Unicredit, Mps, Creval. All the government fiscal help for mergers
How and why the government with the Sostegni bis decree will facilitate bank mergers with tax regulations on Dta. All the numbers and estimates of analysts for the budgetary benefits that Unicredit, Mps, Creval and more would have
The engines are warmed up and the government adds fuel: for the participants in the banking risk, interesting news is in sight on the DTA front, the tax losses that can be transformed into tax credit in the event of a merger. A provision in the draft of the Sostegni bis decree – which should arrive on the CDM next week as said by the Minister of Economic Development, Giancarlo Giorgetti – could particularly favor Unicredit which, with the newly arrived CEO Andrea Orcel, would take the road with greater enthusiasm leading to Siena. After all, the end of the year is not so far off, the date by which the Ministry of Economy and Finance, majority shareholder of Montepaschi with 64%, must dispose of its stake.
WHAT IS IN THE DRAFT OF THE SUPPORT DECREE
As Il Sole 24 Ore informs, in the draft of the Sostegni Bis Decree a series of changes to the legislation on Dta (Deferred tax assets) has been included, i.e. the tax losses that can become tax credit in the event of a merger with other banks upon payment of commissions, deductible for IRES and IRAP purposes, equal to 25% of the amount. According to the balance sheets at the end of 2020, Deutsche Bank has calculated that the tax losses involved would be equal to 11.6 billion for Italian institutions: the government, with a provision in the latest Budget law, had allowed the transformation through mergers by the end of current year. However, Palazzo Chigi has postponed the deadline to June 30, 2022, "a decisive change because it is intended to give more room for maneuver to all bankers to set up the mergers, since it usually takes 5-6 months of preparatory work before the shareholders' meeting approval ". The second important change envisaged by the Sostegni bis decree, on the other hand, concerns the threshold of convertible DTAs which would rise from 2% to 3% of the total assets of the smallest bank involved in the merger.
WHAT WOULD HAPPEN FOR MPS
These are two significant changes for all credit institutions but which would favor MPS in particular, the most easily attacked prey and with the largest number of DTAs in its portfolio, around 3.8 billion. According to the Confindustria newspaper, which quotes Equita analysts, in the event of a merger between UniCredit and Mps, the benefit would amount to approximately 3.4 billion, 1.1 billion more than the current law "with an estimated impact on Cet1 of the combined entity in 90 basis points, compared to the previous 60 basis points ”. It should also be considered that in this way the appeal of the operation between the group led by Andrea Orcel and Rocca Salimbeni increases and the fork is reduced with the appeal that would derive from the Unicredit-BancoBpm merger: the estimated benefit would be 4.1 billion , but the main component would come from the UniCredit DTAs (about 4.35) and not from those of Piazza Meda, equal to about 1 billion. On the other hand, the benefits of a merger between Banco-Bper, equal to approximately 1 billion, are without impact.
WHAT MEDIOBANCA SECURITIES THINKS
Mediobanca Securities analysts believe that these innovations may represent "an advantage from an M&A perspective" for "banks with relatively large DTAs such as Unicredit, Mps and Carige". In particular, "the full advantage of this tax benefit will materialize during the second year and only in a quarter of the first, in addition to the fact that it can only be used once". According to Mediobanca Securities, in most of the combinations involving Carige and Rocca Salimbeni the M&A incentive "will not cover all previous tax losses, with the consequence that greater post-M&A profitability will allow further revaluations of the DTAs in the coming years". Certainly, however, mergers and acquisitions, he stresses, "will remain fundamental for medium-sized banks" and the Sostegni bis dl will allow the CEOs of Unicredit and Bper to study "their new strategy with a more reasonable horizon, given the the usual 5/6 technical months between the approval of the board of directors and that of the shareholders' meeting, which must take place before June 2022 ”.
DTA AND AGRICULTURAL CREDIT
The dl Sostegni bis could also lend a hand in the operation that sees Crédit Agricole get its hands on Creval. At December 31, 2020, Credito Valtellinese Dta had recorded in the financial statements for 81 million and others for 180 million off-balance-sheet. At the same date, Crédit Agricole had 136 million Dta in its balance sheet. Therefore, as Il Sole 24 Ore remarked, "against an estimated cost of 66 million, the group will benefit from a tax asset of 331 million, provided that the merger takes place within 12 months of the payment of the shares. delivered on offer: a nice 'gift' considering that at 12.50 euros (the maximum price of the raise) the Creval is valued at 875 million ”.
For Agricole, the overall commitment thus increased from 737 to 855 million for 100%, about half of which recoverable through tax credits (Dta) for approximately 400 million euro. But from an industrial point of view it promises great efficiency, it is no coincidence that the integration was also well received by Lovaglio and Dumont. With Creval, the Crédit Agricole Italia group strengthens itself as the sixth bank in the country and reaches around three million customers distributed throughout most of Italy, including in the south where Creval has a strong presence, particularly in Sicily.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/unicredit-mps-creval-ecco-gli-aiutini-fiscali-del-governo-pro-fusioni/ on Thu, 06 May 2021 07:36:43 +0000.