UniCredit is in talks with two local suitors over the sale of the Italian bank’s Czech/Slovak business, local media reported on March 27.
The claim remains only speculation, but if accurate, it suggests UniCredit continues to seek cash to shore up the Italian parent, which is struggling with a huge volume of bad debt. The bank agreed to sell several assets late last year, including Pekao, Poland’s second largest lender. Meanwhile, there is growing worry that the Czech Republic is set to hit the banks with populist measures.
Unnamed sources told the Euro weekly that UniCredit has opened preliminary talks with potential buyers that include Komercni banka and Moneta Money Bank. Analysts suggested the country’s fourth largest bank could be worth up to CZK90bn (€3.3bn), adding that expected high interest could push that up. That would make it the biggest ever transaction in the Czech sector, which is regularly described as the perfect boring banking market.
UniCredit's Czech and Slovak operations had CZK570bn in assets, CZK351.5bn in loans and CZK364bn in deposits as of 2015, reports Wood & Co. The unit delivered a ROA of 1% and a ROE of 11.4%, and held a tier 1 ratio of 14.2%. UniCredit reported CZK5.64bn in net profit in 2015.
“The transaction would be about twice as big as the current market capitalisation of Moneta,” point out analysts at J&T Bank, who say they doubt either of the suitors mooted are likely to be able to pull it off. Moneta was rebranded last year following an IPO and subsequent exit by US giant GE Capital.
Investors snapped up the shares on the back of a strong dividend offer. An acquisition of the UniCredit business would wipe out the strong payout and likely see the bank forced to raise capital from elsewhere.
However, KB – one of the country’s top three banks – would likely face an even more fundamental issue. “Komercni would face regulatory constraints,” predicts Wood & Co. The CZK40bn privatization of 60% in KB to France’s Societe Generale is the largest transaction to date on the Czech banking market.
UniCredit refused to comment on the story. The Italian bank is still the largest lender in Central & Eastern Europe, but may lose that mantle to Austrian competitors RBI or Erste should it continue to shed assets.
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