Tuesday, May 28, 2024

Sparkasse Bank Share Purchase Announcement

It was recently announced that Merkanti Holdings plc[1] has signed a share purchase agreement to purchase all the shares of Sparkasse (Holdings) Malta Ltd.

Merkanti Bank plc, a subsidiary of Merkanti Holdings plc, is licensed as a credit institution under the Banking Act (Chapter 371 of the laws of Malta) and regulated by the Malta Financial Services Authority (MFSA), which is involved in corporate and merchant banking. Merkanti Holdings plc in turn is owned by New York Stock Exchange-listed Scully Royalty Ltd (NYSE: SRL).

Sparkasse Bank Malta plc is a company registered in Malta and licensed by the MFSA to carry out the business of banking in terms of the Banking Act (Chapter 371 of the laws of Malta), to provide investment services and custody and depositary services in terms of the Investment Services Act (Chapter 370 of the laws of Malta), and is authorised to act as custodian of retirement schemes in terms of the Retirement Pensions Act (Chapter 514 of the laws of Malta). Founded in 2000, Sparkasse Bank is a leading custody and depositary provider, operating under multiple licences. Furthermore, in 2018, Sparkasse Bank Malta plc established a branch in Dublin for the provision of depositary services to collective investment schemes, including Irish authorised investment funds.

For a while now, and as a result of Sparkasse Bank Malta plc’s growth, the bank has reached a stage where additional share capital has become imperative to sustain its current business and future growth. Sparkasse Bank Malta plc has reached a point in its growth trajectory where both its leverage ratio and minimum requirement for own funds and eligible liabilities (MREL) requirements have become a challenge and the current strategy in capitalising profits is not sufficient enough to sustain the current fervent growth nor Sparkasse Bank Malta’s plans for further development. As a result of regulatory requirements, when banks grow their balance sheets the expectation is to also grow their capital base proportionately, and this acquisition allows for that.

The announcement made earlier this week relates to this matter as it discloses an agreement reached for the acquisition of shares in Sparkasse (Holdings) Malta Ltd by Merkanti Holding plc (the holding company of Merkanti Bank Ltd — another Maltese bank) and the subsequent merger of Sparkasse Bank Malta plc and Merkanti Bank Ltd to form a larger entity. This merger will provide both Sparkasse Bank Malta and Merkanti Bank Ltd, merged as one, with the additional share capital required to sustain and grow the merged unified bank and also provide the extra resources needed to continue further growth opportunities.

The transaction is subject to regulatory authorisation and it is envisaged that this will be completed during the second half of 2022. 

The combined entity will be renamed and rebranded to reflect its focus and market footprint in corporate banking, custody, depositary, and investments services in Malta and Ireland. The combination of the existing market presence and product offerings of Sparkasse Bank Malta plc with the investment in resources and capital from Merkanti Holdings plc creates a strong foundation for growth and development in the banks’ core markets.

It has been established that Paul Mifsud will be appointed as the CEO of the new, larger bank, thus allowing the continuity of leadership within the merged banks. It is also anticipated the management teams both in Malta and Ireland, along with all the employees and existing business models, will not change.

[1] https://borzamalta.com.mt/announcement-mrk22

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