The risky bank operations Natixis conducted in 2007 are definitely history!
Natixis SA offers corporate, investment management and financial services. The bank services companies, financial institutions, and institutional investors. Natixis offers wholesale banking in the form of advising and financing; investment solutions in the form of asset management; insurance; private banking; and private equity, as well as other specialized financial services.
Investment case
Natixis is in the process of implementing a new business model and now increasingly resembles an asset management company. As the company withdraws from its capital intensive business operations, investors can play the capital return story. Between 2015 and 2017, it is expected that Natixis will return about 37% of its market capitalization to investors. Alternatively, as Natixis plans to dispose of about €1.5bn of excess capital, it could execute a disciplined acquisition strategy, while at the same time transitioning to its new business model.
At present, the banking sector is not the most favored sector due to low GDP, low loan growth, and new regulatory and capital requirements; but despite this, Natixis probably offers a sweet spot for investors. From a valuation point of view it is cheap and we believe the move to the new business model will be well executed, which would allow a generous share buyback program and consequently a higher EPS ratio.
Business triggers
- Natixis’ disciplined approach to M&As to date (it has aborted 2 deals), will show up in its results in the coming quarters,
- A return of capital distribution will take place on 18 February 2015,
- Natixis’ upside potential is likely to exceed 35% given its EPS of 0.51 and at a P/E of 12.