UniCredit enters exclusive talks to buy Monte dei Paschi
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UniCredit has entered exclusive talks to acquire parts of Monte dei Paschi di Siena, the world’s oldest bank that was bailed out by the Italian government in 2016.
In what would be the first big deal under Andrea Orcel as new chief executive, a takeover of MPS by UniCredit has long been mooted and encouraged by Italian politicians as part of a wave of consolidation among Italy’s banks.
Earlier this month, the prospect of a deal appeared to be receding as Orcel set a series of conditions on buying the ailing MPS that Italian government officials balked at.
But the two sides have since agreed a framework for a possible deal. Terms have not yet been agreed as talks are at such an early stage.
Speaking on Thursday evening, Orcel said any deal would be designed to “materially strengthen our competitive position in Italy and allow us to generate material synergies”.
He added: “The potential transaction is expected to be both tangible book value per share enhancing and deliver double-digit earning per share accretion to the group.”
Orcel said in order for the deal to go ahead, it should not negatively affect UniCredit’s common equity tier 1 ratio — a measure of its financial strength.
Among the other conditions he outlined were UniCredit being protected from legacy litigation surrounding MPS’s bailout and also being protected from certain credit risks.
UniCredit will spend the coming weeks carrying out due diligence on the deal and deciding which parts of the business it would like to buy.
The bank’s international shareholders have long opposed a deal for MPS and Orcel said he had yet to discuss it with them, but he hoped they would be supportive once terms were agreed.
Earlier this month, UniCredit announced that it would create a new standalone domestic division, led by Niccolò Ubertalli, formally separating it from the bank’s operations in Germany, Austria and central and eastern Europe.
The reorganisation followed a shake-up of top staff in May, when Orcel reduced the number of senior executives from 27 to 15, removing layers of management and duplicated “co-head” roles.
One of Europe’s best-known dealmakers, Orcel led UBS’s investment bank until 2018, when he left to take up the chief executive job at Santander. The move was scuppered when he fell out spectacularly with Ana Botín, the Spanish bank’s chair.
Orcel advised MPS to buy Santander’s Antonveneta business for €9bn in 2007, on the eve of the financial crisis, a deal that many blame for the Tuscan lender’s continued woes.
UniCredit’s new chair, Pier Carlo Padoan, was Italian finance minister when the government bailed out MPS.
UniCredit reports its second-quarter results on Friday.
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