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Activist Investors Hit the Banks

BILL ACKMAN screen shot

Activist investors like Nelson Peltz, Carl Icahn and Bill Ackman are known for their strong-arm tactics to get companies to change their ways, whether its splitting up, throwing out a faltering CEO or selling themselves to other companies. Bill Ackman waged a tireless campaign to have botox maker Allergan taken over, and Icahn was the push behind eBay’s spin off of PayPal.

Banks have been largely immune to activist pressure, but that might change, as reported by Crains. Bank of New York Mellon has allowed Nelson Peltz’s Trian Fund to put a representative on its board. Allowing activists to have influence hasn’t been typical for banks; the last example was when Michael Price pushed for the merger between Chase Manhattan and Chemical bank in 1995.

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The next two targets, according to Mike Mayo of brokerage CLSA are the embattled banks Citigroup and Bank of America. Citigroup has seen better days, and has lost 75% of its value in the last decade. Bank of America has shed 45%. However, JPMorgan Chase and Wells Fargo have seen huge increases in the past ten years, and are unlikely to deal with activist interference. Banks, because of their size, have been protected from activists, but since the valuations have declined for some of them, and an investor can have a small 2.7% stake to earn a board spot, it looks like Peltz, Ackman, Icahn and their ilk may have a go at the banks.



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