Unicredit has signed a binding agreement in the form of a term sheet with the Alpha Services and Holdings, 100% parent company Alpha Bank to establish a strategic partnership in Romania e Greece.
The two banks will merge their operations in Romania, creating the country's third largest bank by total assets, thus strengthening UniCredit's presence in a key growth market. Alpha Bank will retain a 9,9% stake. In Greece, contractual agreement to establish a commercial partnership, through which UniCredit's asset management and unit-linked products will be distributed to Alpha Bank's 3,5 million customers. A joint venture has also been established in the insurance and pension investment products sector, in which UniCredit holds a 51% stake in AlphaLife.
Le Unicredit shares are on the rise by 1,17% to 22,38 euros when the Ftse Mib rises by 0,07%.
The third largest bank in Romania is born
Unicredit and Alpha Services and Holdings have established the main financial terms for the merger of UniCredit Romania with Alpha Bank Romania SA., thus creating the third largest bank on the market Romanian in terms of total assets, with a share of overall market of 12% for total assets.
The merger will bring together two franchises that integrate into a growing market, where both banks have a strong presence in the corporate and retail segments.
The operation should end in 2024, subject to the completion of due diligence, approval by the relevant boards of directors and necessary regulatory and antitrust approvals. At the end of the operation, Alpha Bank will retain 9,9% of the shares of the new entity and will receive a cash payment of 300 million euros. The amount may be subject to change based on credit quality at the end of due diligence.
Business partnership in Greece
In Greece, however, a commercial partnership will be launched between the two banks. UniCredit will acquire a 51% stake in AlphaLife Insurance Company SA., a Greek life insurance company wholly owned by Alpha and specialized in insurance and pension investment products. Alpha Bank will distribute Unicredit's "onemarkets" mutual funds through its network.
The collaboration will leverage UniCredit's experience and broad product range in asset management and banking insurance, with the aim of enhance AlphaLife's skills e offer improved wealth management services to Alpha Bank customers.
The two parties will explore further opportunities for collaboration. The final business partnership agreement will be subject to the conclusion of due diligence, the approval of the relevant boards of directors and the necessary regulatory and antitrust clearances.
Offer for 9% of Alpha Bank
UniCredit submitted a bid for buy all shares held currently fromHellenic Financial Stability Fund (HFSF) in Alpha Bank, which amount to 9% of the total. In the event that the process with the HFSF is not completed, UniCredit undertakes to purchase on the market a stake equal to the lesser of 5% or the stake resulting from an investment of a predefined amount within 24 months.
The merger in Romania will impact the CET1 ratio of UniCredit by approximately 15 basis points, and together with the commercial partnership based on UniCredit products, is expected to lead to a Net income incremental increase of over 100 million euros for UniCredit. For Alpha Bank, the transaction is not expected to change net profit expectations, but will improve capital buffers by more than 100 basis points and increase Return on Tangible Equity (ROTE) by at least 50 basis points, with the potential for further benefits from business partnership.
Orcel, Unicredit: “We could replicate this type of deal”
“We have discussed a lot about the pan-European advantage of our group, and thanks to the operation announced today we are able to obtain advantages in the partnership with Alpha without the need to make a traditional acquisition, thanks to the capital light structure of the operation” he stated Andrea Orcell, CEO of UniCredit, during the conference call with analysts that followed the announcement of the strategic partnership with the Greek bank.
“There could be situations where this type of deal could be replicated, as it gives us strategic flexibility to add banks to the network. I think it's a right way to act” Orcel then added.
