China firm rebuffs siege nations’ claim on deal

 05 Sep 2017 - 8:43

China firm rebuffs siege nations’ claim on deal
Banque Internationale a Luxembourg (BIL)

The Peninsula

China’s Legend Holdings has said that its negotiations to acquire 89.9 percent stakes in Banque Internationale a Luxembourg (BIL), owned by Qatar, started in October 2016 and the final deal to buy BIL for ¤1.48bn ($1.76bn) was clinched recently. 

The Senior Vice President of Legend Holding, LI Peng rejected reports of Saudi and Emirati media outlets in which it was claimed that the deal is a proof that “Qatar is liquidating some of its assets” under diplomatic pressure.  Li Peng said that the negotiations for acquisition of Precision Capital share in BIL started in October 2016. “We know it is a solid deal and sale negotiations have nothing to do with any kind of pressures.”

Answering a question about why the Chinese company had chosen BIL for its investment expansion, Vice President of Legend Holding Corporation said: “We found the deal meeting our aspirations for successful investments. BIL has strong assets, successful bank investments and has plans to expand in Europe. The main motive behind buying the stake was the positive growth that was achieved by BIL during the last two years whereas the bank achieved steady growth rate of 6.3 percent compared to 2015.” 

He rejected reports which claimed that the negotiation was started in July this year under the current Gulf crisis and asserted that the talks were continued in the whole of 2016 year. 
“The bank suits very much our strategy to acquire principal assets. This is an important strategic investment for Legend. Financial services is one of Legend Holdings’ key target industries,” said Li Peng adding: “We exerted much efforts to determine the activities that provide with strong platform for our development strategy on financial services for a long run”. 

Scope for growth

Peng pointed out that his company believed that the Luxembourg-based international banking group was doing very well and it had a major presence with deep-rooted business in Luxemburg and had excellent development horizons. 

He said Legend aimed to support the bank and its existing management to grow BIL into a Luxembourg-based international banking brand.

The deal was facilitated by Goldman Sachs which played the role of investment banking consultant for Precision Capital. 

The pre-conditions of the deal include informing the Dubai authority for Financial Services about the change in the ownership of the bank because BIL has business operations in Luxembourg, Switzerland, Denmark and Dubai.

Changes in the ownership of any banks require alert or approval of the local regulatory body which is one of the specifications needed for merging or acquisition of a bank. 

The end of 2016, BIL was running some 37.7bn euros ($44.8 bin) showing an increase of 6.3 percent comparing to assets of 2015.

BIL’s existing net assets by the end of 2016 was 23.1bn euros ($27.4 bn)

Duchy of Luxembourg will maintain 9.9 percent of the share of BIL.

Precision Capital paid 657m euros ($ 781.5m) which is 90 percent of the total deal price 730m euros ( $869.4m) for the acquisition of 89.9 percent of BIL in a deal ended in 2012. 

The deal took place when the former shareholder (Dexia) faced major financial pressures.

BIL was founded in 1856 and is the oldest privately owned bank in Luxembourg, under the supervision of the European Central Bank along financial monitoring committee in Luxemburg.