The banking risk in Europe it already is started a long time ago. They are examples of this BBVA’s “hostile” takeover bid for Banco Sabadell and now Unicredit’s OPS on Banco BPM and Banco’s takeover bid for Anima, which could also involve Montepaschi. But what revitalized these M&A operations? and How they are seen by European authorities.
The EU he made no secret of consider positively the possibility of consolidation of the banking sector at European level, for various reasons, not least the fact that US banks are infinitely larger than their European counterparts, just think that the operation involving Unicredit and Banco BPM will create a banking hub worth around 70 billion of euros and that the main European banks are worth the same, against a market-cap equal to three times that of the first US bank. But what fuels M&A operations? and What do analysts think of the latest episode involving the bank led by Andrea Orcel?
Risk favored by ECB interest rate policy
“A reduction dand interest rates drives M&A – explains i Giacomo Calefcountry head Italy of NS Partners – because it can be done acquisitions at lower costs”.
“It’s also changing the European monetary policy: Until now, banks have benefited from high interest rates and therefore also from very strong income statements thanks to the interest margin. This is changing because monetary policy needs to be less restrictiveespecially in a European context of very sluggish growth.” According to the expert this implies that “banks must increase its business lines and diversify sources of revenue”as would happen with the Anima operation which “goes in that direction, that is, we try to have the product houses within the bank and therefore generate more commissions and make up for what will be the lower interest margin in the economic accounts”.
Unicredit-BPM: what do the analysts think?
Overall positive analyst judgmenti on the OPS, both from a strategic and industrial point of view, but the offer price is judged by everyone to be too low and therefore the premium offered will certainly have to be revised for the success of the operation.
“An integration between Unicredit and Banco Bpm would undoubtedly present a significant industrial value (possibility of strengthening the positioning in Northern Italy, scaling up product factories, space for creating synergies)”, he states Equityindicating that “the prize is limited”.
Intermonte he even talks about a “discount” offer as the share exchange would take place “after Unicredit pays the 2024 dividend next spring”. Therefore, it appears that the price offered is below Banco BPM’s closing stock market value last Friday.
Also for Deutsche Bank the limited nature of the prize will make “difficult for Unicredit to reach the 67% threshold of capital”, while the 2 billion in integration costs imply that the other operation on Commerzbank should be considered at least “postponed” if not “aborted”.
For MediobancaUnicredit’s move “could have the aim of avoiding the further inorganic growth of Banco Bpm”, which recently purchased 5% of the capital of Siena.
Stock market performance
As for the stock market performance of the securities involved, the negative performance of Unicredit stands out, leaving over 4% on the ground, while Banco BPM jumped by 3.58%. In Milan MPS bank also hurts -1.42%, while Commerzbank sinks by 6.20%, signaling the market’s discontent for the vague banking aggregation of European origin.
