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By Steve Slater
LONDON, June 22 (IFR) - Dozens of European banks will bookhefty windfalls in the second quarter from the sale of theirstakes in Visa Europe, after Visa Inc this week completed thepurchase of its sister card payments firm.
Barclays is set to be the biggest beneficiary due to theamount of trading on its Visa cards, booking a gain of about£396m now the sale has completed. The British bank will alsoreceive shares in Visa and another cash payment in 2019 thatcould see it reap about 1.2bn from the sale, people familiarwith the matter have previously said.
Most other major European banks - including Lloyds, HSBC,Intesa Sanpaolo, Santander and Caixabank - will also get asecond-quarter windfall of varying size depending on how activethey are on the Visa network. That income will be timely, asbank profits are under pressure from sluggish economies and weaktrading income.
US card giant Visa agreed to buy Visa Europe for up toUS$23.3bn in November, in a deal that unites the two arms of theworld's largest payments network.
The proceeds will be shared by more than 3,000 banks andpayment firms that own the European network.
Visa and Visa Europe were part of a global bank-ownednetwork until 2007, when Visa Europe became a separate entity.It has more than 500m cards in issue and had a 52% share of theEuropean card market in 2013.
Under November's deal, Visa said it will pay 16.5bn upfront in cash and convertible preferred stock, with potentialfor an additional payment of up to 4.7bn.
Visa Europe's members have this week received shares in Visaas well as the cash payment, and will get another cash paymenton the third anniversary of closing, the size of which willdepend on future net revenue for the business.
UK banks could receive about 40% of the proceeds, because ofthe popularity of the Visa network in Britain, people havepreviously estimated. Much of the remaining activity is inFrance, Spain and Italy.
Some banks have this week disclosed the second-quarterprofit boost they will get, although some said most of thecapital benefit was booked in 2015 results when the deal wasstruck.
Italy's Intesa Sanpaolo said the deal will result in asecond-quarter net capital gain of around 150m and Spain'sCaixabank said it expected a gain of 115m.
Austria's Raiffeisen Bank International said it will get97m from the initial cash payment and Britain's Co-operativeBank said it will recognise a gain of £62m in its half-yearresults.
Lloyds has previously said it expected a pretax gain ofabout £300m from the upfront cash payment when the deal closed.
Payment services provider Worldpay Group said the sale ofits 5.9% interest in Visa Europe will bring in 1.25bn. Thatconsists of an upfront cash payment of 592m, 374m in Visashares and a future payment of up to 283m. (Reporting by Steve Slater)
