ACM/Swissquote deal details reveiled

Swissquote Bank, the Swiss Bank which acquired ACM back in October 2010, has recently released its 2010 financial report which

Swissquote Bank, the Swiss Bank which acquired ACM back in October 2010, has recently released its 2010 financial report which allows us to gather some interesting data about the deal. It’s also interesting to see that Swissquote Bank’s share price which was gradually decreasing throughout 2010 has gained as much as 40% in 2010 since the deal was announced. I guess this alone was worth the whole deal.

ACM (Advanced Currency Markets) is a Swiss broker which struggled to receive FINMA (Switzerland financial regulator) forex license. FINMA requires forex brokers to receive banking license and for now has only approved MIG Bank and Dukascopy. ACM’s application was denied on October 1st 2010 and on October 27th the acquisition by Swissquote Bank was announced. No figures were disclosed, until now.

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There’s not much specific information about ACM in the report, as Swiss reports seem to be less descriptive and transparent than American public reports we are used to, however what I managed to extract is the following:

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  • ACM was acquired for CHF 42.3 million (about $45 million)
  • ACM may have had revenue of CHF 37 million in 2010 on a net loss of CHF 12.6 million *
  • ACM had about 6,500 forex accounts
  • ACM held about CHF 115 million in client funds (about $120 million) – that’s CHF 18,000 ($20,000 per account), extremely high comparing to industry standards
  • ACM’s monthly volume was about CHF 25 million (~$30 million), way below my estimate of $120 million
  • ACM had 85 employees at the time of the deal

* Swissquote’s report contains the following paragraph: “Since 26 October 2010, and excluding pre-tax post-acquisition restructuring charge, the ordinary operations of ACM Advanced Currency Markets Ltd and subsidiaries are breakeven (+CHF 150,763) providing the Group with additional revenues of CHF 5,913,276. Had ACM Advanced Currency Markets Ltd and its subsidiaries been consolidated from 1 January 2010, the consolidated income statement would show a net profit inferior of CHF 12,596,305 (excluding pre-tax post-acquisition restructuring charge) with additional revenues of CHF 36,898,223. These figures are not indicative of the future contribution expected from its post-restructuring Forex activities. ACM Advanced Currency Markets Ltd will be merged into Swissquote Bank Ltd in the course of Q2-2011.”

Unfortunately ACM did not come back to me with respect to this but it seems to state that ACM’s 2010 revenue was about CHF 37 million on a net loss of CHF 12.6 million. Swissquote did recognize deferred tax assets of CHF 7.1 million stemming from ACM’s losing activities in 2010.

Click More in order to see the full Swissquote’s 2010 report and the press release.

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