Banco BPM Says No Contact With UniCredit: Italian Banking Update

(Bloomberg) --

Bankers based in Italy are meeting in the northern town of Parma at the Assiom Forex conference as the banking industry looks at possible consolidation amid rising profits and a resurgent economy after the pandemic.

Italian lenders have cleaned up their books, curbed risks and reduced costs in last few years. Now, they are set to benefit from a rebound in economic output, rising interest rates and over 200 billion euros ($227 billion) worth of EU Recovery Fund cash coming into the country in the next few years.

On the sidelines of the event, executives discussed the economy and the outlook for business, with the potential for mergers and acquisitions high on the agenda. Growing in scale is seen as one of the key ways to further strengthen the sector and produce synergies.

Banco BPM rose to the highest in more than four years on Friday amid speculation that UniCredit SpA may be eyeing its smaller rival. Responding to a report in newspaper Il Messaggero that a takeover offer may be imminent, UniCredit said it continues to evaluate all available strategic options.

Key Developments

• Italy’s Debt Load Decreased More Than Expected, Visco Says
• Intesa chief says banking cross-border mergers are needed
• Visco says NPLs may rise as pandemic economic aid is reduced
• Banco BPM CEO says he hasn’t received anything from UniCredit

Cassa Depositi Should Intervene in Economy Only When Needed, Chief Says (15:37 p.m.)

Cassa Depositi e Prestiti’s role in the Italian economic and financial system is to intervene only “where there is a need for us,” Chief Executive Officer Dario Scannapieco said during a panel at the event. He also said the state lender is respecting the timeline required for the 4.3 billion euros in European Union Recovery Fund cash assigned to it.

Iccrea Is Open to a Merger With CCB, Pastore Says (3:30 p.m. CET)

Iccrea, one of Italy’s two cooperative banking groups that aggregate mutual banks, is open to a merger with cooperative banking group Cassa Centrale Banca, general manager Mauro Pastore said in an interview on the sidelines of the event. Iccrea has had informal contacts with CCB, but there aren’t talks at the moment, he said.

“Iccrea has always been open to starting talks over a consolidation that could generate scale economies without changing the cooperative profile of the group,” Pastore said. Iccrea has more than halved its gross NPE ratio since its creation and has significantly reduced the cost-to-income ratio, now close to 65%. 

Intesa’s Gros Pietro Says Banking M&As needed (1:20 p.m. CET)

The banking industry needs consolidation at both the European level and beyond, Intesa Sanpaolo SpA Chairman Gian Maria Gros-Pietro said on the sidelines of the event. “It is difficult to say now how it will happen” because of regulatory factors, he said.

Visco Says Italy’s 2021 Debt-to-GDP Level Fell to 150% (11:50 a.m. CET)

“The strong recovery of the economy has been decisive in halting the increase of the public debt-to-GDP ratio, which might have fallen to around 150% at the end of 2021,” said Bank of Italy Governor Ignazio Visco. 

That’s better than predicted by the government and compares with 156% in the previous year, he said. Italy’s economy is set to reach pre-crisis levels by the middle of this year, according to the central banker.

Visco Says NPLs May Increase on Withdrawal of Government Support (11:45 a.m. CET)

On banks, Visco said that the improvement in the cyclical situation and the support given by measures still in force, has had a positive impact on the sector. Italian lenders have cleaned up their books and curbed risks also following the disbursement of loans backed by public guarantees, he said.

“Although the banking system as a whole is not in a bad condition, there are still some cases of fragility, mainly concerning small and medium-sized banks,” he said.

In coming months, the gradual phasing-out of the measures to support the economy might lead to an increase in the flow of non-performing loans and some losses in the banks’ books, Visco said, adding that the central bank expects the “growth in insolvencies will likely be well below that registered during previous recessions.”

Visco Says Nexi-SIA Expansion Needs Risk Monitoring (11:40 a.m. CET)

Nexi SpA’s merger with SIA SpA, which created one of Europe’s biggest payment providers, generated a leading position on the European scene, Visco said. The significant expansion in terms of size and geography that Nexi intends to pursue “will require careful monitoring” of possible risks. 

Bank of Italy is “following the implications of these developments closely, in terms of both prudential supervision and payment systems oversight, activating appropriate forms of cooperation with foreign authorities when necessary,” he said.

Credit Agricole’s Maioli: Banks to Support Economy Amid Rising Prices (11:10 a.m. CET)

Italian banks have instruments that can help companies and families face energy price hikes, rising inflation and uncertainty over interest rates, Credit Agricole’s Italy chief Giampiero Maioli, said in a speech.

Banco BPM CEO Says He ‘Hasn’t Received Anything’ From UniCredit (10 a.m. CET)

Banco BPM Chief Executive Officer Giuseppe Castagna says he hasn’t received any communication from UniCredit in response to press reports that the lender is considering a bid on Banco BPM.

“Interest from third parties is not surprising given our situation, our results and our ability to look to the future,” he said on the sidelines of the event.

Castagna said Banco BPM’s stock is worth more than its current valuation. The bank is moving away from restructuring and “we are happy about how it’s going,” he said. Castagna also said the bank has a “very important” standalone growth path. 

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