The UniCredit-Mps operation closely followed by the market and politics after a hearing with Minister Franco. Today Gae Aulenti promoted by Intesa
The Mps-Unicredit affair continues to hold court outside and inside Piazza Affari in the aftermath of the awaited hearing by the Minister of the Economy, Daniele Franco, to the Finance Commission of the Chamber and Senate regarding the ongoing discussions between the MEF and UniCredit and the Sienese group. In Piazza Affari, the stock of the bank led by Orcel rose by 0.44%, a step away from 10 euros, while Mps marks an increase of over 1.5% while waiting for the accounts for the semester.
The hearing of Minister Franco
During his speech, the Treasury Minister expressed confidence in the positive outcome of the operation, while underlining that it will not be closed at all costs and also reiterated, without many turns of words that “the sale is the only solution for Mps“. This is because, Franco explains, we must consider the outcome of the stress test which confirmed the need for a significant capital strengthening of the bank, exceeding the 2.5 billion euros provided for by the standalone plan and that the standalone plan is exposed to significant risks. and uncertainties, with the European Union that could ask for more ambitious cost reduction targets, with staff cuts exceeding 2,500 people. Furthermore, the capital increase on the Tuscan banking group that could be necessary for the operation would amount to approximately 1.5 billion euros, financed by the August decree. “Although the definition of the exact amount of the capital increase for Mps could be premature, considering that the perimeter and technicalities of the deal have not yet been defined, Franco’s statement provides visibility on the financing of a potential capital increase”, analysts say Intesa Sanpaolo.
On the question the experts of Equita underline that Franco’s hearing confirmed that, although the exact terms and conditions of a possible deal remain to be verified, the principles agreed between UniCredit and the Mef leave ample flexibility to the bank in negotiating a favorable agreement from an economic / equity point of view . According to the hypothesis of “The sun 24 hours“, Recall the Equita analysts who focused on the potential acquisition, the transaction could be structured through the spin-off of Mps into a good bank (where Mps’s bank assets will converge to be transferred to UniCredit, which will evaluate whether to keep the Southern branches) and a bad bank (with NPL, part of the internships and legal risks). Both will then have to be recapitalized and obtain authorization, not conditional on burden sharing.
Meanwhile, the political sphere is looking closely at the potential operation. One for all, the lunge of the League secretary, Matteo Salvini, who in an interview with Italian business he declared: “The League and I are only interested in the fact that, with public money, private banks that do not need it are not favored once again, sacrificing thousands of workers and closing hundreds of branches. The Mps brand is rich in history and value ”.
The negotiations
The situation on the M&A banking front was unlocked at the end of July, when the number one of Piazza Gae Aulenti Andrea Orcel decided to enter into exclusive negotiations with the Treasury, the largest shareholder of the Sienese bank, to take over the commercial activities of Mps. In the note of July 29, UniCredit and the Ministry of Economy and Finance, in its capacity as majority shareholder of Banca Monte dei Paschi di Siena, approved the conditions for a “potential transaction involving the commercial activities of Mps, through the definition of a selected perimeter and adequate risk mitigation measures. To this end, they will initiate exclusive discussions to verify the feasibility of the operation “
The buy on UniCredit arrives
And waiting for the Mps accounts to arrive, expected today, UniCredit collects analyst upgrades. In particular, that of Intesa Sanpaolo which promoted the stock of the banking group in Piazza Gae Aulenti from add to buy, with a target price rising from 10.7 to 12 euros. “The results of the second quarter exceeded expectations thanks to higher revenues and lower cost of risk, making the achievement of the improvement in the underlying net profit more visible – explain from Intesa Sanpaolo -. We share the rationale of the discussions on an MPS perimeter, assuming that the set of principles set are respected: capital neutrality, increase in EPS and risk mitigation ”. Ubs, on the other hand, has revised upwards the target price on UniCredit from 12.7 to 13.55 euros, with the recommendation that it remains buy.