Banking & Finance

Legend goes to Luxembourg

Chinese conglomerate completes European bank deal

BIL-w

Now under Chinese management: Banque Internationale a Luxembourg

Legend Holdings has a reputation for leading the pack in market-leading acquisitions and the group has been at it again with the acquisition of Luxembourg’s oldest private bank, Banque Internationale a Luxembourg (BIL).

To date, Legend’s best known acquisition overseas was IBM’s PC computer business, purchased in 2004 via its subsidiary Lenovo. The deal represented a landmark in China’s ‘Going Out’ strategy, demonstrating how it was broadening its horizons into international M&A.

The purchase of BIL for €1.53 billion ($1.79 billion) shows a new force in action. The deal, which was announced last year, received regulatory approval in Europe this month, and Legend is acquiring 90% of the bank from the Qatari royal family, with the Luxembourg state retaining 10%.

The European banking sector has been struggling with low profitability and new regulatory burdens, but Liu Chuanzhi, chairman of Legend, said the deal was the corporation’s most significant step since Lenovo bought the IBM unit 14 years ago. Legend sees the bank as geographically important as a gateway for foreign companies to enter EU markets and it is promising to grow the BIL brand internationally.

The acquisition is also something of a coming home for BIL’s boss Hugues Delcourt, who began his career in China in the early 1990s. Nevertheless, he has been telling his local audience that BIL won’t be transforming into a Chinese lender. Legend’s investment “is strategic”, Delcourt insists, and BIL will “remain a universal bank in Luxembourg”.

Since it was founded in the mid-nineteenth century, BIL’s changing ownership has reflected shifting trends in political and financial power. It was owned originally by some of Germany’s most powerful families at a time when the country was newly united and beginning to flex its industrial might. In the 1960s, the bank worked alongside SG Warburg to deliver the world’s debut eurobonds and more recently Dexia was its main shareholder until BIL was scooped up by one of the titans of the private equity industry after the global financial crisis.

Its most recent owner, the Qatari-backed Precision Capital, has more than doubled its money on its investment since 2012.

The Chinese media have welcomed the deal, which diversifies Legend’s assets away from the notoriously volatile IT industry. “Legend has greatly strengthened its ability to resist risks and develop in the future,” the China Daily applauded.

Some social media commentators took a different view, however. “Keep the debt in China and take the fortune overseas,” said one. “Wow, even Lenovo wants to run abroad,” added another.


© ChinTell Ltd. All rights reserved.

Exclusively sponsored by HSBC.

The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.