Recent events lead us to bet that Natixis is considering a move to become a financial services supplier rather than a bank and go for turbo charged returns. Keeping a banking balance sheet without customer deposits is basically irrelevant. Minorities would enjoy the ride while 72% owner BPCE would see organizational benefits.
If reshaped NATIXIS could be worth 20% or 38% more : The Simpler, The better.
Our lead analyst, Farhad Moshiri, released a 30-pages report, where he found that Natixis worth more if it reshapes respectively as a Financing Company (20% upside) or as an Investment Service Provider (38% upside and +41% with Ingenico).
We have repeatedly been mentioning that considering Natixis as a bank is not fair. Investors seem yet comfortable not to discriminate the company versus the sector. Market applies the same cost of equity and discount than a traditional bank (respectively about 11% and a P/E at 9x below the sector’s average).
We can’t but agree with investors that as long as Natixis needs to comply with the heavy burden of a banking balance sheet (ever more regulation), it’s hard to consider any re-rating.
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