Will the taxman favor a wedding to three Unicredit, Mps and Banco Bpm?
All the potential effects of a clarification by the Inland Revenue on the tax benefits envisaged for bank mergers (such as the one between Unicredit, Mps and Banco Bpm?). Emanuela Rossi's article
An opinion that could trigger polygamy. The clarification of the Revenue Agency on the application of the law on DTA (prepaid taxes on tax losses) to multiple mergers could push the architects of the expected made in Italy risk to incorporate Unicredit not only with Montepaschi but also with Banco Bpm and, why not, with Carige. Basically, in Piazza Gae Aulenti the mergers could earn 2.9 billion by joining with Mps (which according to its board's estimates has 2.2 billion Dta convertible into loans), 3.9 billion by joining Banco Bpm while the Ligurian bank would bring in dowry more or less 900 million, of which about 400 million in the balance sheet, as said by Salvatore Maccarone, president of the Interbank Deposit Protection Fund who is a shareholder of Carige. But what do the law and the opinion of the tax authorities say? And what do analysts think?
THE LAW OF DL SOSTEGNI BIS
The 2021 Budget Law, then taken up without changes in the Sostegni bis decree of last May, provides for the possibility of transforming DTAs into tax credits in the event of corporate mergers. All this if the boards of the companies involved give the green light by 31 December 2021. It should be noted that the total amount of the DTAs to be converted into tax bonuses cannot exceed 2% of the assets of the parties participating in the merger. The increase to 3%, which had also been rumored, did not enter the Sostegni bis dl, but it is not certain that it cannot come back into play according to Il Sole 24 Ore .
THE OPINION OF THE REVENUE AGENCY
The Radiocor press agency reports that the opinion, albeit technical, "is removing the last remaining brakes, according to the experts, in the autumn season of the risk that sees Monte dei Paschi and Carige destined to find their respective white knight ". It was formally requested by the Fitd and, according to what the agency learns, it was “one of the conditions set by the suitors, national banks, who examined the Ligurian bank's dossier without taking the next step of the binding commitment”. In the response to the Interbank Fund's request, it is noted that the same discipline also applies "in the case of merger transactions involving more than two parties" as long as the multiple mergers – as mentioned above – are approved by the respective boards of directors by next December 31st. Paragraph 234 of the Budget Law states that "the Dta can be transformed into a tax credit within the limit of 2% of the sum of the activities of the participating subjects" but this can be done by 31 December 2021. According to unconfirmed rumors, Il Sole 24 Ore , the rule could be extended to next year in order to give more time for any aggregations.
BECAUSE AN EXTENSION OF THE STANDARD IS NEEDED, ACCORDING TO ANALYSTS
On the part of the analysts there is a whole chorus of request for an extension for the rule, especially if you intend to involve Banco Bpm. At Intesa the possibility is not excluded because it would help the group led by Giuseppe Castagna to marry Carige.
According to Bestinver analysts, however, it would be good news for those who think that – after the wedding with Montepaschi – the CEO of Unicredit. Andrea Orcel, would like to add Banco Bpm as well. In fact, in the agreement with Siena, "the tax bonuses could only be used by the Sienese bank considering the total assets of the smallest subject" and therefore most of the Dta in Piazza Gae Aulenti "cannot be used as credit for imposed in the same operation but could be used instead in a subsequent one ". Exactly, with the Lombard group.
For Kepler, on the other hand, the best deal for Banco Bpm would be with Bper “thanks to which it could reach market shares of more than 10% in Italy with limited overlaps”.
Morgan Stanley analysts also agree with the benefits of a possible extension, according to which the board's consent by 31 December 2021 means that there would be 12 months "to complete the transaction and ask for the approval of the shareholders" . In an amicable scenario, the American company pointed out, "an agreement between the councils is a sufficient condition if the transaction is agreed by December 31" to then complete it within the next 12 months.
In the event of a hostile offer, however, if the board of the acquired bank does not support the merger, "the buyer is required to acquire control by 31 December 2021 in order to benefit from the tax bonuses" and therefore a takeover bid would be triggered that , to benefit from the DTAs, the potential buyer is expected to launch by July 31st. Certainly, an extension of the rule to 2022 – according to Morgan Stanley – would facilitate Unicredit which "would have more time for more extraordinary transactions".
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/fisco-unicredit-mps-banco-bpm/ on Mon, 13 Sep 2021 06:08:19 +0000.