Investment banks caught in the Covéa-SCOR turmoil

The reinsurer SCOR is attacking Barclays and Rothschild, the banks advising its first shareholder Covéa. An unprecedented act on the Parisian square.

The reinsurer SCOR is attacking Barclays and Rothschild, the banks advising its first shareholder Covéa.

“Unheard-of violence”. The criminal action initiated by the reinsurer SCOR against Covéa – its first shareholder who planned to take control – caused amazement in the place of Paris. But the legal attack orchestrated in London and Paris against Barclays and Rothschild, two of Covéa’s banks, stunned her. “It’s quite unprecedented aggressiveness”, react several financiers. In the memory of an investment banker, in fact, the tensions linked to a takeover bid had never led to legal proceedings against market references in these conditions.

The two establishments are implicated in civil proceedings for “Serious breach of confidentiality and business secrets of SCOR”. These accusations come on the sidelines of the action taken against Covéa which, according to the reinsurer, misappropriated in a way ” illicit »Sensitive information disclosed during board meetings on the value of SCOR and its proposed Partner Re approach. And this, with a view to” killing “this objective, and submitting its own offer.

Credit Suisse escapes accusations

The Parisian market has seen few precedents, at least not of this nature, some resulting in negotiated results: an action by Aéroports de Paris against JP Morgan during the takeover of Turkish airports TAV in 2012 for lack of advice, and of LVMH against Morgan Stanley for biased analyzes in 2003. In 2008, Eiffage also questioned the role of Crédit Agricole’s investment bank as part of the rise of the Spanish Sacyr to its capital for complicity in false information.

In the Covéa-SCOR battle, the accusation against the banks also took an unprecedented turn: it was made public by press release, then, Tuesday evening, SCOR published the direct quote targeting Covéa (before withdrawing it), detailing up to the names and personal contact details of the bankers concerned.

These procedures have a taste all the more bitter for the two incriminated banks… that it is a partner bank, Credit Suisse, which has fueled the accusation by “ a large number of documents “, underlines the direct quote. From the outset, Covéa was advised, the Swiss bank even found itself the only one of the insurer’s three investment banks not to be sued by SCOR.

Pressure on financing banks

It’s a ” decision of the SCOR chairmanship, argues a relative of the reinsurer. ” She considered that she had obtained what she wanted: the transmission of evidence and the withdrawal of Credit Suisse from the Covéa project ».

It is indeed no coincidence that the reinsurer first put under “Maximum pressure” Credit Suisse and Barclays (and not Rothschild), explains this source: they were the two banks which financed the offer of more than 8 billion euros from Covéa on SCOR. “ If they folded, it would de facto put the Covéa offensive in a more difficult situation “, estimates another close to the reinsurer. Also Denis Kessler did not deprive himself of judging “All to his credit” the decision of the Swiss bank to withdraw from the game.

Why did Credit Suisse dissociate itself from the trio? The direct quote published by SCOR is quite self-explanatory. A lawyer for the reinsurer demanded that Credit Suisse and Barclays communicate to him information transmitted by Covéa on SCOR. It was after having carried out an internal investigation that the Swiss bank withdrew from the Covéa project and obeyed the injunction of the High Court of London to communicate these documents to it. The only question mark: Credit Suisse has withdrawn from the offer but has it ended its mandate with Covéa? ” Failing that, if it has transmitted confidential information, the bank may in this case very well be attacked by its client. », Indicates a local banker.

Property damage

SCOR has thus won a round, and is now demanding material damage from Barclays and Rothschild ” substantial ”For the costs incurred against its first shareholder, indicates a close friend of SCOR. Beyond this particular case, for a banker, “ if you ask me in “on” I will deny it. But fundamentally, this will strengthen compliance ”.

The unease is nevertheless palpable in the Parisian square. ” Customers will find it difficult to mobilize banks on hostile transactions, said another, and mergers will undoubtedly become more and more judicial ».

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