VP Bank Group continues to pursue the strategy of growth through acquisition. Following receipt of the regulatory approval of the Financial Market Authority (FMA) Liechtenstein, VP Bank Ltd, Vaduz, acquired the entire share capital of Centrum Bank AG, Vaduz, as of 7 January 2015. Centrum Bank AG, Vaduz, thus became a 100-per cent owned subsidiary company of VP Bank Ltd, Vaduz. The legal merger between VP Bank Ltd and Centrum Bank AG was consummated on 30 April 2015.
Marxer Stiftung für Bank- und Unternehmenswerte participated in the capital of VP Bank to the equivalent amount. VP Bank Group thereby welcomes a further anchor shareholder in this reliable and long-term-oriented Liechtenstein family.
The following assets and liabilities were acquired as part of the merger:
in CHF 1,000 | Fair value |
|---|---|
Amounts due from banks and clients | 1,487,633 |
Financial instruments | 294,924 |
Software | 5,720 |
Other intangible assets | 34,045 |
Deferred tax assets | 5,179 |
All other assets | 129,570 |
Total assets | 1,957,071 |
Amounts due to banks and clients | –1,790,650 |
Deferred tax liabilities | –9,360 |
Provisions | –185 |
All other liabilities | –37,650 |
Total liabilities | –1,837,845 |
Total net assets | 119,226 |
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Net assets acquired | 119,226 |
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Purchase price settled in cash and cash equivalents | 3,854 |
Purchase price settled in shares of VP Bank (755,955 bearer shares at the price (as per 07.01.2015) of CHF 86.50) | 65,390 |
Purchase consideration | 69,244 |
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Bargain purchase arising from acquisition | –49,982 |
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Cash and cash equivalents on hand in the company acquired | 352,241 |
Purchase consideration settled in cash and cash equivalents | –3,854 |
Cash inflow arising from the transaction | 348,387 |
Assets under management of CHF 6.7 billion and custody assets of CHF 0.4 billion were taken over as part of the acquisition. The transaction gave rise to a “bargain purchase” of TCHF 49,982 as well as intangible assets (client relationships) of TCHF 34,045. The client relationships will be amortised over 10 years.
The costs of the transaction incurred in the reporting period (advisory, legal, auditing, valuation costs, etc.) amount to CHF 2.8 million and are recognised in general and administrative expenses (note 7) (financial year 2014: CHF 1.2 million). The costs for the capital increase accompanying the transaction, in compliance with IFRS, were not taken to income but charged to capital reserves and amount to CHF 1.1 million for the current period.
The resulting “bargain purchase” can be ascribed in particular to two specific reasons. On the one hand, it must be taken into consideration that the whole restructuring and integration costs in connection with this transaction are borne by VP Bank. On the other hand, the fact that the seller has become an anchor shareholder in VP Bank in an equivalent amount is also to be taken into account. The market values underlying the sales price of the bearer shares are significantly lower than the intrinsic value of the bearer share. The bearer shares of VP Bank have been traded on the stock exchange at a price under their carrying value. Both effects combined led to the disclosed “bargain purchase”. The latter was taken to income under “Other income” (note 5).
Centrum Bank was merged with VP Bank Ltd on 30 April 2015 and fully integrated into VP Bank, Vaduz. Because of the merger of the various organisational units, it is not always possible to show the impact of the acquired company on the profit and loss account.