Swissquote acquisition of MIG Bank – $70 million

MIG Bank brand will disappear, as Swissquote (SWX:SQN) Q3 report provides more insight into the acquisition of its Swiss rival.

Leading Swiss online broker Swissquote has reported its Q3 financials, which showed a relatively slow but profitable Q3 (more on that later). However the interesting part of the report shed more light on Swissquote’s acquisition of rival Swiss retail FX broker MIG Bank, and Swissquote’s plans for MIG Bank moving forward — including doing away with the MIG Bank brand altogether.

Until now, both Swissquote and MIG Bank had remained somewhat tight-lipped regarding details of the acquisition. The only specifics, which LeapRate exclusively reported a few days after the acquisition, was that the deal had been done for a combination of cash and Swissquote shares. We reported that Swissquote had issued 750,000 shares (worth about $26 million) to MIG Bank’s owners, the Mansour family — making the Mansours, via their holding company Windel Investments Ltd., 5% shareholders in Swissquote.

How about the cash portion?

Well it turns out that the cash portion of the acquisition was CHF 40 million ($44 million). That brings the total value of the acquisition to just over $70 million.

Some other interesting facts relating to the Swissquote – MIG Bank acquisition.

Goodbye, MIG Bank – All MIG Bank clients will be transferred to Swissquote by the end of 2013, and the MIG Bank brand will cease to exist.

Employees – Most MIG employees will be offered positions at Swissquote. We understand that MIG Bank CEO Hisham Mansour will indeed be joining Swissquote in a senior capacity. Most of MIG Bank’s other senior management will not be joining Swissquote.

Locations – MIG’s Lausanne headquarters will be shut down — MIG employees there will be offered positions with Swissquote at their Gland location. Swissquote will keep MIG’s Zurich, London and Hong Kong branch locations.

The Swissquote Q3 report also revealed some interesting figures about MIG Bank, notably:

  • Client Assets – MIG had about CHF 138 million ($150 million) in client assets.
  • Revenues – MIG did Revenues of about CHF 40 million ($44 million) during the first nine months of 2013, but had a relatively low gross margin of just 10%. Swissquote hopes to bring that up to industry standards of 25% plus.

As far as Q3 goes, Swissquote had a relatively quiet July-August-September. Its forex trading volumes averaged just CHF 25 billion ($28 billion) monthly during the slow summer months. At the corporate level Swissquote reported Q3 revenues of CHF 28.4 million ($31 million), down 10.7% from Q2. Pre-tax profit was CHF 5.9 million ( $6.5 million), down 40% from Q2.

Swissquote also announced a not-unexpected restructuring and integration charge of CHF 12.8 milion ($14 million) in the quarter.

We’ll have more news and analysis of the Swissquote – MIG Bank combination, as it becomes available. Stay tuned to LeapRate for exclusive coverage of this important acquisition…

To see the Swissquote Q3 press release click here.

To see Swissquote complete Q3 financial report click here.

For more on the global Forex industry see the LeapRate-Dow Jones Forex Industry Report.

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