SC Lowy expands with Italian bank acquisition

By Thomas Blott   20 April 2018

SC Lowy has taken a major step forward in its expansion with the acquisition of a stake of over 90% in Italian lender Credito di Romagna.

Hong Kong-based SC Lowy, which began trading distressed Asian loans in 2009 before expanding into fixed income and par loan trading, has targeted Europe for its next growth stage.

“The origin of our desire to acquire a bank in Europe, specifically in Italy, comes from the fact that we believe replicating the structure we have in Asia is quite powerful,” said CEO Michel Lowy.

“If you look at Asia, we have our sales and trading operations covering loans and bonds, we’ve got a growing debt capital markets presence and we have a bank in Korea.”

SC Lowy received European Central Bank approval on April 12 to acquire a stake in excess of 90% in the bank for a capital injection of roughly €50m (US$62m).

Credito di Romagna, based in north-east Italy, had total assets of €650m as of December 2017.

Lowy said the recapitalisation would allow the bank to expand its commercial banking footprint and grow new areas, including syndicated loans and illiquid assets like non-performing credit and special situations.

The Asian firm is making several changes to Credito di Romagna’s management.

Maurizio Barnabe, previously with local bank BCC Valdostana, has been appointed general manager, while Frank Fogiel, former managing director at ING, is his deputy. Nicola Guadagni is the new head of investment banking and joins from Credito Fondiario, a Rome-based bank specialising in distressed debt.

According to Lowy, acquiring a bank was the most straightforward means for expanding into Europe.

“We started our European business truly four or five years ago and we’ve now developed a platform that makes secondary markets and invests in bonds and loans, but what we didn’t have is a banking platform,” he said.

“Italy is the largest distressed market in Europe today. There are €300bn-€400bn of NPLs in the banking system and we came to the conclusion that the best way to tackle this opportunity, as well as to complement the other businesses we have in London, is by acquiring a bank.”

This is SC Lowy’s second acquisition in the banking sector after its 2013 purchase of South Korea’s Shinmin Mutual Savings Bank, which it then renamed Choeun Savings Bank.

SC Lowy said last Thursday it had acquired private-equity firm Yuil PE’s stake in the bank, taking its overall shareholding to 99.8%.

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