Tag Archives: UNICREDIT

UniCredit Italy posted a heavy loss on year-end cleanup as the CEO bowed | Instant News


MILAN (Reuters) – Italy’s UniCredit on Wednesday posted a larger-than-expected quarterly loss after recording the value of its investment banking business, when Chief Executive Jean Pierre Mustier stepped down.

FILE PHOTOS: UniCredit bank logo seen in Siena, Italy 29 June 2017. REUTERS / Stefano Rellandini

However, the bank topped its underlying net profit target for the year, which removed the item one-time, and its core capital strengthened further, paving the way for a pledge to distribute 1.1 billion euros to investors via dividends and share buybacks.

UniCredit, which under Mustier has rebuilt its capital reserves and cleaned up its balance sheet, said its best quality capital reached 15.1% of assets in December, up sharply from 14.4% three months earlier and above expectations.

After steering UniCredit through a restructuring since mid-2016, Mustier late last year said he would not stay for the next term, blaming a dispute with the board over strategy.

His successor, former head of UBS investment banking Andrea Orcel, will take over after the annual shareholder meeting in mid-April. Meanwhile, UniCredit has appointed the Co-Chief Operating Officer Ranieri de Marchis as interim general manager.

“Andrea has … an impressive track record in international finance. He is in the right position to take UniCredit at a later stage of his journey, ”Mustier said in a statement.

Orcel’s first challenge is deciding whether to succumb to pressure from the Italian Ministry of Finance to acquire state-owned lender Monte dei Paschi in Siena.

Slightly interested in expanding UniCredit’s domestic footprint despite a wave of consolidation in Italy, Mustier has negotiated stringent terms to consider a deal.

It will fall to Orcel to assess whether Roma sweeteners have lined up to lighten the deal enough to face Monte dei Paschi, who earlier on Wednesday reported a loss of 1.7 billion euros for 2020.

UniCredit posted an underlying net profit of 1.3 billion euros for the year, with costs helping it beat forecast yields above 800 million euros.

It said the 2021 target was above 3 billion euros, compared to a previous estimate of 3.0-3.5 billion.

For the fourth quarter, the bank reported a net loss of 1.18 billion euros, above the firm-provided consensus-provided average estimate of 686 million euros.

The results were influenced by a record 878 million euros in goodwill at UniCredit’s Corporate Banking and Investments Unit.

Unexpectedly releasing its earnings a day early, UniCredit said provisions for loan losses reached 5 billion euros last year, as banks prepare for future pandemic strikes.

In line with restrictions on payments that were imposed until the end of September due to the pandemic, UniCredit said it would pay 268 million euros in cash dividends and buy back shares for 179 million euros.

Another 652 million euro share buyback is scheduled for the fall.

($ 1 = 0.8242 euros)

Reporting by Valentina Za; editing by Elaine Hardcastle and Grant McCool

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NEWSMAKER-Andrea Orcel has rocked Italian banking again | Instant News


MILAN, 26 Jan (Reuters) – In 2015, renowned dealmaker Andrea Orcel stated in an interview that he wanted to become the chief executive of a bank.

But the ill-fated offer to run Santander has kept the silver-haired Italian on the sidelines of European finances for more than two years, mired in a legal dispute with a Spanish bank as the COVID-19 pandemic engulfs the world economy.

The last time Europe was on the brink of an economic crisis, Orcel was at the heart of the action. Back in 2007, he played a central role in a series of bank deals that cemented his reputation as one of the most agile dealmakers in the region.

Now appointed as chief executive of Italy’s second-largest lender, UniCredit, all eyes will be on which deals he does – or doesn’t – want to do.

As global head of the Merrill Lynch financial institution team and later worldwide, Orcel advised Royal Bank of Scotland, Santander and Belgium Fortis in the 71 billion euro ($ 86 billion) takeover of ABN Amro.

RBS and Fortis were both later nationalized, with the deal partly blamed for their fate as the financial crisis brought banks across the region to their knees.

Before the deal was closed, Orcel advised Monte dei Paschi to buy ABN Amro Italia Antonveneta’s business from Santander. The Tuscan bank paid 9 billion euros, although Antonveneta had valued around 6.6 billion euros in the ABN Amro deal several months earlier.

Monte dei Paschi later admitted that he had not carried out due diligence.

By stretching Monte dei Paschi’s finances just as the global financial crisis was a bit, the Antonveneta deal, coupled with a series of troubled derivative trades and a mountain of bad loans, helped send the world’s oldest bank still in business into a cycle of failure.

The following year, as European banks struggled to survive the crisis, Orcel received a bonus of about $ 33.8 million.

PAY ROW

In 2012, Orcel moved to Swiss bank UBS to run his investment bank. But he maintains close ties with Monte dei Paschi, making millions in pay by advising on a series of rights issues and fruitless merger attempts.

Then in 2018 Santander, another close client, came on the phone and appeared to be about to grant his wish.

Spanish bank chief executive Ana Botin wants Orcel to be the next chief executive, surprising many in the European financial world given his lack of experience in commercial banking.

But when his appointment was announced, Santander still had yet to reach an agreement with UBS on how to deal with the roughly 55 million euros of deferred payments Orcel will receive in the coming years from a Swiss bank.

Santander hopes UBS will continue to pay. UBS says No.

After months of fruitless bargaining, Botin told Orcel that the political climate in Spain meant they were unable to meet his salary demands and job offers were canceled.

Botin tries to find a way to reach a friendly agreement, but to no avail. In May last year, Orcel sued Santander for 112 million euros. Delayed due to the pandemic, that case will go to trial later this year, but what will happen now is unclear.

What is clear is that by taking the top spot at UniCredit – the bank he helped create in 1998 as a young Merrill Lynch banker working on Credito Italiano’s merger with UniCredito – Orcel will again become the center of Monte dei Paschi’s fate.

UniCredit is seen as a pioneer in becoming its white knight. With Orcel in charge, a UniCredit deal is likely to happen, but whether it will still involve Monte dei Paschi remains to be seen. ($ 1 = 0.8222 euros)

Written by Rachel Armstrong; Edited by David Clarke

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Monte dei Paschi Italia to open books for potential partners | Instant News


ROME / MILAN (Reuters) – Monte dei Paschi in Siena said it would give access to classified data to potential merger partners chosen by its advisers, as Italy goes ahead with plans to cut its holdings in the state-owned bank.

FILE PHOTOS: Entrance to the Monte dei Paschi headquarters in Siena, Italy, 27 October 2017. REUTERS / Stefano Rellandini / Photo Files

Confirming comments to Reuters from an earlier source on Monday, Monte dei Paschi (MPS) said his board had hired Credit Suisse to assist Mediobanca in the task of studying strategic options and exploring market interest for Tuscan banks.

Despite the chaos in the ruling coalition that risks triggering a government crisis, Italy’s Ministry of Finance is moving forward with plans to cut its 64% stake in MPS and fulfill promises made to the European Union as part of its 2017 bailout.

Rome has identified UniCredit as the ideal merger partner for MPS, sources said earlier, but Italy’s second-largest bank wants stringent terms to be met before considering the acquisition and has yet to sign a nondisclosure agreement.

The Ministry of Finance wants to see if Banco BPM, Italy’s third-largest bank which last year saw Rome as a possible partner of MPS, could be interested in entering the data space, said one of the sources.

Banco BPM could not immediately be reached for comment.

UniCredit, which is in the process of selecting a new chief executive after Jean Pierre Mustier decided to step down in April, will only consider a deal that does not affect its capital reserves.

They also want to ensure that an incentive package that Rome is preparing to facilitate sales will be approved in Brussels and Frankfurt, the sources said.

The UniCredit Board is expected to examine the list of candidates for CEO at a meeting on Wednesday before making a final decision in early February.

In the latest push to get the Milan-based bank to consider the deal, Rome is studying plans to divert at least 14 billion euros in non-performing loans from UniCredit to state-backed loan manager AMCO, sources said.

That could increase further to 20 billion to 21 billion euros, accounting for nearly all of UniCredit’s 22.7 billion euros in troubled debt at the end of September, one source added.

The Ministry of Finance has also set aside 1.5 billion euros to cover part of the capital shortfall of up to 2.5 billion euros in MPS.

The Siena-based bank will have to tell the European Central Bank in late January how it plans to fill the gap. The MPS said on Monday that it was pushing back around 10 days to January 28 a board meeting called for approving capital measures.

The tax cuts introduced by Rome for the 2021 merger would cost UniCredit a net profit of 2.4 billion euros if it took the losing MPS.

But the potential takeover is having resistance from within the bank as well as among some of UniCredit’s leading domestic investors.

To remove a major hurdle to a potential deal, Italy is working on a complex scheme requiring bail and a possible spin-off involving state-owned company Fintecna to deal with around 10 billion euros in claims, both in court and out of court, faced by MPS.

Reporting by Giuseppe Fonte and Valentina Za; Edited by Kirsten Donovan, David Evans and Jonathan Oatis

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Italy Could Take 17 Billion Unicredit Bad Loans To Simplify MPS Sales | Instant News


Italy is working on a plan to take out some 14 billion euros ($ 17 billion) of unaffected UniCredit loans to make the takeover of state-owned Monte dei Paschi more attractive to the country’s second-largest bank, sources told Reuters.

Bad loan manager AMCO, which is backed by Roma and run by former UniCredit executive Marina Natale, wants to lift about 60% of UniCredit’s non-performing debt while also clearing Monte dei Paschi of some high-risk loans, two sources said on condition of anonymity.

The plan is part of steps being prepared by the Ministry of Finance to move forward with the sale of MPS, which has become a symbol of Italy’s long-running banking crisis.

UniCredit shares extended gains on the news, rising as much as 7.4% before closing more than 6% higher, their biggest one-day gain in nearly a month.

The Italian Ministry of Finance, AMCO and UniCredit declined to comment.

The Treasury Department aims to prepare various solutions by the end of January, despite divisions in the ruling coalition that risk overthrowing the government.

In a bid to meet the re-privatization commitments agreed with Brussels, the Ministry of Finance is working with advisors to tackle the complexities of the deal, including providing possible state guarantees to protect future MPS owners from around 10 billion euros in lawsuits that the bank faces after decades mismanagement.

“It is impossible to solve all the unresolved issues by the end of January, but there will be material progress in identifying solutions that will eventually lead to an agreement,” said one of the sources.

MPS recently added Credit Suisse to its advisory ranks, including Mediobanca, while UBS joined JPMorgan to represent UniCredit, the sources said.

Bank of America and Orrick act as financial and legal advisors on behalf of the Italian Ministry of Finance.

The European Central Bank is monitoring measures to address the MPS’s capital woes, putting pressure on the Treasury Ministry to have a deal ready to be approved at the annual UniCredit meeting in April, other sources said.

UniCredit has yet to sign a non-disclosure agreement to enter into formal talks, the three sources said, as it seeks more assurance that both the EU and the ECB will support the package of measures.

Discussions are ongoing despite CEO Jean Pierre Mustier’s decision to step down by April due to disagreements with the board.

UniCredit is in the process of finding a new boss but three people close to the matter said Mustier would remain in charge until February.

The French, who have so far avoided a deal in favor of cash returns to investors, have set strict conditions for a potential takeover of MPS and will only consider buying a Tuscan lender if it does not affect UniCredit’s capital ratio.

If successful, the NPL sale would be close to UniCredit’s biggest bad loan deal – a 16 billion euro FINO transaction since 2017.

Under Mustier, UniCredit has slashed its bad debt to 4.7% of total loans. The new cleanup will help him deal with the impact of the viral crisis and make the MPS acquisition more suitable for his investors, who have been rocked by governance clashes.

“If continued, this agreement will facilitate the sale of MPS purchases to the market,” said the first source, adding that AMCO would also take another share of MPS ‘high risk loan totaling several billion euros.

LEGAL RISKS

To address the costly legal risks arising from MPS’s ill-fated acquisition of rival Banca Antonveneta in 2007, the Ministry of Finance is working with its advisors on three options.

