The merger between Bpm and Banco Popolare will lead to a group of one billion euros of net profit in 2019 and a payout target of 40%. This is what the business plan disclosed today by the two institutes and presented in a conference call to analysts envisages. "It's a new bank, which wants to be a leading bank, said the managing director of Bpm, Giuseppe Castagna. This union is not a coincidence, it is the daughter of a vision that we hope will also prove to be far-sighted". Castagna defined the industrial plan of the new bank as "solid, ambitious but not unrealistic" underlining that "we are heading towards a world in which the support of trading for the banks' income statements will cease, also due to the progressive depletion of reserves".
In four years, therefore, profits are expected to grow by as much as 80% compared to 593 million in 2015 thanks to potential synergies valued at approximately 460 million euros, of which approximately 320 million relating to cost synergies and approximately 140 million for proceeds. On the top line front, in particular, the strategic plan aims, according to the press release, to "exploit the distinctive features of the new group, including its unique positioning in the banking landscape, and unleash profitability thanks to a business model optimized to better serve customers through a complete range of products with high added value”. On the stock exchange, both stocks seem to like the new plan: BPM rises by 1,6% and Banco Popolare accelerates above 5%.
In terms of costs, 1.800 voluntary departures and relocations are envisaged for around another 800 people, who will go to take on new roles. In all, therefore, the reduction of jobs and outplacements will affect approximately 2.600 employees. The reduction of branches is also planned, which will have to drop in 2019 to 2.082 from the current 2.417, with the prospect of reaching a number between 1.800 and 1.900 in the future.
As regards the solidity ratios, the new bank will have a Fully Phased Cet 1 ratio of 12,9% in 2019, including the capital increase of €1,0bn by Banco Popolare. During the presentation of the plan, Castagna announced a 25% reduction in the stock of non-performing loans (Npl) from 31,5 billion at the end of 2015 to 23,9 billion expected for 2019, specifying that the bank's bad debt reduction plan will be of "at least 8 billion but up to 10 billion".
In 2019, therefore, the ratio of nominal non-performing loans will be 17,9% (net non-performing loans ratio equal to 11,1%), the coverage of non-performing loans at 59% and the cost of risk of 63bps in 2019, to be achieved through a new unit dedicated to the management of non-performing loans. “The creation of a new unit dedicated to the management and recovery of non-performing loans – reads the press release in parallel with the definition of a clear plan to reduce the latter by carrying out disposals of at least 8 billion euro – will guarantee close attention to the quality profile of the credit of the New Group”.
