The acquisition is subject to the completion of confirmatory due diligence and negotiation of the share purchase agreement
MONETA Money Bank announced that it is engaged in exclusive negotiations with Germany-based Wuestenrot & Wuerttembergische to purchase its Wüstenrot stavební spořitelna and Wüstenrot hypoteční banka.
The proposed acquisition is expected to add approximately 400,000 clients to MONETA’s customer base and result in 45% growth in retail deposit, adding approximately CZK 53bn ($2.3bn) in deposit balances, and increase retail deposits market share from 5% to 8%.
MONETA Management Board Chairman and CEO Tomáš Spurný said: “We believe this acquisition fits with the bank´s long term retail banking growth strategy and will be accretive to both earnings per share and dividend per share in the short and medium term.”
“The transaction will not require any increase of capital and therefore will not cause dilution to our shareholders. Equally importantly, MONETA will propose to pay 2019 dividend as previously communicated. We appreciate confidence from Wüstenrot group, and we believe that together we will successfully conclude this transaction.”
The acquisition is expected to enable MONETA to realise cost synergies
The transaction would also add CZK13bn ($560m) of retail building savings loans, and increase the bank’s consumer loan portfolio from current CZK40bn ($1.7bn) to CZK53bn ($2.3bn). It would strengthen MONETA’s annual profitability by 15% and increase a minimum of 10% in operating revenues.
In addition, the acquisition is also expected to reduce MONETA´s overall risk profile due to an inherently lower risk profile of acquired assets and may lead to an extraordinary gain during the year of the acquisition.
MONETA intends to finance the proposed acquisition from its existing excess capital and liquidity resources.
The acquisition is subject to the completion of confirmatory due diligence and negotiation of the share purchase agreement, which is expected to be signed before the year-end of 2019.
The transaction, which is expected to be closed in April 2020, is subject to the regulatory approvals from the Czech National Bank and the Czech Office for the Protection of Competition.
Once the share purchase agreement is finalised, MONETA is expected to provide a detailed overview of the purchase price and other conditions of the acquisition and will update its market guidance.
According to the Ministry for Regional Development, MONETA is the fourth largest bank in the country and the fifth-largest mortgage provider in the Czech Republic and has more than one million clients.