J.P. Morgan & Co. has been making significant strides in building its global M&A activities, especially in the burgeoning Eastern European markets.
Its latest success is a mandate from Slovakia to privatize that country's two biggest banks. The agreement was announced Thursday by the Slovakian government.
Morgan will advise on the sale of majority stakes in Vseobecna Uverova Banka AS, the country's largest commercial bank, and Slovenksa Sporitelna AS, its biggest savings bank, according to Slovakia's finance ministry. The two banks each have about $5 billion of assets. They are expected to be sold to the public next year or early in 2001.
Morgan officials were unavailable for comment on the announcement.
The New York-based banking company has become a powerhouse in the merger-and-acquisition business in Western Europe. It scored a coup this year when it was retained by National Westminster PLC to fend off hostile bids by Bank of Scotland and Royal Bank of Scotland.
"Morgan has been hard at work building relationships and is unique in that it's managed to carve out a strong position by building up organically without buying another firm," said Raphael Soifer, a banking analyst with Brown Brothers Harriman.
Morgan ranked fifth in advising on global mergers and acquisitions in 1999, with nearly $515 billion of transactions, according to year-end figures released Wednesday by Thomson Financial Securities Data. (See story on page 1.)
Though merger activity in Russia has dwindled since financial crisis struck in 1998, Morgan has been stepping up its efforts to beat fierce competition for mandates to handle a growing array of privatizations and capital market issues in neighboring countries.
As part of that effort, Morgan recently hired a team of seven emerging-market specialists in London and Warsaw who had left Deutsche Bank, including Michael Fortier, who formerly ran Deutsche's Eastern European investment bank.
Announcing the hirings this month, Morgan said the seven will help to reinforce the bank's expansion in the region, adding that Central and Eastern Europe are a "fundamental" to Morgan's efforts to expand in emerging markets.
Morgan has opened offices in Prague, Warsaw, and Budapest in recent years and has been active arranging capital market issues for Poland and Hungary. This year Morgan underwrote and distributed $500 million of 10-year, euro-denominated bonds for Hungary, as well as issues for Slovakia and Lithuania.
Slovakia and other Eastern European countries have been privatizing government-owned banks as part of a major effort to strengthen the capital bases of local banking systems and modernize their financial structures by bringing in foreign expertise.
A third bank, Investicna a Rozvojova Banka AS, will also be privatized after it has been restructured. Banka Slovakia AS and an insurance company, Slovenska Poistovna AS, are also on the privatization list.
