Ant, MoneyGram deal killed; Hatch to retire

Receiving Wide Coverage ...
No deal: Ant Financial Services, the big Chinese payments company, and U.S.-based MoneyGram International have called off their planned $1.2 billion merger after the deal failed to win regulatory approval from the U.S. government. Ant, the payments service of Chinese internet commerce giant Alibaba Group, had originally agreed to buy MoneyGram for $880 million about a year ago, later increasing its offer to $1.2 billion after Euronet Worldwide submitted a competing bid. The two companies said they will now seek “strategic cooperation” to provide low-cost money-transfer services to customers in the U.S. and China. Ant paid MoneyGram a breakup fee of $30 million. Wall Street Journal here and here, Financial Times, New York Times, American Banker

Leaving: Orrin Hatch, R-Utah, the chairman of the Senate Finance Committee, said he will retire when his term ends. Hatch, 83, is the longest-serving Republican senator. His departure at the end of the year could lead to a change in leadership on the Banking Committee. Wall Street Journal, New York Times, Washington Post here, here and here, American Banker

Limping along: Last year may have been the worst year for business lending “in recent history,” the Journal reports, after loan growth continued to show weakness in late December. The average weekly growth rate was 2.7% in 2017, compared with 9.3% growth in 2016 and double-digit growth in the two years before that, according to Federal Reserve data. The paper says this “puzzling development,” which has left bankers “scratching their heads at the sluggish expansion,” could “weigh on bank earnings later this month.”

While some bankers hope the recent tax reform enactment “will open the floodgates,” others are more pessimistic. “I’m not sure how much pent-up demand there is,” said Zions Bancorp CEO Harris Simmons. “The lack of loan demand mystifies me somewhat.”

Yet this should be another good year for American bank stocks, the Financial Times states. Their “ability to earn more on assets, while capping the cost of liabilities to depositors, should keep shareholders happy this year. Analysts and investors say that, even after two successive years of standout performance, the outlook for bank stocks remains bright.”

But the same can’t be said of their European counterparts. “Those betting on a Continental banking catch-up in 2018 shouldn’t get their hopes up,” Heard on the Street says. “European banks have made great strides. More certainty over regulation, stronger economies and better expected lending growth are all in their favor. But they are still saddled with negative interest rates in the eurozone and Switzerland, which hurts interest income.”

Wall Street Journal
The sky’s the limit: GreenSky has raised $200 million in equity from Pacific Investment Management Co. in a deal that values the company at nearly $4.5 billion, making it the most highly valued online lender in the U.S. It also makes GreenSky the second most valuable privately held U.S. fintech company trailing only payment processor Stripe. GreenSky’s lending platform arranges loans through a network of banks that enables retailers, contractors and health-care providers to offer credit to their customers.

All in: Founders Fund, the venture capital firm co-founded by Peter Thiel, the co-founder of PayPal, has taken a “moonshot bet” on bitcoin. According to the paper, Thiel’s fund “has amassed hundreds of millions of dollars of the volatile cryptocurrency.” Thiel previously “had some success navigating the financial crisis before racking up investment losses by investing in havens and missing out on the subsequent rebound.”

In the works: Rabobank Groep’s California unit has set aside €310 million in anticipation of a settlement with the U.S. Justice Department over the bank’s money laundering compliance problems. The settlement is also likely to include a guilty plea.

Quotable
“The geopolitical environment has changed considerably since we first announced the proposed transaction with Ant Financial nearly a year ago.” — MoneyGram CEO Alex Holmes.