Popolare Milano Quarterly Net Rises on Gain From Asset Sale

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Banca Popolare di Milano Scarl, Italy’s oldest cooperative bank, said fourth-quarter profit climbed, boosted by the sale of its stake in the Italian banking-services provider Istituto Centrale delle Banche Popolari SpA.

Net income rose to 86.9 million euros ($96 million) in the three months through December from 13 million euros a year earlier, the Milan-based bank said. Earnings beat the 64.8 million-euro estimate of six analysts surveyed by Bloomberg. The bank proposed a dividend of 2.7 euro cents per share.

Chief Executive Officer Giuseppe Castagna is among the CEOs of Italy’s cooperative banks, known as popolari, that are considering alliances as new rules force them to become joint-stock firms. The lender is in advanced talks to combine with Banco Popolare SC, according to its CEO Pier Francesco Saviotti. Castagna said Jan. 30 that the bank may reach an agreement in February, though he stressed he’s still also open to talks with rival Unione di Banche Italiane SpA in addition to Banco Popolare.

The bank is “on the right truck” to reach an agreement for a combination, Castagna said during a conference call, without elaborating on the potential partner. The bank is seeking a “merger of equals,” that creates value for shareholders, he said. Castagna ruled out a capital increase to finance the eventual deal.

Popolare di Milano’s revenue rose 14 percent to 468.3 million euros as it posted a gain of 75.4 million euros from the sale of its stake in ICBPI. The gain more than offset one-off charges including the sharing of the costs of winding down four small banks and the writedown of a subordinated bond issued by one of the four rescued lenders.

The bank’s common equity Tier 1 ratio stood at 11.5 percent at the end of December.