Swissquote buys MIG Bank to create the dominant Swiss forex broker

MIG Bank monthly forex volumes averaged $60 billion in the first half of 2013.

This will once be known as the week of retail forex acquisitions. After seeing Gain Capital close on its purchase of GFT, Oanda acquire social and copy trading service Currensee, and FXCM buy FX research shop Faros Trading, comes potentially the most important deal of the bunch — Swissquote buying MIG Bank, essentially merging the two dominant Swiss forex brokers into a major global player in retail forex brokerage.

Some interesting datapoints regarding privately-held MIG Bank’s business became available in the press release announcing the deal (see link below). Namely, that:

  • MIG Bank did CHF 325 billion in total trading volume in the first half of 2013, which translates into about $60 billion of monthly volumes.
  • MIG Bank’s revenues were, on an annual run-rate basis, at about CHF 60 million (or about $66 million). Going forward, MIG Bank’s contribution should increase Swissquote’s revenues by about 33%.

Although the buyer here, Swissquote, is larger and more diversified than MIG Bank, MIG Bank had the larger retail forex presence. Swissquote does about $30 billion of monthly forex volumes, and MIG Bank at $60 billion per month is about double that.

Swissquote — which is known locally as the E*Trade of Switzerland, holding an approximate 50% market share in the domestic online equity trading market, gave its retail forex business a boost three years ago by acquiring Geneva-based ACM for $43 million. ACM had failed to get a Swiss banking license before a FINMA-mandated deadline, and held a brief auction to sell itself, won by Swissquote.

While ACM provided a nice base for its eForex business, Swissquote was never really able to push the business forward internationally. Acquiring MIG Bank instantly gives Swissquote a nice presence in the key forex markets of Hong Kong and London, and instantly makes Swissquote a major international player and a Top-20 Global retail forex broker. (For a list of leading global forex brokers see the LeapRate-Dow Jones Forex Industry Report).

Swissquote also gets a nice MT4 business with its MIG Bank purchase, something it was sorely lacking until now.

Full details of the acquisition still are being held back by the parties. Swissqupte reported that the deal “was financed entirely with equity capital”, without saying more. We understand that MIG Bank’s major shareholders, including brothers Hisham and Wissam Mansour who have successfully run MIG Bank since its founding, will become significant shareholders of Swissquote as part of the deal.

And based on some of the comparative data we discussed above, and a current market cap of about CHF 450 million ($500 million) for Swissquote, we guesstimate that MIG was acquired for about $150 million. But again, that’s speculation at this point. We’ll bring you more details as they become available.

One final note — the markets seem to think (as we do) that this is a great and transformational deal for Swissquote. Swissquote shares (SWX:SQN) traded up 13% on Wednesday after the deal was announced.

To see the complete Swissquote-MIG Bank press release click here (pdf).

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

Read Also: