Monte dei Paschi, Unicredit breaks the delay: deals with the Treasury but wants a dowry of 6 billion

MILANO – After a year of negotiations Unicredit, with acceleration from a few waiting, it bursts towards the acquisition of the Monte dei Paschi. Yesterday the board of directors of the bank led by Andrea Orcel agreed with the treasure, 64% shareholder from Siena, «the conditions for the potential transfer of a selected perimeter of activities Mps to Unicredit ”, and will start an exclusive negotiation, to be closed“ within 40 days ”, if the appraisal at the start bears fruit.

An opportunistic move that allows Unicredit, which today will present a quarterly report to the kiss, to negotiate a public dowry that is estimated to be higher than the 6 billion raised by the past management in 2020 in the negotiation. Still today, in fact, MPS will come out of the European stress tests with a capital deficit close to 2 billion.

The Italian Unicredit of Orcel the moves of the first hundred days

by Andrea Greco

July 26, 2021

The operation, reports a note from Unicredit, “would allow to accelerate organic growth plans and facilitate the achievement of sustainable returns above the cost of capital”. The perimeter, although not yet defined, is indicated in “approximately 3.9 million customers, 80 billion euros in loans, 87 billion euros in deposits, 62 billion euros in assets under management and 42 billion euros in administered assets “.

In practice, a selected part, which the appraisal will tell how large, of the commercial network (in the 2020 budget Mps had credits for 92 billion), while the general management in Siena would not be included.

«Releasing the enormous value that Unicredit has within it continues to be our priority. However, I have always been clear on the role that mergers could play as an accelerator able to improve strategic results, always in full respect of the interests of our shareholders, ”Orcel said. Almost a justification for the signs of disinterest in the dossier filtered after the last contacts between the Roman banker and the Treasury.

Evidently the government concessions encourage him: “The agreement with the Italian government on certain requirements, namely neutrality in terms of capital, a significant increase in earnings per share, protection from legal disputes and the exclusion of non-performing loans from any transaction, has formed the basis for us to enter the exclusive negotiation, in which we will perform detailed analyzes and verify whether to define a transaction that meets the agreed parameters “.

Another condition, cited in a Unicredit note, concerns “the agreement on personnel management according to the compendium”, and which, as Orcel told the operators, could decrease. Then, not mentioned but now law with the Sostegni bis decree, the aid of 2.9 billion euros in assets that Unicredit would obtain by integrating Mps by 2022, transforming deferred tax assets (the “Dta”) into tax credits .

In short, the August negotiations will have to plan on a public “dowry” sufficient for Unicredit. At least half a billion to eliminate legal risks, the money to smooth out the accounting imbalance of MPS bad and substandard loans, the slips for employees to Siena, which has 900 unspent redundancies in the current plan. The bill is on the rise.

The arrival of Orcel, on April 15, was also linked to the willingness of the Italian shareholders of Unicredit to recover in Italy, where the bank earned only 8 million euros in 2020, giving land not only to Intesa Sanpaolo, but to the pursuers Banco Bpm e Bper. “The operation would make it possible to strengthen the competitive positioning in Italy – writes Unicredit – and in particular in the Center-North (where 77% of Mps branches are), contributing to a growth in market share in Tuscany of 17%, in Lombardy and in Emilia Romagna of 4% and in Veneto dell’8%».

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