First-E, the Internet retail bank owned by Dublin-based holding group Enba, has completed a deal with the second-largest bank in the euro zone placing a €2.4 billion (£1.9 billion) valuation on the merged entity.
The agreement between First-e and BBVA (Banco Bilbao Vizcaya Argentaria) will create the world's largest Internet-based financial services group.
Enba will hold a 32.5 per cent stake in the merged entity, which will operate as Unofirst Group. Following the First-e merger, Enba's valuation has soared to €1.1 billion.
Enba is officially licensed to trade as an Internet bank through its affiliation with France's Banque D'Escompte, a 2.5 per cent stakeholder in the group.
Enba originally approached AIB and Bank of Ireland in 1998 to secure its banking licence, but at the time AIB was not interested, and advanced discussions with Bank of Ireland proved fruitless. The newly-merged online retail banking entity with BBVA is likely to pose a threat to the hard-pressed traditional banking industry.
It is understood Unofirst hopes to offer its retail services to Irish customers within a year, subject to regulatory approval from the Central Bank. Enba's founder and chief executive, Mr Gerhard Huber, said yesterday he was confident this latest expansion would persuade the Central Bank it was a legitimate player on the global banking stage.
Two weeks ago Enba's was valued at $443 million (€461 million) after Paine-Webber Capital paid $31 million for an estimated 7 per cent stake in the group. The latest valuation does not take into account four other Enba subsidiaries still in the early stages of development.
Also, Enba shareholders will get a €291 million cash payment from Uno-E, the Internet banking arm of BBVA. Uno-E is 51 per cent owned by BBVA and 49 per cent owned by Terra Networks, the biggest Internet service provider in the Spanish and Portuguese-speaking world. UnoE will hold the remaining 67.5 per cent stake in Unofirst.
Uno-E is also committing €362 million in capital to Unofirst. This will top up Firste's cash reserves of €60 million and Uno-E's capital base of €118 million providing the new entity with a €540 million war chest.
First-e's, and by association Enba's, biggest attraction for BBVA is the strength of its management team and its core technology. The firm's goal has always been to build a global retail banking entity.
Yesterday's announcement will allow First-e's products to be deployed in the massive southern European and Latin American markets. Mr Huber - who becomes chief executive of Unofirst - says the key to its expansion will be through further access to banking licences in new regions.
Already heads of agreement have been drawn up with a joint venture partner in Asia which will provide access to 14 Asian countries, and in the US it is in negotiations with five potential partners to obtain an online trading licence there.
Mr Huber says Unofirst Group may seek a stock market listing within a year.
