Tag Archives: Credit Market

UPDATE 3-Italy considering extending tax breaks for bank mergers, bad loan sales | Instant News


* Tax relief is seen as the key to bank consolidation in Italy

* The draft bill was extended in size by six months, increasing the size

* Tax relief for bad loan sales can also be extended (Added analyst calculations, stock reaction)

ROME, May 4 (Reuters) – Italy is considering extending to mid-2022 a tax break that is expected to spur mergers in the fragmented banking sector, while increasing incentives for any ties, a draft decree shows.

The draft bill seen by Reuters reintroduces current-year tax benefits for companies releasing damaged loans that expired in December.

Both measures, if confirmed, will help Italian banks cope with the impact of the pandemic, which will spark bad credit and further hit bank profits once the government releases support measures for the economy.

In this regard, the government is considering providing state guarantees for bank loans to companies and a debt holiday scheme, with only interest payments continuing after June.

The tax breaks for corporate mergers, which expire in December, are a key part of the incentive package that the previous Italian government has put in place to convince the country’s number two bank, UniCredit, to take over losers Monte dei Paschi (MPS).

Negotiations for the state-owned MPS hit a dead end due to a change of CEO at UniCredit, which Andrea Orcel last month took over from French banker Jean Pierre Mustier.

The proposed changes extend the timeframe for a possible merger and give banks greater incentives to join forces and shore up profits through cutting costs.

The draft decree proposes to increase the tax relief limit to 3% of the assets of the small companies involved from the current 2%.

The Bailed MPS said in March the current move, which allows companies to join forces to turn past losses into tax credits, would require a profit of 2.2 billion euros ($ 2.6 billion) for buyers.

Equita analyst Andrea Lisi estimates the new scheme will mean a 3.4 billion euro increase for UniCredit if it takes over MPS.

Lisi said the bounty would increase to 3.6 billion euros in a bond between UniCredit and Banco BPM, Italy’s third-largest bank which is widely seen as a potential alternative takeover target for UniCredit.

MPS shares rose 5.8% on Tuesday outperforming a 0.8% gain in the Italian banking index.

The cost to the state treasury will be up to 1.05 billion euros spread over three years, the draft decree said.

This would cost the country another 1 billion euros over the same period to extend the tax incentives for the release of bad loans for another year, which the bill says could generate sales of 17 billion euros this year, with 10 billion euros from banks.

The Bank of Italy said the tax breaks helped banks issue 33 billion euros in non-performing loans last year.

Ministers in Mario Draghi’s government are expected to discuss the decision, which is subject to change, at a cabinet meeting on Friday, government sources said.

Lawmaker Giovanni Curro told Reuters his ruling party with the 5-Star Party would ask parliament to change the measures, if approved, to curb incentives.

$ 1 = 0.8333 euros Reported by Giuseppe Fonte in Rome and Valentina Za in Milan; Edited by Gavin Jones, Alexander Smith and Edmund Blair

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UPDATE 2-Italy considering extending tax breaks for bank mergers, bad loan sales | Instant News


* Tax relief is seen as the key to bank consolidation in Italy

* The draft bill was extended in size by six months, increasing the size

* Tax relief for bad loan sales can also be extended (Adding details)

ROME, May 3 (Reuters) – Italy is considering extending to mid-2022 a tax break that is expected to spur ties in a fragmented banking sector, while also increasing the size of incentives, a draft decision seen by Reuters showed on Monday.

The bill also reintroduces current-year tax benefits for companies that lost loans maturing in December.

Both measures, if confirmed, will support Italian banks in the face of the impact of the pandemic, which will spark bad credit and further hit bank profits once the government releases support measures for the economy.

In this regard, the government is considering providing state guarantees for bank loans to companies and a debt holiday scheme, with only interest payments continuing after June.

The tax breaks for corporate mergers, which expire in December, are a key part of the incentive package that the previous Italian government has prepared to convince the country’s number 2 bank UniCredit to take over the losers’ Monte dei Paschi (MPS).

Negotiations for the state-owned MPS hit a dead end due to a change of CEO at UniCredit, which Andrea Orcel last month took over from French banker Jean Pierre Mustier.

The proposed changes extend the timeframe for a possible merger and give banks greater incentives to join forces and shore up profits through cutting costs.

The Bailed MPS said in March that the current move, which allows companies to join forces to turn past losses into tax credits, would require a profit of 2.2 billion euros for buyers.

The draft decree proposes to increase the tax relief limit to 3% of the assets of the small companies involved from the current 2%.

The cost to the state treasury will be up to 1.05 billion euros ($ 1.3 billion) spread over three years, the draft decree said.

This would cost the country another billion euros to extend tax incentives for the release of bad loans for another year, which the bill says could result in sales of 17 billion euros this year, of which 10 billion come from banks.

The Bank of Italy said the tax breaks helped banks issue 33 billion euros in non-performing loans last year.

Government minister Mario Draghi is expected to discuss the decision, which is subject to change, at a cabinet meeting on Friday, government sources said. ($ 1 = 0.8297 euros) (Report by Giuseppe Fonte and Valentina Za; Editing by Gavin Jones and Alexander Smith)

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UPDATE 3-Westpac Australia’s revenues more than tripled, planning to cut costs by 21% | Instant News


* Cash gain for 1H21 increased to A $ 3.5 billion vs forecast A $ 3.2

* Targeting $ 8 billion cost base by 2024, smaller headquarters, branches

* Target yields and costs are better than expected – analyst (Recast and update in full with details, CEO & analyst comments, open share prices)

SYDNEY, May 3 (Reuters) – Australia’s Westpac Banking Corp will close several branches and shift focus to digital banking under a fee-cutting plan announced on Monday as it reported that first-half cash revenue more than tripled from a year ago.

