Following our on 21 March 2025, Paperjam reviewed recent news flows and financial reports and contacted several stakeholders to assess the seriousness of a potential sale of Banque Internationale à Luxembourg by its majority owner, Legend Holdings.
A Hong Kong-listed Chinese investment holding company, Legend acquired a 90% stake in Bil in September 2017 from Precision Capital S.A., a Luxembourg-based financial holding company that represented “the private interests of members of a prominent family in Qatar.” The transaction was closed on 2 July 2018.
Bil: key performance figures
As the bank is regularly hit by numerous non-recurring items, it’s fair to look higher up in the profit & loss statement to assess its recurring profitability. Bil’s “core operating income before tax” was €124m in 2016 (last full-year result before the acquisition by Legend). The same metric reached €92m in 1H2024 (the bank has not yet reported its full-year results), down from €121m in 1H2023.
Its solvency improved slightly over Legend’s detention period, exhibiting a common equity tier 1 capital ratio of 13.9% as of 30 June 2024 (12.4% on 31 December 2016). This ratio lags behind that of by year-end 2024, according to the European Banking Authority.
Moody’s positive outlook on the bank was removed over the detention period (A2-/stable), whereas S&P’s rating remained unchanged (A-/stable). Bil decided to drop Fitch during the period, which rated the bank at BBB+/stable in 2016.
Aligned with China’s industrial plans and policies
Legend Holdings states on its website that it holds “equity in leading enterprises in multiple industries and international influence.”
It is, indeed, a conglomerate sprawling over several industries in two segments: “diversified-industries operation” and “industrial incubation and investments.” The first segment includes Lenovo, a company that develops, manufactures, and sells high-end technology products and services (Legend holds an equity interest of 31.4%); Levima Advanced Materials, which is active in R&D, production, and sale of new material products (equity interest of 51.8%); Joyvio Group, which focuses on agriculture and food (equity interest of 77.8%); and Bil, which covers financial services (Legend holds 90%).
Interestingly, Legend’s 2023 annual report specified that its second segment “closely adheres to China’s industrial plans and policy guidance” with a focus on “AI, integrated circuits, new energy and advanced materials.” Paperjam understands that Legend finances companies at different stages of their development in a large array of industries, which often exit through the capital markets via an IPO.
No insights from the grand duchy
In an on 24 March 2025, Luxembourg’s finance minister (CSV) said that he is “not allowed to comment on the existing rumours… for legal reasons.” He stated that his goal is to “ensure that a bank, which has a long tradition in Luxembourg, can also continue to thrive in the financial hub of Luxembourg.”
Reactions--or lack of--from the seller and the target
Contacted by Paperjam, Legend Holdings did not reply to our questions.
The core importance of Bil within the Legend Holdings group is very much unclear given the mixed signals communicated by the group to the market. Legend wrote in its 1H24 earnings report that China became the core market of Bil’s international business, which “connects Beijing and the Greater Bay Area, Luxembourg and Switzerland.”
But Bil’s only operation in China is a representative office that it opened in Beijing in 2019, which conducts “market research” while promoting the “Bil brand in the Chinese market.” As per 30 June 2024, China accounted for 1% of Bil’s credit risk exposure. When Paperjam asked Bil to comment on the performance of its Chinese and international businesses and the technological support coming from Legend, a focus of the investment holding when it announced the acquisition of Bil in 2017, Bil answered that it was not commenting on rumours.
It is difficult to assess Legend’s investment cycle or the philosophy that would drive divestment for the diversified-industries operation segment where Bil sits in the balance sheet of the investment holding. Indeed, nothing could be found on that matter in the 2023 annual report or in the 1H24 earnings report. Moreover, several requests for comment were left unanswered by Legend.
Heard on the street
Paperjam discussed the matter off the record with a representative of a Luxembourg financial association. The person interpreted the potential sale of Legend Holdings’ stake in Bil as a standard investment decision by a financial company reaching the end of its investment cycle looking to crystallise profits, and dismissed the idea of any external or more complex motivations.
Another market commentator in Luxembourg suggested that Goldman Sachs may have deliberately leaked a price to the market to assess interest by potential buyers.
In a written comment, Leon Kirch, managing partner and conducting officer in charge of portfolio management at European Capital Partners, stated that “the current prices seem quite high compared to profitability.” In addition, he thinks that there is a lot of work to be done to restore customer confidence given the operational problems the group has experienced (IT, retail restructuring). He admitted, though, that “the group, either as a whole or in parts, may be of strategic interest to a group seeking to position itself in the grand duchy.”
According to two sources who spoke on condition of anonymity, two candidates interested in acquiring Bil have already come forward.
So bullish but so silent
Five investment research houses have a buy/outperform rating on Legend Holding’s stock. In other words, their analysts have a positive opinion on Legend’s business and/or potential share appreciation. Paperjam contacted all of them to assess the probability of piecemeal transactions or a full sale of the Bil by Legend Holdings.
A sense of shyness has transpired from our communications with these research firms.
Sadif Investment Analytics (an independent European-based research firm) wrote back to Paperjam, saying: “We cannot comment on this transaction since we have not been able to rate Banque Internationale.” It’s an interesting comment given that the remaining stake (10%) is held by the Grand Duchy of Luxembourg. Bil is therefore not listed.
Citi wrote that it is “not appropriate for their analyst to comment.” Finally, we received no replies from CICC (China), SDIC Securities (Hong Kong) and the Institutional Shareholder Services group (which is majority owned by the Deutsche Börse Group).
Strong stock performance by European banks since 2023 offers some guidance
Irrespective of Bil’s performance or its international or Chinese activities, the recent stock performance of European banks may have attracted Legend’s attention. Indeed, the was stationary between 2014 and 2022, but it posted a performance of +26% in 2023, +32% in 2024 and +22.7% in the first quarter of 2025.
In a , Paperjam reported a possible selling price ranging between €2.5bn and €3bn against a valuation of €1.48bn in 2017. Such levels appear in line with the market repricing on European banks.
The recent drive in banking M&A may be seen as an opportunity to unload an asset at a decent price given the higher valuation of European banks.
A demanding regulatory process before an official approval
The Luxembourg Bankers’ Association (ABBL) reminded Paperjam that selling and buying a bank is not a straightforward affair. To name a few requirements, the seller would first need to notify the supervisory authority of its intention to sell the bank while supplying detailed information on the acquirer. Second, the authority needs to assess the professional integrity of the acquirer, its financial soundness, the business plan and the various risks involved in the transaction.
Communication with the European Central Bank (Bil is a systemically important bank) and/or other regulators (if a cross-border group) may also be required before getting explicit or tacit approval of a sale. Though not unsurmountable, it would be an uphill process for Legend, indeed.