UniCredit's Mustier Seals $1.1 Billion of Disposals in First Day on the Job
UniCredit (UNCFF) took its asset sales to just over €1 billion ($1.1 billion) in the first 12 hours of its new CEO's tenure after the bank late Tuesday sold a stake in Polish unit Bank Pekao for €749 million.
Italy's largest lender by assets said it sold a 10% stake in Pekao at a 6% discount to the share's Monday closing price, reducing its stake to 40.1%. The sale came hours after UniCredit sold a 10% stake in its Italian online banking unit FinecoBank for €328 million, leaving it with a 55.4% stake in the business.
The sales marked a busy start for UniCredit's CEO Jean-Pierre Mustier, the former head of the bank's investment banking unit, who officially took up his new role on Tuesday morning with a brief to oversee a strategic review of all of UniCredit's operations. The early focus on disposals raised hopes that Mustier is intent on reducing the size of a looming capital increase needed to strengthen UniCredit's balance sheet.
"Coming just after the launch of the strategic review, we view this transaction as a strong signal that...[UniCredit] is willing to proactively reduce dilution risk [from a capital increase]," Goldman Sachs analysts Jean-Francois Neuez and Willis Palermo wrote in a note. Goldman Sach's rates UniCredit a buy, with a 12-month price target of €3.50. The bank's shares traded Wednesday at €2.08, down €0.02 or 1%, as investors took profit following a 10% increase since the start of this week.
UniCredit, like other Italian lenders, is under pressure to raise its core capital, known as CET1, ahead of an expected write-down of non-performing loans. The bank needs between €6 billion and €10 billion of new capital to boost its CET1 ratio to the traditional target level of 12%, according to analysts. UniCredit said at the end of March that its CET1 ratio had fallen to 10.5%, uncomfortably close to the European Central Bank's minimum guidance level of 10%.
Mustier has not said what assets are on the block, though UniCredit, on Monday, published a list of core operations including its Italian retail business, its investment bank, German unit HVB and some Central and Eastern European operations. The list did not include its Polish and Austrian retail banking operations or its fund management business.
Separately, shares in Italy's third-largest and most troubled lender Monte dei Paschi di Siena (BMDPY) leaped more than 7% on Wednesday to €0.332, on renewed confidence that negotiations to help Italy's banks would be a success.
Officials from Rome and Brussels are meeting to discuss the structure of a restructuring of the bank, which has about €46.9 billion of non-performing loans on its books, equal to a third of its total lending. Italy is keen to avoid pushing losses for the restructuring onto bondholders, which include savers. Brussels, backed by Germany, has insisted on the enforcement of recently agreed bail-out rules that include requirements that debtors shoulder losses on bonds.
"I see no crisis-like developments," Germany's Chancellor Angela Merkel told reporters in Berlin on Tuesday. "I am very convinced that questions that need to be decided there will be resolved in a good way."
Not everyone was excited by Monte dei Paschi's gains.
"You would have to be mad to invest in Monte [dei Paschi]. It's a waste of time," said a London-based credit analyst who asked not to be named. "Volume is so thin that if just one person trades it moves the stock so the daily fluctuations are a nonsense."