This would require a “guarantee scheme” or alternatively some kind of “insurance contract” with cash as collateral, said one of the sources.

Another option is subordinated loans which can be written off in certain circumstances, the source added.

More than half of MPS’s legal risk comes from lawsuits, while the remainder relates to extra-judicial suits primarily from the former controlling shareholder of the bank, local foundation Fondazione Monte dei Paschi in Siena.

Sources said the foundation and MPS could consider a settlement that would see 3.8 billion euros of damage claims drop in exchange for a stake in the bank.

Rome spent 5.4 billion euros in 2017 to rescue the loss-making Tuscan bank, which now needs up to another 2.5 billion euros, giving new urgency to efforts to slash 64% of Italy’s shares under a deal with European Union authorities.

After warning its capital reserves would breach the minimum threshold in the first quarter, the MPS had to inform the ECB at the end of January how it plans to address the shortfall.

(Reuters)


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UniCredit beat profit forecasts, ruling out corporate changes | Instant News


MILAN (Reuters) – UniCredit CRDI.MI confirmed a stronger-than-expected third-quarter profit goal, and delayed plans to split domestic and overseas operations to lower financing costs.

FILE PHOTOS: View of Unicredit’s headquarters where many employees work from home due to the Corona virus outbreak, in Milan, Italy March 2, 2020. REUTERS / Yara Nardi

UniCredit has sought to create sub-holding companies for operations in Germany, Austria and eastern Europe to increase funding costs for the group, which faces a higher risk of sovereignty in its home region given Italy’s fragile public finances.

“Thanks to the massive buyout of bonds by the European Central Bank and the very tight spread of sovereign bonds … we don’t need to sub-hold so the project remains a project,” CEO Jean Pierre Mustier told a media briefing.

Italy’s second-largest bank on Thursday reported a third-quarter net profit of 680 million euros ($ 798.39 million), well above the 334 million euro median estimate the company provided.

Underlying net profit, which the bank uses for capital distribution purposes, was also slightly higher and UniCredit said it was on track to hit a target of more than 0.8 billion euros this year and between 3.0-3.5 billion by 2021. .

UniCredit’s performance confirms an increasing trend of earnings at Italian banks after the country in May lifted one of the tightest coronavirus lockouts globally. Intesa Sanpaolo’s rival ISP.MI also beat expectations on Wednesday with a strong third quarter.

Mustier said he expects an immediate renewal from the ECB on the dividend ban that has hampered its plans to increase investor returns and lift the price of UniCredit’s share, which is currently worth less than 30% of the bank’s book value, versus 50% of Intesa.

“We confirm our distribution policy … is subject to green light regulations … which we firmly believe will happen next year,” he said after core capital strengthened to 14.4% of assets.

French bankers stand by their refusal to join the wave of consolidation in Italy where Intesa has taken over UBI to jump the size of UniCredit.

He declined to comment on reports UniCredit is facing pressure from the government to take over Monte dei Paschi BMPS.MI, who published the results on Thursday.

“Our plans are not based on M&A. We prefer to transform rather than integrate and use our excess capital to support the economy and pay it back to shareholders when we are allowed, ”said Mustier.

UniCredit’s revenue declined from a year earlier, but rose 4.4% from the three months to June, driven by a surge in trade revenue. Costs also recovered due to increased commercial activity in the bank’s main market.

Unlike Intesa, UniCredit experienced a decline in its quarterly net income from loans even though funds borrowed by the ECB at negative interest rates, were hit by the large customer loan repayments in that period.

Lower-than-expected loan losses also helped the outcome, as did larger cost cuts that prompted the bank to slightly increase its current plan targets.

Mustier said the bank would increase its provisions on credit risk in the last quarter to prepare for the impact of the pandemic, but confirmed guidelines for that year.

Shares in UniCredit CRDI.MI rose 0.8% at 0816 GMT in line with the European sector .SX7P. ($ 1 = 0.8517 euros)

Reporting by Valentina Za; Edited by Alexander Smith / Muralikumar Anantharaman / Jane Merriman

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