“We are close to the conclusion, sooner or later we will conclude”. This was stated by Pier Francesco Saviotti, managing director of Banco Popolare, answering questions from journalists, on the sidelines of the meeting of the ABI executive committee in Milan, regarding the timing of the merger with Bpm. On the timing for convening the councils of the two banks that will have to endorse the operation, Saviotti replied: "I don't know" if it can be done by the end of the week. As for the need for a capital increase to conclude the merger, Saviotti reiterated that he has “already said it a hundred thousand times. There is no capital increase, if there were an increase the operation would not be carried out. I've been clear?". Also on the analyzes according to which the bank's "Texas ratio" would not be adequate, Saviotti replied that "it does not exist".
The operation remains at the center of the interest of the Stock Exchange which continues to keep the securities in the spotlight. Bpm marks +1,35% at 14,19 and Bpop +1,38% at the same time. The Berenberg report was released on the stock, which cut the target price of the stock to 7,5 euros, confirming the Hold opinion.
Analyzing two scenarios for the merger, Berenberg assumes that BPM is the acquirer: one scenario is with a capital increase and one without.
“Based on our calculations, we believe that a combination without a capital increase could be accretive to BPM shareholders by 49% in terms of EPS (earnings per share) in 2018 and that the combined entity would trade at 0,52 times the tangible book value for a 2018 Rote (operating profitability) of 6,9%”, say the experts.
“While this may seem attractive given current market multiples, we believe any deal would be subject to substantial execution risk and significant restructuring costs. So for us the potential benefits deriving from a merger are discounted in the price of the Bpm share”, they explain to the investment bank again.
“Bpm is the best way to focus on the consolidation of Italian banks: it is in fact a central figure in the consolidation process in Italy. Given its strong capital position, we believe it will be able to exploit the best possible terms for its shareholders. So Bpm is the best way to bet on the issue of consolidation in Italy, in our opinion”, conclude the Berenberg analysts.
