Jones Day is advising Mercantil Bank N.A. as it prepares to spin off from its Venezuela-based parent corporation along with its U.S. holding company, Mercantil Bank Holding Corp.
Chip MacDonald, a financial services partner in the law firm’s Atlanta office, is leading the team for Mercantil Bank, while a group of in-house lawyers from Venezuela-based parent Mercantil Servicios Financieros, led by their general counsel, represents the interests of the parent company.
The spinoff is expected to be complete in the first half of 2018.
The parent corporation has agreed to spin off Mercantil Bank and its U.S. holding company, Mercantil Bank Holding Corp., which will allow it to become an independent organization. The move comes at a time of severe financial crisis and steep inflation in Venezuela, where Mercantil is one of the largest banks. The companies believe the spinoff will allow each of them to compete more effectively, simplify their operations, reduce risks and improve performance.
The spinoff is part of a plan long in the works, said Jones Day’s MacDonald, who has had a long-standing relationship with Mercantil. MacDonald’s practice focuses on mergers and acquisitions, public and private securities, regulatory, governance and policy issues for clients in the financial services industry.
The shareholders of Venezuela-based Mercantil Servicios Financieros approved a spinoff distribution of 80.1 percent of the U.S. holding company’s Class A and Class B common stock. Mercantil will sell the remaining 19.1 percent of common stock from time to time after the spinoff is complete.
The company plans to list its stock in the United States once the Securities and Exchange Commission approves the company’s registration statement.
“They’ll keep their Mercantil Servicios Financieros shares and get a proportionate interest in the Florida operations that they have currently in Mercantil Servicios Financieros,” MacDonald said. “The U.S. markets are deeper and have more liquidity than most foreign markets.”
Mercantil is among the largest commercial banks headquartered in Florida. The company’s next step in the U.S. is to further expand the bank’s business in South Florida, Houston, Texas and New York City.
Coral Gables-based Mercantil Bank and its subsidiaries, Mercantil Investment Services and Mercantil Trust Co., provide a range of banking, trust and wealth management services. The bank has about $8.5 billion in assets and about 1,000 employees, according to a company statement.