The document provides an overview and analysis of the global banking industry in May 2013. It summarizes that the banking industry saw mixed trends in mergers and acquisitions activity, with overall market capitalization increasing by $51 billion. Specifically, US and European banks improved while Japanese banks declined. It also discusses a failed acquisition in the UK and provides rankings of the top 10 banks in various M&A categories.

1. The Banking Industry Chessboard
May 30, 2013
Market Capitalization: $5.949 trillion
The global banking industry weakened somewhat from a Mergers and Acquisitions
perspective, while net market capitalization increased by $51B during May, although we
saw conflicting regional trends. US banks generally improved, and Japanese banks took a
nosedive. In Europe we saw improvement, while emerging markets were mixed.
A major acquisition failure occurred in the UK, where the Co-operative Bank was set to
take over the Lloyds retail branch network. Loan losses from Britannia, a 2009 acquisition
engaged in mortgage lending surfaced out of the blue, leading to a debt downgrade. It
seems that the acquisition may have slowed the reporting of loan losses, but this will not
be clear until we gain further insight. We downgraded Co-operative Bank from Acquirer to
Performer rating during May, but we are urging caution, as reporting issues must be
investigated. Even if losses were to be confirmed at GBP 0.8bn, we believe the bank would
remain a Performer. It is hard to tell in the early stages of scandal what the undisclosed
elements may represent. At this time, we maintain our Performer rating. The case
illustrates the execution risk in the Mergers and Acquisition game.
PHIMARK Global Index: 137(-2.1%)
Acquirers: 85 (+25)
Performers: 207 (-15)
Management Change: 75 (- 3)
Acquisition Target: 120 (-12)
Distressed: 9 (- 1)
Total coverage: 496 (- 6)

2. Top 10 Banks in Each M&A Classification Category
Management Acquisition
Acquirer Performer Change Target Distressed
Commonwealth Bank ofAustralia Wells Fargo & Co Citigroup Inc. Bank ofAmericaCorp FNMA
Royal Bank ofCanada Industrial and Commercial BankofChina Bank ofChina Mitsubishi UFJ Financial Group BancaPiccolo Credito Valtellinese
Itau Unibanco Holding SA HSBC Holdingsplc Goldman SachsGroup, Inc. Banco Santander, S.A. CyprusPopular Bank Public Co Ltd
Westpac Banking Corporation ChinaConstruction Bank Corporation LloydsBanking Group PLC BarclaysPLC Sparebanken Vest
Banco Bradesco SA JPMorgan Chase & Co. Sumitomo Mitsui Financial Group BNP Paribas BancaPopolare dell'Etruriae del Lazio
Australia& New Zealand Banking Group Toronto-Dominion Bank Bank ofCommunications Co Ltd Deutsche BankAG SpareBank 1 Buskerud Vestfold
Allied Irish Banks Bank ofNovaScotia Banco Bilbao VizcayaArgentaria Banco Santander Brasil Dexia
BankCentral Asia National AustraliaBankLimited Morgan Stanley ING Groep N.V. SpareBank 1 Notteroy Tonsberg
HDFC Bank Limited U.S. Bancorp Mizuho Financial Group Inc. Royal Bank ofScotland Group Sparebanken Pluss
Pacific & Western Credit Corp UBS AG PNC Financial ServicesGroup Societe Generale Proton Bank

3. Top 10 Acquirer Banks
The following banks were upgraded from Performer to
Acquirer rating
The Co-operative Bank was the only downgrade among
the Top 10 from April.
Hang Seng Bank, Bank Mandiri and Bank Rakyat
Indonesia are still rated Acquirer, but were overtaken in
the rankings.
Acquirer
Commonwealth Bank ofAustralia
Royal Bank ofCanada
Itau Unibanco Holding SA
Westpac Banking Corporation
Banco Bradesco SA
Australia& New Zealand Banking Group
Allied Irish Banks
Bank Central Asia
HDFC Bank Limited
Pacific & Western Credit Corp
Australiaand New Zealand Banking Group
Itau Unibanco Holding
Banco Bradesco

