Carige: the majority shareholder of the Interbank Deposit Protection Fund says no to the offer from B to take over the Ligurian bank.
The reason is simple: Article 35 of the statute governing the FITD does not allow it. Bper’s request to the Fund is twofold: on the one hand, to acquire the 88% stake in both the Fitd and the second Ccb shareholder at the price of 1 euro (proposed in the Intesa SanPaolo-Venetian banks style) and then launch a ” Takeover bid on 12% of the remaining capital at the price of 0.80 euros; on the other hand, for the successful completion of the operation, the sine qua non condition is that the Fund recapitalises the Ligurian bank by injecting 1 billion euros. It is the latter ‘particular’ that cannot be satisfied, as article 35 of the state establishes that the preventive interventions referred to in this article – that is, those “aimed at preventing or overcoming the state of failure or risk of failure of a consortium bank authorized in Italy ”-“ cannot exceed the total amount, in each financial year, determined to be 50% of the contributions paid in the previous year ”.
The text continues, underlining that “in exceptional cases, where there is a need for the protection of depositors and in order to ensure the continuity of essential functions, taking into account the role played by the bank in the reference context and the potential impact on the other consortium members, the Board, on the proposal of the Management Committee, it may resolve an increase in the limit referred to in paragraph 10 up to 20% of the contributions paid in the previous year, where the condition provided for in paragraph 5 is met “.
Carige: Fitd rejects Bper proposal, 1 billion recapitalization not compliant with statute
Translated and applied in the specific case in question, the injection of 1 billion is in itself excessive, since 50% of the contributions that Italian banks paid to the fund last year corresponds to 500 million, exactly half of the previous year. amount that Bper asks. According to the statute, we could reach up to 700 million, 300 million less than the amount requested by the Modenese bank. Il Sole 24 Ore writes that “in the auspices of Bper, to reach the requested billion, a quota of another 300 million should have been added to be injected by the voluntary scheme, but the almost Bulgarian quorum provided for by the statute (95% of the members), the the opposition of many member banks – especially among small and medium-sized ones – and the very short deadlines to convene the associates made this hypothesis practicable “. The Fund thus decided to refuse the expression of interest and the Carige share did not like it, immediately capitulating by more than -3% to Piazza Affari. Bad too Bper.
It is also worth drawing on the fund’s statute to highlight its legal nature: “The Interbank Deposit Protection Fund is a private law consortium between banks, with the aim of guaranteeing the depositors of the associated banks. The financial resources necessary for the pursuit of the Fund’s objectives are provided by the consortium members, in compliance with the provisions of the law and the Articles of Association “.
That said, his no doesn’t seem to be definitive. In the press release issued, in writing that “the expression of interest presents terms and conditions to be explored which, at present, in particular, as regards the level of recapitalization required for Carige, does not comply with the statutory provisions (Article 35) relating to interventions of the type in question ”, the Fitd has shown a certain openness, in any case, to study the proposal well.
Barclays calculates UniCredit, Intesa, Mps & Co contributions of 1 billion to Fitd
In a note issued before the no of the Fitd to Bper – Carige: ‘It would be a solid deal’ “, or” Carige: it would be a solid agreement “(for Bper) – Barclays analysts calculated the contributions that the banks members of the Fund should pay to reach the figure of 1 billion requested by Bper for the recapitalization of Carige.
Without prejudice to the fact that the size of the contributions is calculated on the basis of the share held by each institution in the Italian deposits, Intesa SanPaolo should pay 221 million euros, UniCredit 96 million, Banco BPM 54 million, the same B for 48 million, Mps 47 million, Mediobanca 13 million, Credem 19 million.
An opening to the proposal also comes from the top management of Carige, the managing director Francesco Guido who, according to what Il Messaggero reports, expressed himself as follows: Bper’s offer is “certainly an opportunity, there is no no doubt, I do not comment further because this is the majority shareholder (which is the Fitd, precisely)
Guido also pointed out, based on what the 19th Century reports, that, should Carige end up being taken over by Bper, “Genoa would probably no longer have its bank as a decision-making center”. Having said that, the CEO added, “from this point of view it is important to try to understand what the real advantage of the territory is”. That is: “the territory does not have an advantage in the fact of having a decision-making center located in via Cassa di Risparmio but in the fact of having the possibility of serving the territory, businesses, families and guaranteeing jobs”. In any case, “the prospects for Liguria depend on the quality of the person who will join Carige and on the services provided”.
Carige-Bper: the last word is not said. Focus on DTA dowry
In the meantime, Equita SIM comments on the Fund’s decision to reject Bper’s offer, referring in the note to the provisions of the statute, in relation to the maximum amount granted for the Fund’s interventions. Equita calculates that the contributions paid last year by the consortium banks amounted to approximately 926 million and that, “according to our estimates, the maximum amount payable by the Fitd would be around c. 650-700 million”. In this context, “although the deadlines dictated by Bper are rather tight (by December 20, the FITD must decide whether to grant BPE a period of exclusivity), we do not exclude that there may be room for negotiation. In fact, adding to the 650 million of the Fitd the conversion of 320 million of DTA (post tax effect), we believe that there is room to cover the restructuring / integration costs, with a CET1 that should remain between 13% -13.5% (13 , 7% at the third quarter of 2021 of Bper, before further derisking and the impact of personnel exit costs) and an NPE Ratio of less than 5% “.
Equita SIM concludes the note by underlining that, “based on our estimates, we assume an EPS accretion to 2023 mid single digit, with a Rote that would drop from the current 7.1% to 6.3%, while the P / TE would go from 0.36x to 0.31x “.
Equita SIM has a hold rating on Bper with a target price on the share at 2.4 euros.
Barclays analysts were also positive about the deal who, in the note dedicated to Bper, wrote that, “under the proposed conditions, Bper’s offer to acquire Carige would have an (at least) neutral impact on the capital, and would be accretive on the eps of a double-digit percentage by 2024 “.
“The terms of the offer guarantee neutrality on capital. Bper presented a non-binding offer to the Fitd (Interbank Deposit Protection Fund) for the acquisition of an 88.3% stake in Carige (and for the subsequent takeover on the remaining 11.7% stake at 0 , 80 euros per share, for a total of 71 million euros) – the Barclays note recalls – The offer will expire if, by 20 December 2021, the Fitd does not guarantee Bper an exclusive agreement or if Bper and Fitd will not sign a binding Memorandum of Understanding by 31 December 2021. Among other aspects, Bper has asked Fitd to inject 1 billion euros into Carige before closing (all banks should therefore contribute. the CET1 of the combined entity would reach 14.5%, according to our estimates. “” The merged entity – reads Barclays’ comment again – would have total assets worth 150 billion euros, with a share in the deposit market in Italy equal to 5.5% “. In addition, “It is important to underline that Carige’s long restructuring period (of which more than two years under the leadership of the Fitd) has led to a profound cleansing of Carige’s balance sheet (with an NPL ratio of 4.7%), a factor which is important in view of a possible consideration of Bper’s risk profile after the agreement “.
“Bper’s product companies could be supported by a distribution that would take place over a wider network. In the case of Arca, for example (the asset management company in which Bper holds a 57% stake), this acquisition could also represent a defensive move, as Carige already distributes Arca products and, if there were another bank that acquired Carige, Arca would probably lose some AuM (Carige has a total of 12 billion euros in assets under management) ”.