Merkanti Bank has entered into an agreement to acquire Sparkasse Bank Malta and stated its intention to merge the two entities, which will be renamed and rebranded to reflect its focus and market footprint in corporate banking, custody, depositary and investments services in Malta and Ireland.

In a statement posted to the Malta Stock Exchange on Friday 4th March, Merkanti Holding plc, a subsidiary of Scully Royalty Ltd and parent of Merkanti Bank, said that the combination of the existing market presence and product offerings of Sparkasse Bank with the investment in resources and capital from Merkanti Bank creates a strong foundation for growth and development in the relative banks’ core markets.

Merkanti Holding will purchase Sparkasse (Holdings) Malta Ltd, the parent of Sparkasse Bank Malta, and merge the two banks to create a larger independent institution with projected, on the basis of 31st December 2021 financial information: combined own funds of circa €60 million, total assets of €1.1 billion, assets under custody of €8.5 billion and revenues of €17 million.

Subject to regulatory approval, Sparkasse Managing Director Paul Mifsud will be named CEO of the new entity, as well as a Director of the company.

The business model of Sparkasse Bank will remain unchanged and will be supplemented with the additional resources and banking activities of Merkanti Bank, the statement read.

Merkanti is acquiring Sparkasse Holdings from Anteilsverwaltungssparkasse Schwaz, for a total consideration approximately equal to the net tangible asset value of Sparkasse Holdings, less certain adjustments.

This includes a cash payment at closing of the transaction, three consecutive annual payments of €2.5 million, and a contingent payment, payable upon the recovery of an asset of Sparkasse Bank which was previously written off in its entirety. The consideration is expected to be satisfied through cash on hand, available liquidity within Merkanti Holding’s group, or through other means.

The transaction is conditional upon the satisfaction of certain standard conditions precedent for such as regulatory approval from various regulators, including the European Central Bank, the MFSA and the Central Bank of Ireland. The acquisition is currently expected to be concluded in the second half of calendar year 2022.

Mr Mifsud explained that “Merkanti offers Sparkasse Bank Malta the necessary enthusiasm and resources to assist us sustain and grow the business both locally and in Ireland. It also provides us with the appetite for new opportunities and to pursue new projects that we had parked for a while.”

He continued: “Our team supports this development and we are confident that our clients and combined team of professionals will benefit from this transaction.”

Merkanti CEO Samuel Morrow added that the company is “please to expand its footprint in Malta” with the acquisition of Sparkasse Bank Malta.

“The combination of the existing market presence and product offerings of Merkanti with the corporate and custody banking experience and talented professionals of Sparkasse Bank creates a top-tier, diversified bank with critical mass,” he said.

“We believe that the additional scale and operational scope provided by this transaction will generate long-term value for all of our stakeholders. On behalf of Merkanti, we look forward to welcoming all of the employees and clients of Sparkasse Bank to our group and working with and alongside them going forward.”

About Merkanti Holding

Merkanti Holding is a subsidiary of Scully Royalty Ltd, a Cayman Islands-registered company primarily involved in iron ore royalties. It is a public limited liability company in Malta with bonds traded on the Malta Stock Exchange and is the parent of Merkanti Bank, a credit institution and regulated by the Malta Financial Sservices Authority, mainly involved in corporate and merchant banking.

About Sparkasse Bank

Sparkasse Bank is a public limited liability company registered in Malta which is licensed by the MFSA to carry out the business of banking, to provide investment services and custody and depositary services, and is authorised to act as custodian of retirement schemes.

Founded in 2000, Sparkasse Bank is a leading custody and depositary provider. In 2018, it established a branch in Dublin, Ireland, for the provision of depositary services to collective investment schemes including Irish authorised investment funds.