March 8, 2012 8:51 pm

BNP Paribas sells half its Klépierre stake

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BNP Paribas has sold half its stake in Klépierre, one of Europe’s largest shopping centre operators by sales, to US-based Simon Property Group, as part of its plan to strengthen its balance sheet.

Simon Property has agreed to buy the 28.7 per cent stake for €1.52bn, or €28 a share, representing a premium of 20 per cent to Wednesday’s closing price.

BNP said it had made a €1.5bn capital gain on the sale and had committed to holding its remaining 22.2 per cent stake for at least a year. It would not comment on whether it intended to sell its remaining stake, which analysts regard as a non-core asset.

France’s biggest listed bank by assets said the sale moved it closer to its aim of achieving a tier one capital ratio – a key measure of balance sheet strength – of 9 per cent under the new Basel III regulatory rules, by 2013.

Commercial property businesses attract a relatively high capital charge because they are regarded as risky under the new rules. BNP said the sale would contribute 0.32 percentage points to the 9 per cent target, leaving it with another 0.31 points to go.

European banks are shedding assets and conserving capital to adapt to the new rules. Last month BNP sold $9.5bn of energy loans to Wells Fargo. The lender says it has been seeking to shed dollar-denominated assets following the withdrawal of investment by US money market funds in European banks last year. It has also sold corporate loan books.

Analysts said that the bank should also consider selling down its 5 per cent stake in Axa, the French insurer, regarded as another non-core business which attracts a disproportionately high risk weighting.

Before the Klépierre and energy portfolio sales, it had achieved €25bn of its plan to reduce risk-weighted assets by €79bn.

David Simon, executive chairman of Simon Property Group, said its stake in Klépierre was “an attractive opportunity for SPG as we seek to broaden our global footprint”.

Laurent Morel, chief executive of Klépierre, which owns or manages 271 shopping centres in Europe, said the entry of Simon Property provided scope for cross-selling between the US-based and European retail groups. “For us, it’s very favourable because the acquirer understands our strategy,” he said.

Analysts expected more takeovers in the property sector given that many companies are trading at sizeable discounts to net asset value, having been hit by the economic downturn and lower consumer spending.

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