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The sale of Customers Bancorp Inc.'s digital banking unit is in flux after its small-bank buyer failed to gather enough capital for the purchase, though there may now be better offers on the table.
Flagship Community Bank was not able to raise the capital it needed to close the acquisition of BankMobile, according to Customers Chairman and CEO Jay Sidhu. Now, the $9.9 billion bank is considering restructuring the deal as a tax-free spinoff of the unit to Customers shareholders. The bank is also considering going with one of two unsolicited all-cash proposals that could knock Flagship out of the process entirely, depending on mutual due diligence and negotiation of a definitive agreement.
Merion Capital Group analyst Joe Gladue reiterated his "outperform" rating on Customers after news of the sale's disruption broke and raised his target price on the bank's shares to $43. Gladue said it is possible that the two unsolicited offers are better options than the original Flagship deal. If the bank goes with one of the two new offers, the clock on the sale will reset, the analyst said.
"The announcement of the deal could have drawn the interest of some other parties that hadn't originally been looking at it," he said in an interview.
But there is also a chance that the offers are not as good as Flagship's, he cautioned.
Gladue suspects that the bids are from banks well below the $10 billion asset threshold. Part of Customers' reasoning for selling BankMobile was that the bank wanted to cross the $10 billion asset threshold without denting BankMobile's interchange revenue under the Durbin Amendment.
A new, all-cash deal is a "good option," but Sandler O'Neill & Partners analyst Frank Schiraldi thinks it is less likely than a reworking of the Flagship deal, since Customers had a lot of time to market the deal. Restructuring the original deal could provide more time for BankMobile to prove itself and potentially reach a better valuation, Schiraldi wrote in a June 1 note.
BankMobile was not immediately available to comment.
In the digital wealth management space, Stash named Giff Carter chief revenue officer, Bankless Times reported. Carter was previously with Voya Financial Inc.
In payments, Google Inc. released Android Pay in Canada for Mastercard Inc. users with cards issued by several institutions, including BMO Financial Group, Canadian Imperial Bank of Commerce, Canadian Tire Financial Services Ltd.
A Moody's report suggested that cyberattacks, like the recent WannaCry ransomware attack, pose "escalating credit risk" to the asset management industry. Asset managers' cybersecurity programs seem less advanced than those of some large financial institutions, Moody's wrote.
From May 25 to June 1, the SNL U.S. Financial Technology Index rose 1.31%.
S&P Global Market Intelligence released a fintech primer on four areas — digital lending, payments, blockchain and digital wealth management — of particular interest due to their rapid pace of growth, technological disruption, and regulatory and other risks. Click here to read the primer.