“We want to grow in Poland, which is a core country for us,” Ghizzoni said at a meeting with reporters in Milan yesterday. “We made an offer for BGZ; we are at a preliminary phase,” he said. The non-binding offer was made through UniCredit’s Polish unit, Bank Pekao SA, a spokesman said.
UniCredit is reorganizing operations in central and eastern Europe, as well as its Italian branch network, in a five-year plan to increase profit and strengthen finances. The bank, the biggest lender in the former communist part of Europe, is focusing investments on its most promising markets: Russia, Turkey, Poland and the Czech Republic. The Milan-based bank is retrenching in countries including Ukraine, where it’s seeking a buyer, and Kazakhstan, where it sold unprofitable ATF Bank in March.
“From a strategic point of view, a higher exposure to Poland makes sense for UniCredit, as it allows it to leverage on Pekao’s capital excess,” wrote Giovanni Razzoli, a Milan-based analyst at Equita Sim, in a note today.
Rabobank is considering various options for its Warsaw-based unit, Milou Verhaegh, a spokeswoman, said by telephone, declining to comment on UniCredit’s bid. The Utrecht, Netherlands-based bank holds 98 percent of the Polish agricultural lender after buying a 40 percent stake in an offering last year for 1.25 billion zloty ($400 million).
BGZ, with assets of 36.7 billion zloty on June 30, jumped as much as 6.8 percent to the highest since November 2012, and was up 4.4 percent to 67.30 zloty at 11 a.m. in Warsaw trading. Aleksandra Myczkowska, a BGZ spokeswoman, declined to comment on UniCredit’s offer.
UniCredit rose 0.5 percent to 5.12 euros in Milan, giving the company a market value of 29.7 billion euros ($40.4 billion). The stock is up 39 percent this year, compared with a 14 percent gain in the Bloomberg Europe Banks and Financial Services Index.
UniCredit owns more than 50 percent of Bank Pekao, Poland’s second-largest lender. Andrzej Jakubiak, the head of Poland’s financial watchdog, said in June he’s reluctant to allow big bank mergers and expects changes in ownership to come through new investors rather than consolidation.
Pekao CEO Luigi Lovaglio said in August the bank must look at takeover opportunities if target companies fit its strategy and the price is “acceptable.”
UniCredit also plans to open new branches in China, where Ghizzoni is seeking to help corporate clients that want to expand there and to attract Chinese investments. Ghizzoni, 57, said he is also looking at opening offices in Brazil and Africa.
UniCredit is considering scaling back in Ukraine.
“We are testing the market for our Ukrainian assets,” Ghizzoni said. “We will see if we will find counterparties.”
UniCredit had 3.9 billion euros of risk-weighted assets in Ukraine at the end of June, making it the second-biggest western lender in the country after Raiffeisen Bank International AG. (RBI) It swung to a pretax loss of 67 million euros in the second quarter as bad debt provisions soared and revenue plummeted. The bank is in the process of merging its two units in the country.
The sale “would help to reduce the risk profile and the complexity of the group, freeing liquidity, at least 500 million euros, and capital,” Equita Sim’s Razzoli said.
Ukraine’s banking system, which was among the fastest growing in Europe until 2008, has shrunk since. Total loans were equivalent to 58 percent of gross domestic product last year, down from 77 percent in 2008, according to Raiffeisen research. The banking industry reported losses every year from 2009 to 2011.
Ghizzoni said UniCredit doesn’t need to cut assets further and intends to boost profitability by raising fees, increasing asset management commissions and stepping up investment-banking activity as dealmaking improves. He targets a return on tangible equity of about 10 percent in the “mid-term,” without being more specific on the timeframe.
UniCredit’s second-quarter profit more than doubled to 361 million euros after it cut costs and bought back debt. The company lowered second-quarter operating expenses by 1.8 percent from a year earlier to 3.67 billion euros and plans to reduce them by 1 billion euros more than targeted by 2015. In 2011, the bank announced plans to cut expenses by 15.8 billion euros by 2015.
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