National Bank of Canada ‘s acquisition of Altamira Investment Services Inc. is in line with the bank’s strategy says Fitch Ratings.
According to Fitch, National Bank is focused on providing banking services to consumers, small and medium-sized businesses in its core Quebec market, while emphasizing brokerage and wealth management services outside of Quebec and Canada. “In fact, Altamira will significantly increase the bank’s wealth management presence in Ontario and will double the bank’s mutual fund assets under management to approximately $10.4 billion.
The transaction, expected to close by August 2002, is valued between $277.1 million and $314.1 million (primarily in cash). This amount includes a $57.5 million hold-back for potential future liability (primarily disputed tax liabilities). Additionally, National Bank will assume Altamira’s debt of $195.9 million. The acquisition is expected to generate between $463 million and $500 million of goodwill.
Fitch says that with a 10.7% Tier 1 ratio, National Bank exhibits a comparatively favorable capital position among Canadian banks. “With this acquisition, management estimates that the bank’s Tier 1 capital ratio will hover between 9.5% and 9.75% and should leave the bank with enough capital to cover goodwill associated with its recent acquisitions.”
However, it says, “The acquisition presents a certain number of challenges to the bank, as it will have to stop the decline in assets under management experienced by Altamira in recent periods. Furthermore, retaining key portfolio managers and improving investment performance are important challenges as well.”
Fitch is currently evaluating the impact of the transaction on the bank’s ratings.
Altamira deal in line with National Bank’s strategy
Acquisition presents a number of challenges says rating agency
- By: IE Staff
- June 12, 2002 June 12, 2002
- 11:10