The meeting of the Unicredit strategic committee was brought forward to this afternoon (+1,2%), in view of the decisions on the capital increase which will be decided by the board of directors next Monday. It is essentially a pre-meeting requested by the Foundations before the actual summit on Sunday afternoon. The practice is too delicate (also for the fate of the Foundations themselves) not to be examined with due attention.
Furthermore, today we will finally know the orientation of Bankitalia on the computability of cashes (instrument similar to bonds convertible into shares) in the Core Tier I (bank capital solidity index). According to rumors, at least 80% of Unicredit's cashes (a total of 3 billion euros) would be eligible for Core Tier I. In particular, via Nazionale will suggest to Unicredit to restructure the bonds issued two years ago on the basis of a remuneration no longer fixed (as today) but linked to a decreasing mechanism with respect to the distributed coupon: from a multiplier of 7,5 times up to 1,25 in 2018. In this way it will be possible to consider the cashes in the Tier 1 calculation.
But the calculation of the cashes does not move the fundamental problem: Unicredit, included among the systemic banks by the recent G20 in Cannes, finds itself asserting the advanced frontier of Italy's risk on the financial markets, which requires us to face the markets with the due endowment of capital. Therefore, the prediction that the CEO Federico Ghizzoni is preparing to launch an operation, net of cashes, of 7,5 billion takes shape. An unprecedented challenge that brings with it two consequences:
a) a huge effort for the shareholder Foundations, starting with the Turin-based Crt (proven by the losses of the package held in Socgen), which would be asked for an investment of 248 million, Cariverona (315 million) and Carimonte (217 million);
b) the entry of new significant shareholders, among which the Chinese sovereign wealth fund, the CIC, but above all other Middle Eastern capitals could stand out, also in support of the shares held by Libya.
In support of the request, Ghizzoni will present the new business plan to the shareholders, which will be based on two cornerstones:
a) drastic cost cutting (even with a new location of Pioneer);
b) a change of course of strategies, with the new center of gravity based on retail in Italy and beyond, with the abandonment of unprofitable outposts.
The leadership of the consortium, in which Intesa Sanpaolo will also participate, will be entrusted to Merrill Lybch and Mediobanca. In the team (15 institutes in all) there are practically all the big names, with the exception of Bnp Paribas. Nonetheless, the press insists on a 7 billion euro recapitalization plan for Unicredit. Finally, the additional capital required for the system banks (SIFI) is quantified by the press as 1% more (our estimate was 1,5%).
