Bloomberg reports that the authorities of the Italian bank UniCredit – the main shareholder of our Bank Pekao – plan to “review its assets in Poland and Turkey.” And in both cases, the result of this review may be a decision on the sale of shares in banks, which control the Italians (in Turkey is a bank Yapi Credi). Bank officially does not comment on these rumors, but he recently wrote about them the Financial Times.
The Italian bank is in the phase of sale of some assets. UniCredit has already decided to sell 15proc. shares of online financial intermediary FinecoBank, which will allow him to get 600 million euros. The plans also sale of the bank in Ukraine and investment holding company Pioneer. The aim of these moves would be to increase the capital to the Italian financial group, having in Europe 32 million customers, it has regained the confidence of investors. And this is a serious problem. Over the last year, they overestimated UniCredit shares on the stock market by 45 percent.
Listed downfall. President and change strategy?
Today UniCredit shares are valued at 2.8 euros per share, while still in 2010. Paid for no more than 10 euros. Everything looks even less in the long run. In the last ten years, the largest Italian bank shares lost value almost 90 percent! For one euro assets UniCredit investors are paying today only 0.4 cents (as reported by the Financial Times, the average stock market valuation of one euro book value of the assets of the bank is 1.2 euro).
According to Bloomberg in early June, shareholders may recall the President of UniCredit Federico Ghizzoniego, which governs the group for six years. This could prejudge the fate of Bank Pekao. Ghizzoni przeformatował UniCredit bank more specialized in retail banking than corporate and investment. And this strategy, Bank Pekao, a group that provides one-sixth of the profits, it is crucial for UniCredit. Successor Ghizzoniego probably will not have the Polish branch of the estymy. Especially considering that the governments of Poland took the populist party, which on the banners is to “shave” banks extra-taxes and repolonizację industry, which from the point of view of foreign investors is an increase in political risk.
New, powerful player or repolonizacja?
of course, there is no certainty that the Italians decide to cash the shares in Bank Pekao. And even if you decide to do – whether it would mean selling a controlling stake, or just liquidate a few dozen percent stake (up to half ownership of Pekao).
However, if indeed there has been a withdrawal of Italians from the Polish market, it would be a huge castling in this industry. Pekao is the second largest bank in Poland. It has more than 170 billion zł assets and serves five million customers, controlling more than 10 percent. a fairly fragmented market loans and deposits. The market value of Bank Pekao is roughly 40 billion zł (over one-third of the market value of UniCredit on the Milan Stock Exchange).
It is doubtful that banking supervision and the OCCP agreed to purchase such a large bank by a player who already has a significant position in Poland. It would be rather an opportunity to invest in Poland by one of the big financial groups. You would bet Deutsche Bank, but the same barely languished, or eg. The British HSBC, which in Poland tried to expansion, but fell utterly.
You also can not rule out attempts to use the opportunity for supporters repolonizacji banks. Today, in the hands of the national capital is more than 40 percent. the banking industry (PKO BP and Getin Noble Bank, PZU group-Alior, cooperative banks having a total of 10 per cent. of the market). The acquisition of the Polish capital of Bank Pekao mean polonized more than 50-60 percent. the banking industry.
Opening yearn for such a scenario Mateusz Morawiecki, Zbigniew Jagiello and Wojciech Sobieraj – the most powerful today persona in the Polish banking industry. There would be nothing wrong with that, if not for the fact that in Poland there is no private capital, which would be able to take such a big bank. It would have to be the capital of a state, for example. PZU (would be able to invest in the acquisition of another 5 billion zł, and if it will issue new shares or bonds – it’s still 2-3 billion zł more), but that would mean not so much repolonizację but rather nationalization banks in Poland.
Focus large part of the banking market in the hands of the state would decrease competition in the industry and is unlikely to translate into a decrease in fees paid by customers. Not to mention the risk that zrepolonizowane banks will become “errand boys” for politicians. When you will need to buy a heap of coal from indebted to the ears of the mine, the minister will be called to the bank and the bank to do business, which willingly would never do that.
Exodus of Polish banks
the Italians would be another investor who withdraws from Polish. A few years ago out of necessity did the Irish group (AIB sold BZ WBK Spanish Santander), the Belgian KBC (his Kredyt Bank also fell into the hands of Spaniards and today is part of BZ WBK), Dutch Rabobank (he had a stake in BGZ, but sold them to the French with BNP Paribas), Scandinavian Nordea (fell prey PKO BP), Greek Eurobank (sold Polbank Austrian Raiffeisenowi) whether the US General Electric (just sells Bank BPH state group PZU). And that’s not all: to withdraw from the Polish seriously thinking Austrian Raiffeisen (this is in our bank number seven in terms of assets), and from time to time there are rumors – denied by officials – that the sale may be issued Bank Millennium, which main shareholder is the Portuguese group BCP Millennium.
UniCredit, which is a colossus with feet of clay
Why Italians they would get rid of one of its most profitable banks, acting on the 40-million market, the economy is still growing much faster than the average for the continent?
The reasons may be several. The most serious is the need to restructure the Italian group, which under the previous President Alessandro Profumo caught too many pies by the tail and fell into giants. UniCredit operates to 17 European markets – from Germany and Austria to Ukraine, Russia and Turkey. As part of the expansion to the East a few years ago, UniCredit issued eg. 3 billion to gain a foothold in Ukraine and Kazakhstan …. Many of the finalized lightly investments today odchorowuje. In 2014. Board of UniCredit created a 14 billion euro in provisions for losses caused by the failed investment bank in the East. Not to mention the fact that it is exposed to political risk and have very limited opportunities to cut costs.
The ratio of costs to income is the Italian group as much as 60 per cent., When the best Polish banks is below 50 percent. Yes geographically dispersed bank was razor to make money in good times, but in the era of low interest rates and political turbulence of the results suffer.
Last year, UniCredit earned a purely less than 1.7 billion euros, 300 million euros less than in the previous year (of which some 275 million euros earned our Bank Pekao, 570 million Austrian branch, and 430 million – German). The Board explained that if it was not a one-time charge, the profit of 2.2 billion euros.
On the downside, the Italian group has trouble also on the domestic market. The value of loans not repaid on time clients – as reported by the Financial Times recently – is approaching 85 billion euros, or 18 percent. all contracts. In November last year, CEO Ghizzoni announced a restructuring program providing, among others, reducing employment by 18 thousand. jobs (across Europe, the group employs 150 thousand. people).
In search of capital
Another piece of the puzzle is far from the ideal situation of the bank’s capital.
What is true today of the highest quality capital ratio Tier 1 is at UniCredit less than 11 percent. But by 2018. Is to be increased by 1.5 percentage points.
With the huge scale of operation bank means thick billions that must already start to “organize”. Some analysts estimate that the bank may need in the next two-three years, up to 7 billion euros of fresh capital, including due to the expected large write-downs on loans not repaid (although the bank itself denies this).
When not exaggerated high profits and the need to pay dividends (in recent years it was 0.12 euro per share), which require shareholders – the biggest is Aabar Investments, Black Rock and Cassa di Verona and the Central Bank of Libya and Franklin Templeton – the source of strengthening the bank’s capital may be a sale of his “ancestral silverware.” And shares in Bank Pekao – despite flagging ratings Polish – are still worth almost 5 billion euros …
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