Istituto Centrale delle Banche Popolari
Italiane (ICBPI) has bought CartaSi, Italy’s largest card issuing
and acquiring business, for between €300 million and €400 million
($385 million and $514 million), according to sources close to the
deal.

Cartasi: Vital statisticsICBPI, the central body for
Italy’s substantial banche popolari building society network, will
merge the new business with its Key Client subsidiary, set up to
incorporate the BankAmericard corporate cards business it acquired
from Deutsche Bank in 2007.

Intesa Sanpaolo, which had a 42 percent stake in CartaSi, and
UniCredit, which had 9 percent of the business, are the main
shareholders offloading their holdings. It remains unclear whether
Banca Monte dei Paschi di Siena will hold on to some or all of its
24.4 percent stake.

CartaSi is an interbank organisation which issues, acquires and
provides back office operations and services to 800 Italian banks,
including Intesa Sanpaolo, UniCredit, BMPS and BancoPosta, the
Italian post office bank. It is believed some of the processing for
the business, which is currently processed by SIA-SSB, will be
transferred to Equens Europe, with which ICBPI has a joint venture,
Seceti. The deal should avoid any anti-trust problems because some
of the businesses which currently use CartaSi for their card
processing are withdrawing their portfolios to bring operations
back in-house, most notably UniCredit and Intesa Sanpaolo.

New wave of consolidation

ICBPI is reported to be raising between €50 million and €70
million in capital to finance the deal to keep its Tier 1 ratio
above 8 percent. Industry insiders believe a second wave of
consolidation within the processing industry is now set to take
off, after the initial period of acquisitions made in the last few
years by First Data. Countries like Germany, Austria, and later
Spain, are seen to be areas of potential for further consolidation,
but there is still one more big deal in Italy to be completed
before attention is focused elsewhere.

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By GlobalData

SIA-SSB is currently involved in a bidding process, which
attracted as many as 30 businesses when it put out a tender for
bids. They included private equity, card processors and IT and
software businesses (see CI 406). Industry rumours are
circulating that there are six businesses still in the running to
buy, possibly including Advent, Telecom Italia, TSYS, Bain Capital
and Atos Worldline. It is also rumoured an initial asking price of
€800 million has been revised down to a figure closer to the €500
million-€600 million mark.

Processing big business

SIA-SSB made a profit of €2.3 million in 2007, with sales of
€389 million. The business’s main strengths are its knowledge of
payments and processing in the areas of automated clearing houses
and capital markets. Its card processing business, which offers
payment services to issuers and acquirers, accounted for around 40
percent of those sales.

Atos Origin is the only business to have confirmed it has been
shortlisted by SIA-SSB for the potential acquisition. CEO Phillipe
Germond, in the business’s third quarter earnings statement, said
he wants to merge the group into its Atos Worldline unit to become
a European leader in transaction processing.

Initial discussions between Atos and SIA-SSB started some time
ago, but a deal had been thrown into some doubt following a dispute
involving some of the company’s main shareholders, investment funds
Pardus Capital Management and Centaurus Capital. As a sweetener to
them, Germond announced the business would sell €250 to €500
million of non-strategic assets, mainly in Latin America and Asia,
to focus on generating higher margins and recurrent cash flow.

William Cain