Unicredit and Bpm, what is not said about the smell of takeover bid
At what point is the Unicredit project on Banco Bpm and what analysts think about credit quality and more. The deepening of Emanuela Rossi
It is useless to knock on Piazza Gae Aulenti: no one opens the door to say if the marriage with Banco Bpm has to be done. After the indiscretions on a possible interest of Unicredit in the Lombard bank, welcomed by financial analysts, Andrea Orcel does not discover the cards and the group has limited himself to saying that "it evaluates all strategic options". According to Il Messaggero , during the last board of directors the chief executive officer would have given an information highlighting that "for the moment he would have set aside the 'paper against paper' takeover bid plan as there are no longer the price conditions after the jump in the Banco's shares" . Yet the winds of crisis in Ukraine are weakening the stock market prices also of bank stocks, so it is not excluded that this leap mentioned by the Messenger – author of the scoop behind the same rise in the securities of the bank led by CEO, Giuseppe Chestnut – can crumble.
UNICREDIT, BPM AND THE MATTER OF CREDITS
What transpires from the Unicredit headquarters, explains Il Sole 24 Ore , and thanks to the "few consultants admitted", is that the "different treatment of internal rating models allowed by the ECB Supervision is a fundamental point also for the purposes of relative assessments" . According to a consultant interviewed by the Confindustria newspaper, "we enter hyper-technicalism but the issue to keep in mind is 'density' (i.e. the ratio between Risk Weighted Assets and credits) which for UniCredit is 78% while for Banco Bpm it is 58%. Issue on which the different quality of assets and the consequent divergent valuations that UniCredit makes with respect to the 'premium' valuations of the investors depend ”.
Words that would suggest that Banco Bpm's credit quality is low and that Orcel does not want to pay it so much? In reality, a source familiar with European banking issues clarified to Startmag , these are "two different assets": "Unicredit – he notes – makes proportionately fewer credits than BPM and above all different credits (more companies and fewer private individuals)".
HOW IS BANCO BPM REALLY FEELING?
Bpm, in fact, came fifth last in the European stress tests, "in addition to having the lowest coverage among Italian banks on non-performing loans (48.9% against 54% of Intesa and UniCredit) and the net incidence of loans not performing on the total credit of the Banco is the highest in Italy (3% against 1.5% of Intesa and 1.7% of UniCredit) ", notes an analyst who asks for anonymity:" All data which demonstrate a condition that is still subject to ample room for improvement for the asset quality of the institute in Piazza Meda ”. In short, the leak of news last week has inflated the stock, but it seems that the underlying does not make the bank led by Castagna attractive for an acquisition at these prices.
THE REPORTS OF EQUITA AND KEPLER ON UNICREDIT AND BANCO BPM
In general, the hypothesis of the wedding between Unicredit and the Piazza Meda group is not displeased with the financial analysts according to whom it is part of Orcel's strategy which aims more to remain within national borders. Indeed, for Equita the merger "would have a strong industrial rationale as it would significantly strengthen Unicredit's competitive positioning" in Italy "in absolute terms (market share from 11% to 18%), especially in the North (market share from 10% to 20%), reducing the gap ”compared to Intesa Sanpaolo. Kepler agrees that the combination “could make sense for UniCredit to strengthen its Italian competitive position and increase shareholder value. The agreement was not as attractive in the fall of 2021, because Banco Bpm was already above 3 euros like today, but UniCredit was below 10 euros and today it is above 15 euros ”.
THE SCENARIOS ON BANCO BPM AND UNICREDIT
And if for Mediobanca Securities, with this transaction, the institute in Piazza Gae Aulenti would be "ready to further increase its rating and clearly a relative 'outperformance' compared to domestic peers would potentially open up to Intesa-Ubi-type scenarios on peers with lower ratings", for Goldman Sachs is "an unlikely move" because it is "too soon". Not so for JP Morgan: "Unicredit has 4-6 billion euros of excess capital in its business plan and has never ruled out using it for M&A".
To milanofinanza.it Fabio Caldato, partner of Olympia Wealth Management, recalled that “the rumors about the possible integration between Unicredit and Banco Bpm are repeated periodically. There are no certainties, but we have certainly always favorably judged a copy and paste operation of the one between Intesa Sanpaolo and Ubi Banca ”. He also underlined that since last November, when Unicredit withdrew from the Mps affair "it has recovered about 40% in value, with Banco Bpm at about + 20% in the same period of time".
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/unicredit-banco-bpm-opa/ on Mon, 21 Feb 2022 07:36:29 +0000.