Last updated: October 2, 2009 11:34 am

Mediobanca walks away from Sal Oppenheim

Mediobanca, the Italian investment bank, has ended its interest in acquiring parts of Sal Oppenheim in Germany in what would have been its biggest move outside its domestic market.

The decision comes after Mediobanca carried out due diligence on Sal Oppenheim and may give other banks renewed interest in a deal. Australia’s Macquarie is also considering whether the acquisition of parts of Sal Oppenheim would help its plans to expand in Europe.

Sal Oppenheim, which was founded and operates mainly in Germany but is headquartered in Luxembourg, is one of Europe’s biggest private banks but has looked likely to be partially broken up after a lossmaking year and two capital injections.

Deutsche Bank, Germany’s largest, is in talks over acquiring an expected majority stake in Sal Oppenheim but is not interested in the investment banking operations of its smaller rival.

Mediobanca said the discussions had ended after Mediobanca had decided that the deal no longer fitted with its strategy for Germany.

It said a purchase would only have been justified if significant cost cuts could have been made to the business, but that this was not possible in the current environment.

The decision to walk away from Sal Oppenheim is a blow for Alberto Nagel, Mediobanca’s chief executive, who appeared determined to expand into the German market and is understood to have seen the Oppenheim investment banking business as a good fit with Mediobanca’s Italian operations.

Both banks specialise in advising the large mid-sized companies that are common in both countries.

A deal to buy Oppenheim’s German mergers and acquisitions and capital markets business would have been Mediobanca’s first significant move abroad.

Deutsche Bank wants Sal Oppenheim – which is 220 years old and is considered an attractive brand – to add to its own wealth management business, particularly for private clients in Germany. A deal could be reached this month.

Deutsche Bank has already cemented ties with Sal Oppenheim by financing the latest capital injection of €300m ($436m) by Sal Oppenheim’s partners.

Stefan Krause, Deutsche Bank’s chief financial officer, said on Thursday at a Merrill Lynch investment conference that the bank was “looking at quite a few opportunities” and would be prepared to raise capital for acquisitions.

Mr Krause said the guidance from Josef Ackermann, chief executive, was not to buy distressed assets but to buy from distressed investors. “[Sal Oppenheim] is not a distressed asset, it just has distressed investors right now and that is the type of opportunities we will like,” Mr Krause said.

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