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April 3, 2012 7:05 PM

Banking Deals from Canada to Indonesia a Boon to Big Firms

Posted by Brian Baxter

UPDATE, 4/4/12, 8:30 a.m. EDT. The names of the lawyers from Cleary advising Dexia have been added to the thirteenth paragraph of this story.

Takeover volume may have dropped in the first quarter of 2012, but some optimistic observers say that as the global economy improves and stock markets stabilize, the dealmaking market could still be poised for a reversal.

One industry seeing a flurry of deals of late is the banking and financial services sector, where a trio of billion-dollar transactions have generated roles for corporate lawyers at several large firms.

On Monday, Singapore's DBS Group Holdings announced that it would buy Indonesia's Bank Danamon for $7.2 billion in one of the largest financial services takeovers ever in Southeast Asia, according to The New York Times’s DealBook.

DBS is the holding company for DBS Bank, previously known as The Development Bank of Singapore, the largest bank in the city-state. Reuters reports that the move by DBS to buy Bank Danamon at a 52 percent premium would rank as the fourth-largest banking deal ever in Asia, but could also stir protectionist measures by nationalists within Indonesia.

Indonesian press reports state that if approved, DBS would become the fifth-largest lender in the country, whose booming economy has become an increasingly attractive destination for international firms.

A statement on DBS's proposed cash-and-shares acquisition of Bank Danamon shows that Singapore's WongPartnership and Jakarta-based Hadiputranto, Hadinoto & Partners are advising DBS, which is offering to buy the 67.4 percent stake in Bank Danamon held by Singapore's sovereign wealth fund Temasek. (Update: 4/19/12, 8:30 a.m., EDT. Hadiputranto is an alliance firm of Baker & McKenzie, according to sibling publication The Asian Lawyer.)

Temasek, which recently named Lee Theng Kiat as its first-ever general counsel, is a presence on both sides of the proposed deal, as it also owns 29 percent of DBS. Leading Singapore firm Allen & Gledhill, which recently called off tie-up talks with Magic Circle firm Allen & Overy, is advising Temasek, along with Jakarta-based shop Melli Darsa & Co.

A spokeswoman for Bank Danamon says that Jakarta-based Makes & Partners is advising the bank on the offer by DBS. Oei "Fransiska" Lan Siem serves as legal and compliance director for Bank Danamon.

In another major financial services deal announced this week, The Royal Bank of Canada said Tuesday it would pay $1.1 billion in cash to buy the remaining half of RBC Dexia Investor Services it doesn't already own. London-based RBC Dexia was founded in 2006 as a joint venture between RBC and European financial services giant Dexia.

Magic Circle firm Allen & Overy is representing RBC on its move to buy out Dexia's stake in RBC Dexia through corporate partners Mark Gearing and Jim Ford in London, according to an RBC spokeswoman. Osler, Hoskin & Harcourt is serving as Canadian counsel to RBC. Both firms previously advised Toronto-based RBC on its joint venture deal with Dexia six years ago.

Jacques Lamarre, hired two years ago as a strategic adviser to Canadian firm Heenan Blaikie, serves on RBC's board of directors, along with Paule Gauthier, a longtime Canadian public servant and senior partner with Quebec firm Stein Monast. Edward Sonshine, another prominent Canadian lawyer, also sits on the RBC board. David Allgood serves as RBC's general counsel.

The CBC reports that RBC is buying back its RBC Dexia stake from Banque Internationale a Luxembourg, one of three arms that comprise the ailing Dexia, which has been busy unloading assets in recent months in order to raise capital.

Five firms grabbed roles last October on a French and Belgian rescue package for Brussels-based Dexia, which was struggling from its exposure to Greek debt, according to our previous reports. Cleary Gottlieb Steen & Hamilton advised Dexia in December on the $952 million sale of its Luxembourg unit to a Qatari investment group.

It was Cleary whom Dexia turned to for counsel on the sale of its 50 percent stake in RBC Dexia. M&A partner Michael McDonald in London is leading a team from the firm advising Dexia on the transaction, which will result in RBC having sole control of RBC Dexia. Dexia turned to Linklaters and Canadian firm Blake, Cassels & Graydon for outside counsel on its joint venture agreement with RBC in 2006.

Meanwhile, Linklaters and rival Magic Circle firm Clifford Chance both landed lead roles on a major Russian banking merger completed last month, according to U.K. publication Legal Week.

Bloomberg reported in March that Sberbank, one of Russia's largest financial institutions, had finally reached an agreement to buy privately owned investment bank Troika Dialog for more than $1 billion. The move by Moscow-based Sberbank, about half of which is owned by the Russian state, will see the country's government extend its reach into the investment banking sector.

Linklaters corporate partners Denis Uvarov and John Goodwin are leading a team from the firm advising Sberbank, along with corporate and finance partner Jack Boldarin from offshore firm Walkers, which is serving as Cayman and British Virgin Islands counsel on the deal. (Sberbank tapped another Magic Circle firm, Freshfields Bruckhaus Deringer, for counsel in February on its $661 million acquisition of the international arm of Vienna-based Volksbank.)

Legal Week reports that White & Case is representing Troika's shareholders, who own a 63.6 percent stake in the investment bank, while Clifford Chance is advising South Africa’s Standard Bank, which owns the remainder of Troika's shares. The deal was originally announced last year but regulatory hurdles got in the way of its completion, according to Legal Week. Reuters reports that the Russian government has announced a plan to sell a $6 billion stake in Sberbank.

While some banks abroad focus on getting bigger, closer to home, some banking lawyers are alarmed at the movement in the opposite direction.

Sullivan & Cromwell senior chairman H. Rodgin Cohen, perhaps the country's most prominent banking lawyer, told The Street this week that those advocating for breaking up the largest banks in the U.S. under the guise of a revitalized Glass-Steagall Act aren't basing their critiques on sound historical evidence.

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