Italian gov't would be largest shareholder in entity emerging from potential UniCredit-MPS merger

Source: Xinhua| 2020-12-03 07:08:54|Editor: huaxia

ROME, Dec. 2 (Xinhua) -- The Italian state will be the latest shareholder in the combined companies if the proposed merger between Italian banking giants UniCredit and Monte dei Paschi di Siena (MPS) is carried out, according to news stories confirmed by company officials.

UniCredit is Italy's second-largest bank based on assets under control, recently unseated from the top position after the merger of rival Intesa Sanpaolo with UBI Banca, according to data firm ADV Ratings and media reports. But the merger with MPS, the country's fifth-largest bank, would reinstate UniCredit to the top position and also make it one of the top ten banks in Europe, according to data from Consultancy Global.

MPS, which has struggled over the last decade, was rescued from possible bankruptcy when the Italian state took a 68-percent share in the company in 2017. That share would be watered down if the two banks merged as planned, but it would still be enough to make the Italian Treasury the combined entity's largest single shareholder, according to media reports. An official from UniCredit confirmed that conclusion when contacted by Xinhua.

The deal may have been simplified this week after news that UniCredit Chief Executive Officer Jean Pierre Mustier would step down from the bank in April. News of Mustier's departure sent the bank's shares lower in trading on both Tuesday and Wednesday. Mustier had public doubts about the merger deal.

Mustier's departure strengthens the hand of newly appointed chairman, Pier Carlo Padoan, the former Italian Minister of Economy who was one of the architects of the Italian government's bailout of MPS three years ago.

UniCredit's ties to China date back 40 years, but they have strengthened recently.

Earlier this year, UniCredit signed a cooperation agreement with the Industrial and Commercial Bank of China (ICBC), aimed at promoting commercial development; last year, the Italian lender signed a Memorandum of Understanding with the Export-Import Bank of China (China Eximbank), which involves the cross-promoting finance projects; the bank recently teamed up with the China Investment Corporation to launch the China-Italy Industrial Cooperation Fund (CIICF), a fund with an initial endowment of 600 million euros (715 million U.S. dollars).

Last month, Michele Amadei, UniCredit's top manager for the Asia-Pacific region, told Xinhua the bank's growing involvement in China was part of a "natural evolution" for the bank.

Though the recent developments pushed UniCredit's share prices lower, they have not spooked rating companies and investment banks.

On Wednesday, U.S. rating firm Fitch maintained its long-term rating of the financial institution as "BBB-," an investment-grade rating, and it said the bank's outlook is "stable". The rating was the same as from the previous report from Fitch a month ago.

Investment bankers Goldman Sachs on Tuesday maintained its "buy" ratings on the company's shares, calling the dip in the bank's shares a buying opportunity.

Talks on a possible merger between UniCredit and MPS started in September, as the government looked for ways to stabilize MPS as it sought to return to profitability. Enditem

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