Fifth Third Bancorp sells majority stake in payment-processing unit
Fifth Third Bancorp said Monday it is selling a majority stake in its payments-processing business to global buyout firm Advent International for $561 million.
Cincinnati-based Fifth Third said it will retain a 49 percent stake in the new company, Fifth Third Processing Solutions LLC, which is valued at $2.35 billion, before any adjustments.
The unit processes electronic payments such as debit, credit and merchant transactions.
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The new company will be capitalized, in part, by senior secured notes totaling $1.25billion. Those notes will be payable to subsidiaries of Fifth Third. Cincinnati-based Fifth Third will also receive warrants from the new entity.
The move follows a $3.4 billion injection late last year from the government into Fifth Third. The deal announced Monday is expected to boost the regional bank's tangible common equity and Tier 1 capital by about $1.2 billion; both are common measures that attempt to estimate a bank's financial health.
BofA, Temasek will keep holdings
in China Construction Bank, exec says
China Construction Bank Corp. President Zhang Jianguo said Bank of America Corp. and Temasek Holdings will retain their holdings in the world's second-largest bank by market value. The bank is “psychologically prepared” for Bank of America to reduce its stake, Zhang told reporters Monday in Beijing, adding that further sales by the investor wouldn't affect their cooperation. Temasek executives have said that they won't reduce the China Construction stake, according to Zhang.
A decision to retain the stakes would signal the firms' confidence in China Construction, which posted a 30 percent drop in fourth-quarter profit after setting aside more provisions for bad debt as the economy faltered.
Bank of America, China Construction's second-largest shareholder, sold $2.8 billion of shares in the lender on Jan. 7 and agreed not to sell any more stock for 120 days.
Bank of America spokesman Scott Silvestri told the Observer that the bank intends to remain a significant strategic investor in China Construction Bank.
Bloomberg News, Rick Rothacker