An industrial plan necessarily revisited due to the Covid emergency, but which in any case confirms the announced cornerstones last February 17th, just a few hours before - among other things - that Intesa Sanpaolo launched the PEO, which will take effect next Monday 6 July and end on 28. This is in summary the update launched by the Board of Directors of Ubi Banca regarding the strategy between now and 2022, redesigned without waiting for the outcome of the operation that will lead to the merger with the institute led by Carlo Messina. The expected net profit in 2022 is 562 million euros, against 665 of the original plan, with a reduction of about 1 percentage point of RoTE, but dividends increase, which increased over the three-year period to approximately 840 million euro, equivalent to a cumulative amount of over 73 cents per share in the period. "A demonstration of great resilience", argues the Lombard bank, adding that one of the great innovations is to internalize 100% of Aviva Vita, which will lead to an expected return on investment exceeding 10% over the horizon of the plan.
"The results of the plan update testify to the group's ability and speed of reaction and flexibility and the importance of having preserved value reserves generated in the best moments", writes a note from Ubi Banca at the end of the board meeting. Among the strengths of the next few years the bank recalled the maintenance of operating income (CAGR1 +0,7% including 100% of Aviva Vita) in a conservative scenario of GDP evolution over the three-year period and negative rates; the control of operating costs (CAGR -0,6% including among other things the impacts of the new collective agreement, increased investments in new technologies and the internalisation of Aviva Vita); and the cost of credit to 62 bps in 2022. "The bank - continues the press release - was able to face the unexpected crisis with a balance sheet in complete tranquility".
In fact, the data say the CET1 ratio is well above 12,5%, which was the target previously set for 2022 and the reserves, thanks to the important emissions program successfully carried out in 2019, are such as to allow, if necessary, autonomy from the markets for at least a further 12 months. Ubi Banca also underlines that it has a portfolio of performing loans with a low level of high-risk credits (2,7% of the total) and well hedged (55 bps at the end of March 2020), and a significantly reduced level of gross impaired loans equal to 7,5%. However, the new plan could not fail to take into account the Ops of Intesa Sanpaolo, and for this very reason some operations were suspended, such as the bancassurance agreements with Cattolica and Aviva, personnel cuts (a negative balance of over 2.000 employees was expected , with the closure of 175 branches) and the renegotiation of securities services agreements.
In reality, the reduction in personnel is confirmed, but depending on how the Ops ends, it will be discussed again in 2021, just as technological investments and the reorganization of the real estate sector are also confirmed in the new plan. Cumulative IT investments over the three-year period are expected at 645 million, an increase compared to what was announced in February and an overall increase of 24% compared to the previous three-year period. Furthermore, Ubi Banca does not intend to say goodbye and indeed in some cases will strengthen the product companies of the group (asset management, factoring, leasing, salary-backed loans, IW Bank, bancassurance, as well as the debt collection platform) "for the best customer service and as an additional store of value.
NO TO INTESA SANPAOLO'S OPS: HERE'S WHY
After reviewing the plan, Ubi Banca also communicated the outcome of the Board of Directors regarding Intesa Sanpaolo's Ops. "The operation - resolved the board - was not agreed with the issuer and is considered not convenient for the shareholders". Here are the six reasons listed by Ubi:
- Since the Offer does not envisage a cash consideration, the UBI Banca Shareholders are responsible for the risks associated with the achievement of the Strategic Objectives of the Transaction defined by ISP. The Consideration - represented by an exchange ratio between UBI Shares and ISP Shares - does not adequately compensate for such risks and, moreover, it results in a much more favorable allocation of value and synergies to the current shareholders of ISP.
- The Consideration expresses a valuation of UBI Banca which does not reflect its real value and penalizes the shareholders of UBI Banca compared to the shareholders of ISP.
- The UBI Share has high potential for growth in value, also taking into account the growth prospects of UBI Banca on a stand-alone basis represented by the targets of the Updated Business Plan, its capital solidity and the his position as a major player capable of playing a key role in the consolidation process in the country's banking context.
- The possibility for the Offeror to achieve the Strategic Objectives of the Transaction is uncertain, as conditioned by multiple and competing factors, highlighted by ISP itself in the Registration Document, including the uncertainties regarding the completion of the Merger and the transfer of the Banking Branch to BPER and the Insurance Branches to UnipolSai under the terms and conditions established by ISP.
- UBI Banca shareholders who do not participate in the PEO they would still be protected by the controls envisaged by the legislation.
- The Offer is part of a broader strategic plan, aimed at strengthening the position of ISP in Italy through the elimination of a competitor, without actually changing the European positioning of ISP. OPS is also counterproductive for stakeholders of UBI Banca as it would allow ISP to create a dominant leadership position in Italy, anomalous among the large European countries and potentially harmful to the economic and social fabric of the territories in which UBI Banca operates.
