Stifel to Buy Germany's MainFirst Bank in Response to Brexit

(Bloomberg) -- Stifel Financial Corp. will expand into Europe by buying the brokerage operations of Germany’s MainFirst Holding AG, ensuring that the U.S. firm can keep offering financial services in the European Union after Brexit.

Stifel’s London-based European unit will acquire MainFirst’s businesses in Germany, Switzerland and the U.S. and add about 150 employees to the 300 it already has in the U.K. MainFirst holds a full German banking license, enabling Stifel to offer advisory, brokerage and investment banking services in the EU as well as clear and settle trades after Brexit, it said.

Stifel, based in St. Louis, joins a host of overseas lenders that are grappling with the implications of Brexit more than two years after the poll took place. It remains unclear what access London-based firms will have to EU-based clients after the formal exit in March next year and the U.S. firm had previously flagged its interest in acquiring a European rival to ease any complications. Some larger investment banks, including Goldman Sachs Group Inc. and Morgan Stanley, are setting up new trading hubs in Frankfurt and Paris and moving staff out of the U.K. rather than acquiring local companies.

“We’re more interested in the ability to expand and grow in Europe than the regulatory response to Brexit,” Eithne O’Leary, president of Stifel’s European unit, said by phone. “Having said that, we will need it post-March, and this acquisition comes with a full German banking license.”

No price was disclosed for the purchase, which includes the bank’s equity research business. The deal doesn’t affect MainFirst Asset Management, which was split off from the bank this year and now operates as MainFirst Affiliated Fund Managers (Germany) GmbH.

Stifel, which has a market value of about $4.3 billion, has become one of the biggest U.S. brokerages not based in New York through more than two dozen acquisitions under Chief Executive Officer Ronald Kruszewski. Between late 2014 and May 2016, a month before the Brexit vote, the firm bought two London-based competitors, Oriel Securities Ltd. and ISM Capital LLP.

In a May interview with Bloomberg, O’Leary indicated that Stifel may make an acquisition on the continent. She described the “absence of certainty” around Brexit as a “fog.”

Read More: Stifel Mulls Europe Acquisition as Confusion Over Brexit Endures

One of Stifel’s main U.K. businesses is arranging stock sales for smaller, mid-market clients. The Mainfirst deal will allow the firm to expand “in a much more meaningful way” into the equities business in continental Europe, O’Leary said.

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