The country’s second-largest bank said its initial costs will increase this fiscal year as it sells non-core businesses and increases its digital offerings, before starting to fall from fiscal 2022.

Cash income for the six months ended March 31 rose to A $ 3.54 billion, compared with A $ 993 million last year and above the A $ 3.28 billion estimate in a Reuters poll.

Westpac posted A $ 372 million in impairment benefits for half of the money that had been set aside to cover potential losses of COVID-19.

Australia’s success in curbing the spread of the coronavirus and unprecedented monetary and fiscal stimulus have helped jobs and housing markets recover, prompting Westpac and other banks to roll back conservative loss estimates.

“This is a promising start to the year with increased cash income … mainly because of the impairment benefits that reflect better asset quality,” Chief Executive Officer Peter King said in a statement.

However, he cautioned that “although the economic outlook is more positive, there is still some uncertainty.”

Australia’s second-largest bank also declared an interim dividend of 58 cents per share, in line with forecasts. It didn’t pay off a year ago as its profits fell due to a massive downturn and a provision to account for the uncertainty and economic downturn that arose from the pandemic.

Bank shares rose 3.5% in early trading as investors welcomed the cost-cutting strategy.

Westpac, which lags behind its peers because of its complex and inefficient system, said it plans to lower costs to A $ 8 billion ($ 6.17 billion) a year by fiscal 2024, from A $ 10.1 billion in fiscal year. 2020.

Aging software and convoluted procedures have become the main enemy of the Sydney-based lender, leading to fines for violating anti-money laundering laws and loss of market share in the mortgage, its main product.

Westpac said it would “rationalize duplicate metro branches” and have a smaller dedicated branch.

“While more details are expected and will be needed, we expect the size, timing and cost of this cost program to be viewed favorably by the market,” said Goldman Sachs analysts in a note.

ASSET SALES

Faced with tighter regulatory oversight, Westpac has agreed on workable efforts with banking regulators to address risk governance issues and has sold off non-core assets as part of efforts to simplify its business.

They are still mulling whether to abandon the New Zealand unit, which sees mortgage lending rise by 10% for half, even as the country tries to cool its hot housing market.

“I am committed to delivering on the comprehensive plan that currently exists, including strengthening risk management, growing our core franchise, and providing a competitive cost base,” said King.

Westpac’s mortgage books halved by A $ 2.6 billion, but credit cards, personal loans, and auto loans declined. ($ 1 = Australian dollars 1.2960) (Reported by Paulina Duran in Sydney, and Rashmi Ashok and Nikhil Kurian Nainan in Bengaluru; Edited by Diane Craft, Peter Cooney and Jane Wardell)

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The Ferragamo exec said Italy was missing a strong national airline | Instant News


ROME, April 30 (Reuters) – Italy senses a lack of strong national airlines that can boost tourism and the economy as it emerges from the pandemic, said executive vice chairman Salvatore Ferragamo on Friday.

Michele Norsa’s comments are among the first by a senior Italian executive to reflect growing concerns about the issue amid an escalating political crisis over the national airline and a relaunch delay.

“Now more than ever we feel a lack of operators who can accompany this transition and who have systematic and frequent relationships with other markets, not only with Asia but also with America,” he told a conference.

Rome last year began restructuring Alitalia and launched the ITA, which was supposed to replace the cash-strapped airline, hit by years of losses, in early April.

But this was put off by lengthy negotiations with Brussels over a new injection of capital and a whole new airline organization.

Norsa said the luxury sector needed to focus its energies on bringing travelers – both leisure and business travelers – to Italy, one of the world’s top tourist destinations.

ITA Chief Executive Fabio Lazzerini earlier this week said the group aims to start flying on July 1, seizing the last window of opportunity to do so in the summer.

Reporting by Giulia Segreti; Edited by Andrew Heavens

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The revamped Italian airline prepares to take off in July as EU talks drag on | Instant News


MILAN, April 27 (Reuters) – A new Italian airline hopes to replace Alitalia from July 1, the chief executive of the state-owned airline said on Tuesday, although some European Commission hurdles still need to be overcome.

Rome last year embarked on plans to restructure Alitalia and launch the ITA, which was supposed to replace cash-strapped airlines, hit by years of losses, in early April.

This was put off by lengthy negotiations with Brussels that risk ruining the project unless ITA seizes the last window of opportunity in the summer, said CEO Fabio Lazzerini.

“We need to start quickly as the market (traffic) is increasing and … rivals Alitalia are acting aggressively, especially low-cost airlines,” Lazzerini said, citing Ryanair’s plans to offer 100 routes in Italy over the summer.

“We aim to start flying on July 1 with a small number of planes which will gradually increase over time,” he said during an audience with four Italian parliamentary committees.

While the ITA is in talks with the European Union Competition watchdog about its plans, it is also in talks with Air France-KLM, Delta and Virgin on the one hand and Lufthansa on the other about a possible partnership, he added.

A decision on partners is expected by the end of June, Lazzerini said, adding that discussions with the Commission are ongoing and the main concern is whether the new airline can purchase the Alitalia brand, its loyalty program and the majority of Milan’s Linate airport slots.

The ITA is also trying to convince Brussels that it needs the handling and maintenance business of the former airline.

Under EU state aid rules, there needs to be economic discontinuity between the ITA and Alitalia for Brussels to allow Rome to inject 3 billion euros ($ 3.6 billion) into new airlines.

Prior to the coronavirus pandemic, Alitalia owned nearly 70% of Linate’s slots and the ITA rejected EU requests to give up half of it.

This position was driven by a desire to keep them out of the hands of competitors and also use them to propel rival airlines into industry partnerships. ($ 1 = 0.8280 euros) (Reported by Francesca Landini; Edited by Alexander Smith)

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