Societe Generale is rumored to be selling its online brokerage business Fimatex.
Week in, week out, news stories bemoan the worsening economic climate, rounds of redundancies, profit sapping inventories and nose-diving share prices. Who on earth would want to be in a business involved in selling this to people? Not French bank SocGen, it seems. Having ridden the wave up and down, the company is finally rumored to have had enough. In spite of a refocus on wealthy, active traders, some cost trimming and some fighting talk from CEO Vincent Taupin, Fimatex is still expected to lose some E30 million this year on top of E33.3 million last year.
Fimatex may be the fifth largest broker in Europe with 100,000 customers, but size doesn’t bring profits in this industry. So, who are the likely buyers? The obvious contenders are the German trinity of DAB, Consors and Comdirect. Yet DAB already has a solid presence in France following its acquisition of SelfTrade, which it is still struggling to integrate. Consors, on the other hand, is weak in France but does not have the kind of brute financial strength to mount a bid. It is carrying hefty losses itself, and is more or less independent of its founding parent, Schmittbank. The prospect of equity funding is also slim given that its share price has bombed on the Neuer Markt. Which leaves Comdirect. While Comdirect is the biggest online broker in Europe, it too faces similar problems to Consors. What is more, its parent Commerzbank is also rumored to be looking for a buyer.
So where else might a possible bid come from? One outsider worth thinking about is TD Waterhouse, the Canadian-owned online brokerage. Despite its weighty presence in North America and developing presence in Asia, mainland Europe remains uncharted territory for TDW. It has a solid presence in the UK and plenty of cash ready for acquisitions, together with an aggressive approach to gaining business. Fimatex may just be the foothold TDW has been waiting for.
