Twist in Italian banking consolidation. During the board meeting that approved the accounts for the first half year, Unicredit has accepted the appeal launched several times since Ministry of Economy to table direct and exclusive negotiations with the Mef, which holds 64%, for the possible acquisition of a "selected" part of the Monte dei Paschi, the Sienese bank which – according to the agreements between Italy and the EU – is to be privatized by 2022.
The wing stroke of the new CEO of Unicredit, Andrea Orcell, not surprisingly considered the Cristiano Ronaldo of bank M&A, relaunches the bank merger process and, if successful, will allow the bank in Piazza Gae Aulenti to grow especially in the Centre-North, with a rich dowry from the Treasury, and to shorten in one fell swoop the distances that currently separate it from the leading Italian bank, Intesa Sanpaolo.
Unicredit will have the possibility of accessing the Monte dei Paschi data room to verify the real conditions of the Sienese institute and, if there are no surprises, to put pen to paper and purchase a "selected" part of MPS' assets within 40 days.
Orcel, who has a reputation for being a tough negotiator, will not discount e he will demand a rich dowry from the Treasury (we are talking about over 6 billion). The CEO of Unicredit thus set the stakes of the operation: “Capital neutrality, significant increase in earnings per share, protection from litigation ed exclusion of non-performing loans from any transaction. During the due diligence period we will perform detailed analyzes and verify if we will be able to define a transaction that can meet the agreed parameters and then, and only then, will we have the elements to decide whether to proceed".
The scope of the Mps acquisition is fixed at 3,9 millions of customers, 80 billion euros of credits, 87 billion euros of deposits, 62 billion euros of assets under management and 42 billion euros of assets under management”. Unicredit also warns that "the personnel management agreement" will depend on the compendium".
The move from Orcel, which has been positively received by the Stock Exchange and which can pave the way for other mergers among other Italian banks looking for marriage, starting with Banco Bpm and Bper, is good news. But it is also a defeat of the Five Stars and of the CEO of del Monte, Guido Bastianini, who, against all evidence, dreamed of repudiating the agreements with Europe and creating a public bank, of which the need is not felt at all. because leaving the decision of the loans and mortgages that a bank can or cannot grant in the hands of politics is never a wise choice.
As for the accounts, Unicredit closes the first semester with a consolidated net income of 1,921 billion euros, which compares with the red of around 2,28 billion in the same period of 2020. In the second quarter alone, the bank recorded a profit of 1,034 billion, 24,7% more than the previous quarter and above the analyst estimates.
On the balance sheet side, the fully loaded Cet1 ratio stands at 15,5% and the Cet1 Mda buffer at 647 basis points.
For the whole of 2021 Unicredit expects an underlying net profit above 3 billion. The 2021 guidance improved below 40 basis points for the underlying cost of risk, equivalent to loan loss provisions below €1,8 billion. Total revenues for the full year are in line with prior guidance at approximately $17,1 billion and confirmed costs at $9,9 billion.
Unicredit "has solid foundations, which are based on its unique geographical footprint, on the strength of the distribution network and on the solidity of the balance sheet", comments Orcel. “We have made initial but significant progress in simplifying the business, with the aim of operating with greater speed and transparency. We still have a lot to do and will focus on continuing to reduce complexity and accelerate the digitization process. There is enormous potential to be exploited in Unicredit”.
