Swissquote’s stellar performance during the early stages of this year, which saw profits increase by 19% has now begun to bear fruit, the company announced today that it has acquired a 100% holding in compatriot Swiss firm MIG Bank, which is effective from today’s date.
This represents the second major corporate takeover within three years by Swissquote, the company having purchased Advanced Currency Markets (ACM) in October 2010, in order to further its footprint in the retail FX industry.
Expansion Program Lies Ahead
The purchase of MIG Bank, the price of which has not been disclosed by the parties involved and is funded entirely by equity capital, aims to enable Swissquote to greatly expand its FX operations, which at a volume of CHF 158 billion accounted for 26.2 percent of total net revenues in the first half of 2013. In the same period, Swissquote and MIG Bank would have achieved a cumulative volume of CHF 483 billion.
Going forward, the company expects that its income is likely to represent about half of the total net revenues of the group. Thanks to the acquisition, Swissquote will also enjoy a broader international presence in the future, with locations in Switzerland (Gland, Zurich and Bern), Dubai, Malta, London and Hong Kong.
The relevant authorities in Switzerland, the UK and Hong Kong have approved the transaction.
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A Week Of M&A Activity
This week has signaled a period of notable merger and acquisition activity within a wide spectrum of FX firms in different regions, the most recent of which being yesterday’s announcement by OANDA that it purchased Currensee, preceded by FXCM’s acquisition of a controlling stake in Faros Trading in North America.
In addition, GAIN Capital completed its takeover of GFT yesterday, five months after the decision was made to do so.
According to Swissquote, the acquisition of MIG Bank, which will be merged with Swissquote, secures the company a place among the world’s largest FX service providers.
MIG Bank has more than a degree of experience as a financial institution offering FX services in Switzerland, having began life ten years ago as MIG Investments with its head office in Lausanne, with additional offices in Zurich, London and Hong Kong. The company obtained a Swiss banking license in 2009, and has a headcount of 120 staff.
With this recent trend of large retail FX companies reinvesting their profits by purchasing other FX businesses, an overall pattern of firms seeking to bolster their strength is emerging, and could lead to the advent of giant conglomerates. Evolution, as they adage goes, is often better than revolution.