Portuguese state-owned banking firm Caixa Geral de Depósitos (CGD) has entered into two separate transactions to divest stakes in its foreign subsidiaries Mercantile Bank and Banco Caixa Geral for a total of around €565m.
In the first deal, CGD selected South African retail bank Capitec Bank to acquire Mercantile Bank for ZAR3.2bn (€201m) through a bidding process.
Mercantile Bank is a commercial bank in South Africa, which offers banking services to companies and individuals, with a particular focus on the Portuguese market. The CGD’s commercial bank has a network of branches in South Africa, which are primarily located in the Johannesburg region.
The acquisition of the CGD unit will enable the South African retail bank to foray into business banking.
Capitec Bank, in a statement, said: “Mercantile’s core business offer is business banking for small- to medium-sized enterprises and entrepreneurs and it is therefore well positioned to align with Capitec Bank’s business banking strategy.”
The South African retail bank plans to use its capital and cash reserves to pay for the acquisition, which will be based on receipt of regulatory approval.
In the second deal, CGD has agreed to sell 99.79% of its Spanish subsidiary Banco Caixa Geral to Abanca Corporación Bancária for a sum of €364m.
For the Portuguese state-owned banking firm, the sale of Mercantile Bank and Banco Caixa Geral is part of a recapitalization plan under which it is looking to offload its non-core operations outside of Portugal.
It said that the transactions provide rationalization and increased focus on the company’s international operations, thereby enabling a release of capital and a reduction of its risk profile.
For both the transactions, the closing will be subject to fulfilling preceding customary conditions, including regulatory approvals wherever applicable. The deals will also be subject to legal requirements of South Africa for the Mercantile Bank transaction and Spain for the sale of Banco Caixa Geral.
For the transaction pertaining to Mercantile Bank, CGD selected Caixa – Banco de Investimento and Deutsche Bank as financial advisors. On the other hand, it selected Caixa – Banco de Investimento and Société Générale as financial advisors for the sale of Banco Caixa Geral.