UniCredit Gains on Report of Potential SocGen Merger Deal

(Bloomberg) -- UniCredit SpA, Italy’s biggest bank, climbed in Milan trading after a report that it had hired an adviser for a possible merger with France’s Societe Generale SA, a deal rumored already two years ago.

Talks between the lenders to study integration and acquisition possibilities have been continuing, Italian financial newspaper MF reported, without citing anyone. UniCredit appointed Daniel Bouton, the ex-SocGen chief executive officer who is now working for Rothschild & Co., due to the “delicate” nature of discussions, MF said, adding that SocGen hired JPMorgan Chase & Co.

Shares of both lenders rose, leading European banks higher before UniCredit pared gains. The Italian lender was up 1.3 percent at 12:51 p.m. in Milan trading, while SocGen climbed 1.5 percent in Paris.

Spokesmen for SocGen and UniCredit declined to comment. Rothschild wasn’t immediately available to comment.

UniCredit CEO Jean Pierre Mustier, who was head of SocGen’s corporate and investment-banking division and a member of its executive board before leaving the Paris-based bank in 2009, has been eyeing an expansion after spending the past two years cleaning up the Italian lender. Mustier told reporters this month that the bank will have to once again chart a growth path after hitting its 2019 targets.

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"We want to be one of the pan-European winners,” Mustier said Aug. 7. “If it has to be done on an organic basis, we are working on that. If it has to be done on non-organic basis, we could consider that.”

Mustier believes strongly in the benefits of a tie-up with SocGen, which would push the lender into a more pan-European direction, MF said. He may face opposition from Italy’s nationalist government, the paper said.

SocGen CEO Frederic Oudea, meanwhile, recently poured cold water on rumors about a potential tie-up with foreign banks. “I don’t believe at all” in European cross-border mergers, Oudea said at a June 7 conference in Frankfurt. He highlighted that capital requirements for too-big-to-fail institutions discourage large mergers on the continent.

SocGen revamped its top-management team in May by naming four deputy CEOs. The French lender also poached Sebastien Proto from Rothschild to become its new head of strategy, reporting directly to the CEO. Proto, who will start next month at SocGen, was a managing director at Rothschild, in charge of the coverage of key corporate accounts in sectors including financial services.

Speculation about a possible combination with SocGen surfaced shortly after Mustier took over as UniCredit CEO in 2016. It was revived this year after the Financial Times reported in June that both banks are considering a merger, though discussions were at an early stage and the lenders wouldn’t be ready for a deal for at least another year.

To contact the reporters on this story: Fabio Benedetti-Valentini in Paris at fabiobv@bloomberg.net;Jerrold Colten in Milan at jcolten@bloomberg.net

To contact the editors responsible for this story: Dale Crofts at dcrofts@bloomberg.net, Christian Baumgaertel

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