HypoVereinsbank, Germany's second biggest bank, is expected to announce today a takeover of Bank Austria in a deal that will create an institution with a market capitalisation of more than E35bn ($32.4bn) and a banking powerhouse in Eastern Europe.
Those close to the negotiations said "there was a 60-70 percent chance" that talks between the two banks would reach a successful conclusion on Saturday. There was still a slim possibility talks might have to continue for a further two to three weeks as obstacles to a deal remain. However, both banks have scheduled supervisory board meetings for Saturday afternoon. HypoVereinsbank and Bank Austria declined to comment.
A takeover would advance HypoVereinsbank's strategy of developing a bank of the regions, a network of European banks with a common transactions platform. It has steadily strengthened its presence in Germany, Eastern Europe and Spain while successfully shunning merger overtures from Frankfurt-based rivals.
Coming hard on the heels of the month-long merger talks between Commerzbank and Dresdner Bank, a deal would be a further sign of the accelerating pace of European banking consolidation.
Bankers close to the talks said discussions were focused on the structure of the deal which might involve HypoVereinsbank taking an initial 25 percent plus stake in Austria's biggest bank and increasing it in stages later.
HypoVereinsbank had total assets of E500bn at the start of this year, compared with Bank Austria's E134bn, according to Goldman Sachs, the US investment bank. Analysts said it would be "a dream deal" for HypoVereinsbank, which is keen to expand into the fast-growing markets of central and Eastern Europe. "It would be a perfect fit," said Michael Harms of Delbruck Asset Management in Frankfurt, "and offers far more than a simply cost driven project." Reuters
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