HBoS eyes European expansion via restructuring

UK bank HBoS has promoted Iain Purves to head its newly formed leveraged finance business. It has also appointed Stephen Quinn to become head of the bank’s mainland European acquisition finance division.

Purves was the former head of the bank’s acquisition finance division while Quinn was a director in the acquisition finance team.

Quinn will cover the bank’s regional offices in Paris, Frankfurt, Madrid, Amsterdam and Stockholm. The bank is recruiting for its European activities to take its staff to more than 100 across Europe, it said in a statement. HBoS’s spokesman said it had carried out a restructuring in part to facilitate a wider European expansion.

The leveraged finance team has been created from the bank’s acquisition finance and its structured finance team. The bank’s integrated finance team which provides equity and debt for management buyouts will remain separate headed by its managing director Graeme Shankland.

Prior to their merger, the acquisition finance team carried out deals of between £100 million (€143 million; $207 million) and £500 million in equity, while the structured finance team targeted deals of between £500 million and £5 billion, the spokesman said.

Mark Bickford, Toby Walter, Adrian Walker and Chris Gow will jointly lead the London team reporting to Purves.

The restructuring comes as the bank’s strongest sector, the mid-market, continues robustly in Europe, in marked contrast to larger buyouts according to data from UK buyout firm Candover. The mid-market, defined as deals of €160 million ($231 million) to €1.65 billion, actually rose in the number and volume of transactions in the last quarter to the end of September, increasing from 41 deals in the previous 3 months to 49 deals and from €23 billion to €26.5 billion. This contrasted with large leveraged buyouts, where deals greater than €1.65 billion fell by 70 percent to under €9 billion.

One source at a mid-market buyout firm said: “I really do hope this isn’t a last hurrah [for the leveraged loan market]. It’s unlikely because the two Scottish banks HBoS and RBS are looking to capitalise on the problems in the credit markets by bolstering the mid-market to make up for the problems with the larger deals.”