UBI Offices Searched by Italy Police Amid Probe on Units

Italy’s finance police searched Unione di Banche Italiane SCPA’s offices as part of a probe into its leasing and factoring units, the bank said.

The searches are related to complaints filed with authorities in 2012 about the activity of UBI’s factoring and leasing units and in 2013 about the alleged existence of investors’ agreements not disclosed to regulators, the Bergamo-based lender said in a statement today. “The bank, which is fully cooperating with the financial police, already provided at the time clarifications about those complaints.”

The police searched the offices of Chief Executive Officer Victor Massiah and other directors, including the chairmen of the bank’s supervisory and management boards, said two people familiar with the situation, who asked not to be named because the investigation isn’t public.

The probe relates to allegations of obstruction of regulatory activities at UBI, Italy’s No. 5 bank, while the fraud investigation concerns UBI’s leasing unit, where some employees are suspected of fraud and money laundering, one of the people said.

Complaints Filed

Italian consumer group Adusbef filed two complaints in 2012 regarding the alleged purchase of luxury goods by bank managers at low prices and the management of the factoring and leasing units, Elio Lannutti, who heads Adusbef, said in a statement today. In July 2013, several supervisory board members filed a complaint about the alleged existence of secret accords among shareholders, UBI said.

“I’m very relaxed and confident that this will be resolved,” Massiah said on today’s conference call with analysts. “This is a non-story.”

UBI shares reversed earlier gains, falling 1.7 percent to 6.27 euros in Milan trading, giving the lender a market value of 5.7 billion euros.

UBI reported today that first-quarter profit more than doubled on higher income from lending and lower costs. Net income rose to 58.1 million euros ($79.7 million) from 26.5 million euros a year ago, the bank said in a statement. UBI was expected to report a profit of 49.8 million euros, according to the average estimate in a Bloomberg survey of six analysts.

Massiah is reducing costs to strengthen UBI’s finances and boost profitability as stricter rules by regulators curb lending and squeeze margins. UBI is one of the 15 Italian lenders being reviewed by the European Central Bank as part of a three-stage asset quality review and stress test before it takes over banking supervision for the euro area in November.

Revenue rose 6.7 percent from a year earlier to 853.4 million euros on higher income from lending and trading. Loan-loss provisions rose to 198.6 million euros from 157.7 million euros.

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