its activities are perceived to exploit animals. It has also made strides in reducing emissions and aims to be carbon negative by 2030 to limit harm to the planet overall. 

While Apple is not usually associated with animal welfare, it’s also considered to be vegan friendly and is held by the Vegan Climate ETF. It has purchased four gigawatts of renewable energy and is partnering with Conservation International to invest in forests and ecosystems with the aim of removing one million metric tonnes of carbon from the atmosphere.

Semiconductor maker Intel is another stock to consider for its environmental credentials as it has a goal to rely on renewable energy for all its global electricity use.

Payment firms Mastercard and Visa are also among the Vegan Climate ETF’s top 10 holdings, as they are also considered to be climate friendly. Mastercard sources renewable energy for 100% of its global operations and is involved in cross-sector initiatives such as the Greener Payments Partnership. Visa has transitioned to 100% renewable energy for its offices and data centres and is included in the Dow Jones Sustainability North American Index.

“The US Vegan Climate ETF is not set up on the Hargreaves Lansdown platform for regulatory reasons,” the firm adds. “This ETF is traded in the US on the NYSE and as a result the issuer has decided not to produce a Key Investor Information Document (KIID) – this is the case with the majority of US ETFs.

“Post MiFID II, issuers for certain securities have to produce a KIID in order to enable retail investment.”

Maersk signs supply chain management partnership with Unilever

A P Moller-Maersk, the Danish shipping and logistics multinational is partnering with Unilever to develop the consumer product giant’s supply chain management.

The four-year partnership will begin at the start of 2022 and focus on the development and management of Unilever’s International Control Tower Solution – an operational management solution which will consolidate the execution of its global ocean and air transport, while increasing visibility and efficiency and reducing emissions.

Maersk will provide operational management of international ocean and air transport, underpinned by its digital supply chain platform NeoNav.

The NeoNav platform was designed to improve logistics operations, by providing end-to-end transparency, control, and improving decision-making based on data.

“NeoNav offers actionable insights on how to optimise the supply chain, for example in terms of carbon emissions,” said Aymeric Chandavoine, head of logistics and services at A P Moller-Maersk. “Unilever having one of the most effective supply chains in the world, we are glad that we can further support them, enhancing their resilience and transparency through our digital platform and taking it to the next level.”

In a separate development, Maersk has issued a winter plan in response to a record-breaking Atlantic hurricane season. “The severity of the winter weather across the north Atlantic has led to a deterioration in reliability on the trades,” said the group.

Maersk has advised customers that its three North Europe to the US east coast loops, which it operates with fellow shipping group MSC, would temporarily apply a number of port omissions, mainly on the east and Gulf coasts, as part of its “winter plan review”.

Deutsche Bank’s appetite for Latin America revives

Deutsche Bank intends to invest in Latin America in 2022 – six years after downsizing its presence in the region – and plans to open a new Mexico office as it seeks to maintain the positive momentum of its global emerging markets business, according to a Euromoney report.

In late October 2015, Deutsche Bank announced that it would leave 10 countries and cut 16,000 jobs as part of a reorganisation to cut peripheral businesses and exposures. LatAm bore much of the brunt, as it exited from Argentina, Chile, Mexico, Peru and Uruguay. Brazil remained the bank’s only regional office, but was sharply downsized, with local trading desks closed.

Its fortunes have subsequently improved, with both ratings and the share price rising in 2021. Deutsche Bank’s global emerging markets (EM) investment banking businesses – headed by Sameen Farooqui in Singapore – has been one of the bank’s best performers.

Gabriel Roitman, Deutsche Bank's head of client coverage and LatAm head EM origination in New York, said that its growth has so far largely been driven out of Asia and Central and Eastern Europe, Middle East and Africa (CEEMEA) countries. “We’re going to use the success and strength we have in Asia and CEEMEA to keep investing in LatAm,” he confirmed to Euromoney

In other news, both Deutsche Bank and Commerzbank have announced that their customers will be able to use the giropay method to pay for online shopping. 

Users need their access data (username and PIN) from online banking, and the payment is confirmed by means of a transaction authentication number (TAN). Customers of the two banks can pay in thousands of other online shops such as electronics retailers or airlines by online transfer. According to a paydirekt representative, the integration of giropay at Commerzbank and Deutsche Bank is a step towards a standardised online payment method for German banks.

The online payment methods giropay and paydirekt are being combined under the giropay brand. Paydirekt laid the foundation for the merger with the takeover of giropay in December 2020. A transition phase began in May 2021, during which the two digital payment methods of the German banks and savings banks will be gradually merged.

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