VocaLink's 4 Biggest Shareholders Should Cut/Sell Stakes if MasterCard Deal Fails - Regulator
28 July 2016 - 8:28PM
Dow Jones News
By Ian Walker
LONDON--The U.K. Payment Systems Regulator said Thursday the
four largest shareholders of VocaLink should sell all, or part of
their holdings in the infrastructure provider if its acquisition by
MasterCard doesn't go ahead, in order to open up the market and
boost competition.
VocaLink is owned by a consortium of 18 banks and building
societies, with the four biggest being Royal Bank of Scotland Group
PLC (RBS.LN), Barclays PLC (BARC.LN), HSBC Holdings PLC (HSBA.LN),
and Lloyds Banking Group PLC (LLOY.LN). Its technology provides the
backbone for non-card transactions such as employer payroll
deposits and consumer bill payments, processing over 90% of
salaries, more than 70% of household bills and almost all state
benefits in the U.K.
It also unites the infrastructure of Britain's automated teller
machine network among its participating banks. VocaLink reported
$240 million in revenue last year and processed more than 11
billion transactions.
In a review that started earlier this year the regulator said it
now plans to consult on a series of changes designed to increase
competition and better meet consumer needs, including adopting a
common international messaging standard to encourage new entrants,
and creating a competitive procurement process that addresses
consumer needs.
Last week, however, MasterCard Inc. (MA) announced that it was
buying 92.4% of VocaLink Holdings Ltd. in a deal valued at about
$920 million. If the deal completes, a majority of VocaLink's
current owners will retain a 7.6% stake for at least three
years.
The deal, which is subject to regulatory and other approvals, is
expected to close early next year.
At the time of the deal, RBS confirmed it would sell its 21.4%
shareholding in VocaLink and book a 150 million pound ($197.58
million) pretax gain in its accounts. Barclays also said it has
sold 13.68% of its shareholding in VocaLink for GBP104 million,
leaving it with a 1.5% stake.
Hannah Nixon, managing director of the Payment Systems Regulator
said the deal could address the issues identified, but stressed
that the problem runs deeper than just the ownership of the
infrastructure provider and she wants to see further changes in the
market if competition is to be effective.
"We need to future-proof the payments system so that the U.K.
can continue to be at the forefront of payments innovation and
deliver the best service to consumers. This means ensuring there is
effective competition and that new entrants face the right
conditions to enable them come to market," Ms. Nixon said.
"There is not one single area of concern, but a series of issues
that are entwined and require a holistic approach in order to see
them resolved. The remedies we are considering are packaged to
achieve just that," she added.
-Write to Ian Walker at ian.walker@wsj.com; @IanWalk40289749
(END) Dow Jones Newswires
July 28, 2016 06:13 ET (10:13 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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