4. Top 10 Performer Banks
Performer
WellsFargo & Co
Industrial and Commercial Bank ofChina
HSBC Holdingsplc
ChinaConstruction Bank Corporation
JPMorgan Chase & Co.
Toronto-Dominion Bank
BankofNovaScotia
National AustraliaBank Limited
U.S. Bancorp
UBS AG

5. Top 10 Management Change Rated Banks
JP Morgan Chase was upgraded to Performer rating,
after Jamie Dimon survived challenges from investors
wishing to strip him of the Chairman title. The bank
delivered on promises and the market voted massively
for Dimon, bidding up the value of the bank.
Blankfein of Goldman Sachs is the highest paid bank CEO
in America. Blankfein replaced the CFO at the end of
January this year, following two executive appointments
last year. Likely upgrade shortly.
Credit Suisse Group was also upgraded to Performer
rating.
The changes in Japanese monetary policy was sold as a
positive for the economy, but banks generally declined in
value and look weak from a Mergers and Acquisitions
perspective. We downgraded Mitsubishi UFJ Financial
Group to Acquisition Target rating.
Citigroup, Lloyds Banking Group and Morgan Stanley
were all upgraded from Acquisition Target to
Management Change rating during the month.
Management
Change
Citigroup Inc.
Bank ofChina
Goldman SachsGroup, Inc.
LloydsBanking Group PLC
Sumitomo Mitsui Financial Group
Bank ofCommunicationsCo Ltd
Banco Bilbao VizcayaArgentaria
Morgan Stanley
Mizuho Financial Group Inc.
PNC Financial ServicesGroup

6. Top 10 Acquisition Target Rated Banks
Banco Santander Brasil was downgraded from
Management Change to Acquisition Target in May.
As C, Lloyds, and MS were upgraded, Royal Bank of
Scotland and Societe Generale rose into the top 10.
Mitsubishi UFJ Financial Group was downgraded from
Management Change, leading the trend in Japan.
Acquisition
Target
Bank ofAmericaCorp
Mitsubishi UFJ Financial Group
Banco Santander, S.A.
BarclaysPLC
BNP Paribas
Deutsche Bank AG
Banco Santander Brasil
ING Groep N.V.
Royal Bank ofScotland Group
Societe Generale

7. Top 10 Distressed Rated Banks
Central Arizona Bank, Scottsdale, AZ with approximately
$31.6 million in total assets and $30.8 million in total
deposits was closed. Western State Bank has agreed to
assume all deposits.
Sunrise Bank, Valdosta, GA with approximately
$60.8 million in total assets and $57.8 million in total
deposits was closed. Synovus Bank has agreed to
assume all deposits.
Pisgah Community Bank, Asheville, NC with
approximately $21.9 million in total assets and $21.2
million in total deposits was closed. Capital Bank, N.A.
has agreed to assume all deposits.
Distressed
FNMA
BancaPiccolo Credito Valtellinese
CyprusPopular Bank Public Co Ltd
Sparebanken Vest
BancaPopolare dell'Etruriae del Lazio
SpareBank 1 Buskerud Vestfold
Dexia
SpareBank 1 Notteroy Tonsberg
Sparebanken Pluss
Proton Bank

8. Watch-list:
Troubled banks that
could go into distress
ECB Financial Stability Review – Further
decline in bank profitability, linked to
credit losses and a weak macroeconomic
environment is the primary risk, and
rising.
• Caisse Régionale de Crédit Agricole de Normandie-Seine
• Alpha Bank SA
• Sandnes Sparebank
• Caisse Regionale de Credit Agricole Mutuel de la Loire-Haute-Loire
• Banca Popolare di Spoleto
• Caisse Regionale de Credit Agricole Mutuel Toulouse 31
• Cecil Bancorp
• Banco Popolare
• CRCAM Nord de France
• Caisse Régionale de Crédit Agricole Mutuel de La Touraine et du
Poitou
• Credit Agricole Brie Picardie
• Crédit Agricole d'Ille-et-Vilaine
• Crédit Agricole Sud Rhône Alpes
• Caisse Regionale de Credit Agricole Mutuel Alpes Provence
• Credit Agricole du Morbihan

9. Trond Johannessen
Director
Phimark BV
+31 620 59 1015
trond@blackwolfbv.com