Successive crises have contributed to pushing Natixis’ share price down to about 60 per cent below its 2018 peak
Successive crises have contributed to pushing Natixis’ share price down to about 60 per cent below its 2018 peak © Martin Barzilai/Bloomberg

French co-operative bank BPCE has explored buying the 30 per cent of Natixis it does not already own after the investment bank’s shares were hammered by the pandemic, according to people briefed on the situation. 

The move followed a series of crises at Paris-headquartered Natixis that has called parts of its business into question. BPCE, which is unlisted, had worked with advisers on a buyout plan in recent months, the people said.

The same people cautioned, however, that the situation was at an early stage, other options were also being considered and there was no guarantee that a bid for the remainder of Natixis would occur.

One person added that the publication of a report about BPCE’s deliberations might cause bankers and lawyers to temporarily stop work on any deal. The revelation also comes as many in Paris head off on holiday, a period during which dealmaking tends to go on hiatus.

“Following recent press rumours, BPCE indicates that it does not intend to file a draft tender offer on the Natixis shares, it being reminded that BPCE regularly conducts strategic analysis on possible changes in the organisation of the group,” the company said in a statement after the French market closed on Friday.

Along with the rest of Europe’s banks, earnings at Natixis have suffered from negative interest rates and the pandemic. Its risk management has been put under the microscope by investors following large losses on equity derivatives and in one of its prominent asset management subsidiaries. 

The performance has knocked the French bank’s shares by almost 40 per cent this year, giving it a market capitalisation of €7.7bn, according to Reuters data. The Stoxx European Banks index has lost just over 30 per cent over the same time. Natixis stock is now about 60 per cent below its 2018 peak.

Natixis’ shares initially surged about 8 per cent after the Financial Times reported BPCE’s interest and ended the day 4.1 per cent up.

The bank’s equity trading division has suffered since 2018, when its ability to manage risk came under fire after a €260m loss linked to South Korean derivatives emerged in late 2018.

Problems resurfaced in the first quarter of 2020 as companies slashed dividends due to Covid-19 — hitting Société Générale and BNP Paribas at the same time, and helping push Natixis to a €204m loss. 

SocGen has already put its equity business under review and analysts at Jefferies argue Natixis’ division “is in pain” and “a strategic review is needed . . . considering the accumulation of ‘accidents’ over the past two years”.

The bank’s multi-boutique asset management strategy, which involves Natixis taking majority stakes in smaller fund management and advisory boutiques that continue to be run at arm’s length, has also come under scrutiny.

Last year, the Financial Times revealed that H2O Asset Management, one such entity, had put more than €1bn of investors’ money into illiquid bonds linked to Lars Windhorst, a controversial German financier. The news triggered €8bn in outflows in the weeks that followed. Investors have pulled about €1bn out of poorly performing H2O funds this year.

“The main rationale is that [Natixis] is super-cheap . . . it makes sense for BPCE to investigate the option,” said Jérôme Legras, head of research at Axiom Alternative Investments. “Considering the trouble they have had in the past over compliance and risk management issues at H20, maybe there’s also a will to increase oversight on the company.”

BPCE, formed by the merger of French mutual banks Caisses d’Epargne and Banques Populaires more than a decade ago, already bought Natixis’ consumer finance, factoring, leasing, sureties and guarantees, and securities services businesses in a €2.7bn deal in 2018.

Laurent Mignon, chief executive of BPCE, had previously run Natixis, turning it round after the financial crisis before handing the reins to current chief, François Riahi, in 2018.


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