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The strategic acquisition of ZKB Österreich ideally complements our business areas and increases assets under management in Austria to almost EUR 40 billion. The project to integrate the former ZKB Österreich, now renamed LLB Bank AG, is already well advanced.
The acquisition of ZKB Österreich is a perfect match for us. Following the acquisition of Semper Constantia Privatbank and the referral deal with Credit Suisse (Austria), this is our third transaction in the Austrian private banking market. We are already well positioned in Austria with our asset management and advisory services, fund services, and real estate business, and ZKB Österreich is an excellent addition to these areas.
From closing to merger
The closing took place in January, shortly after which the former ZKB Österreich was renamed LLB Bank AG and adopted the corresponding LLB branding. The next step is the merger of LLB Österreich and LLB Bank. Formally, this merger requires approval from the Austrian Financial Market Authority (FMA) and an entry in the commercial register by the commercial register judge. Only then does the merger become legally valid. In our case, the current LLB Bank AG will be merged into Liechtensteinische Landesbank (Österreich) AG to form the unified entity.
The merger application is currently under review by the FMA in Austria and is expected to be approved during June. We will then be able to submit the application to the commercial register. If everything goes according to plan, the merger of LLB Bank and LLB Österreich should become legally effective in August.
Many topics, many questions, many details
Many small and large steps are necessary before full integration is achieved. The project team includes areas from across the entire LLB (see picture). In seven workstreams, all the necessary work related to the completed closing, the merger, and the integration, including technical migration, is being carried out.
The biggest challenge in all the topics we have to address is undoubtedly their breadth and depth. This is reflected in the scale of the project organisation, with specialists from all areas of the company involved.
In each of the aspects we have to consider, many questions are clarified down to the finest detail to ensure everything runs smoothly in the end. Much of this work goes unnoticed from the outside. One example is the harmonisation of all suppliers. Following the evaluation of all suppliers of the former ZKB Österreich, contracts must now be terminated on time, early terminations negotiated, or transferred to existing LLB contracts. This alone is a task that must be managed over several months in parallel and has a significant impact on the LLB Groupʼs costs. It takes place in a wide range of constellations, mostly in small working groups – invisible to the broader public.
In addition to legal and procedural matters, there are also many organisational and technical challenges. The merger will bring together two companies, meaning that areas and departments will be combined and an adapted organisational structure will be established. Naturally, the newly merged bank is also expected to operate on unified IT systems and processes. This requires a migration to the LLB Groupʼs existing systems, primarily the migration of clients from Tambas to Avaloq. However, it is not only the core banking system that is affected by this migration, but also numerous peripheral systems, HR systems, and more.
Stronger together
The main challenge in this project is to consider all relevant aspects and implement them in good time. However, thanks to the extensive technical expertise and wealth of experience of everyone involved, we are managing this very well. It also helps that, as the LLB Group, we are now quite experienced in integration, having successfully completed several integrations in recent years.
But of course, even with this integration, surprises and unforeseen events arise time and again. And these can certainly keep us on our toes throughout the project – on top of all the other tasks.
How does an integration work?
The acquisition and integration of a company is a complex process – especially in the regulated banking sector. The most important stages are summarised below:
Strategic planning
First, potentially suitable target companies are identified. If possible, initial discussions are held with the owners of the target company.
Due diligence
During due diligence, the target company is examined in detail – financially, legally, operationally, and culturally. Only if everything aligns does the process move forward.
Contract negotiation and signing
If the seller and buyer agree, a purchase contract is signed.
Regulatory approvals
All competent authorities – in the case of a bank acquisition in Austria, for example, FMA Austria, the Federal Competition Authority, and the ECB – must give their approval.
Closing
Once all conditions (including approvals) have been met, the purchase is legally completed – known as the closing. The buyer pays the purchase price and, in return, receives the shares in the target company.
Integration including merger and technical migration
Preparations for integration already begin before closing if possible, but the work is intensified once closing has taken place: IT systems, products, processes, employees, and structures are gradually harmonised. The merger approval process is completed, and at the end of this process, the companies involved are legally merged into a single entity. Various tasks are gradually integrated into the standard processes and systems. In our case, the major technical migration of the core banking system, along with related peripheral and other systems, takes place on the designated cut-off date.