UniCredit to Sell Stake in FinecoBank, Mull Asset Disposals

Updated on
  • ‘All assets’ subject to same capital management, lender says
  • Mustier also says seeking solution with Santander on Pioneer

UniCredit SpA is selling as much as a 10 percent stake in online bank FinecoBank SpA and launching a review of its strategy as incoming Chief Executive Officer Jean Pierre Mustier seeks to boost capital.

The bank will take “a more proactive approach” to its non-core loans, and the review will focus on further cost cuts and improving risk discipline, the Milan-based lender said in a statement Monday. UniCredit is selling down its 65 percent stake in FinecoBank to boost its capital ratio, according to a separate statement.

“All assets, with no exception, will be subject to the same disciplined capital management, and any incremental value-creating opportunities, potentially also via disposals, will be evaluated,” the bank said in the statement on the review.

Mustier will spearhead an overhaul of Italy’s largest bank as the nation weighs resorting to state aid to avert a banking crisis. UniCredit has struggled to build up capital and meet regulatory requirements, a task compounded by the bank’s complex structure spread across 17 countries, a pile of soured loans and record-low interest rates.

The shares have lost about 63 percent of their value this year, extending their decline in the wake of the U.K.’s decision to leave the European Union. They dropped 2.9 percent on Monday in Milan trading, while the 39-member Bloomberg Europe Banks and Financial Services Index gained 2.1 percent.

UniCredit’s common equity Tier 1 ratio, a measure of financial strength, fell to 10.5 percent at the end of March from 10.7 percent three months previously. The bank has the smallest capital margin among Italy’s largest lenders, with the European Central Bank requesting a 10 percent ratio for 2016.

“The strategic review will be wide-ranging,” Mustier said in the statement. “Our first priority is and will always be to deliver UniCredit’s products and services solutions to our extensive client franchise.”

Mustier was appointed earlier this month, replacing Federico Ghizzoni. Mustier, a 28-year veteran of the European securities industry, had left as head of UniCredit’s corporate and investment banking business in 2014 after serving the bank for three years.

Mustier separately told reporters in Milan that UniCredit was working with Banco Santander SA to “find a solution” regarding the banks’ plan, first announced more than a year ago, to merge their asset-management businesses. He declined to elaborate. The Financial Times reported Monday that the deal was set to collapse due to Brexit-related uncertainty.

The plan to combine UniCredit’s Pioneer Global Asset Management and Santander Asset Management valued the merged entity at about 5.4 billion euros in April 2015.

— With assistance by Dan Liefgreen, and Chiara Vasarri

(Adds share movement and Mustier comment on Pioneer deal.)
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