Britain’s biggest banks are expected to find out on Monday whether they are in line for a multimillion pound windfall from a £14bn sale of Visa Europe.
The payments company is expected to be bought out by the US company Visa Inc, which is to publish its full-year profits on Monday. UK high street banks such as Barclays and Lloyds Banking Group own Visa Europe along with thousands of other lenders across Europe.
Speculation that a deal is close to being clinched has mounted following a move by the US company to report is results early in the morning rather than after the US markets have closed.
In its third-quarter trading update in July, the US company acknowledged it was interested in exercising a right to buy Visa Europe. It said: “Visa Inc believes there is compelling logic for both Visa Inc and Visa Europe to consummate a business combination and therefore regularly engages in such discussions and is currently in such discussions with Visa Europe.
“The company is targeting to resolve these discussions by the end of October and will provide an update during the fourth-quarter earnings call, if not sooner. There is no assurance, however, that any transaction will be ultimately agreed or implemented.”
The owners of Visa Europe each own one share – giving them the same influence over the business – but the shares do not all have the same value. Barclays, for instance, is believed to have a stake that could be worth £1bn as a result of any deal.
Any payout to the lenders is not expected to come in one amount. A cash payment is expected to be made along with shares in Visa Inc and then further payments could be made in the future depending on the performance of the enlarged organisation.
Neither Visa Europe nor Visa Inc would comment before the results on Monday.
The UK’s new payments regulator may be watching the terms of any deal for any lock ins that might deter the banks from using other payment networks. From December, new regulations from Europe will cap the fees that can be charged on debit and credit card transactions.
The Bank of England has reportedly told Visa Europe it needs to keep a substantial presence in the UK after any takeover, according to Sky News. The company currently employs almost 1,800 people, with just over 15% outside the UK. The Bank of England refused to comment.
