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    AV.   GB0002162385

AVIVA PLC

(AV.)
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UBI buys back minorities to shore up core capital

04/16/2014 | 07:24am EDT

MILAN (Reuters) - UBI Banca will buy back minority stakes in three bank units as part of revised commercial accords with British insurer Aviva, in a move that makes the Italian group's capital structure more efficient under new global banking rules.

Under the Basel III accords, minority stakes in a bank's units held by third parties will be valued less highly in terms of their contribution to that bank's core capital - giving the bank an incentive to buy them back.

Banks across Europe have been beefing up their capital ratios ahead of region-wide financial health checks designed to identify and weed out lenders at risk of going bust in the event of another financial crisis.

UBI (>> UBI Banca Scpa) said in a statement it would pay 327 million euros (269 million pounds) to repurchase the minority stakes held by Aviva Holding Italia in Banca Popolare Commercio e Industria, Popolare di Ancona and Banca Carime.

UBI estimated the payment would take about 35 basis points off its Core Tier 1 capital ratio as of end-December. This measure of best-quality bank capital stood at 12.6 percent of UBI's risk-weighted assets at end-2013.

UBI shares rose sharply and traded up 5.25 percent at 6.815 euros by 0932 GMT, outpacing a 2.6 percent rise <.FTIT8300> in Italy's banking index.

Traders said the gains were triggered by a bullish report by Mediobanca Securities, published before the repurchase transaction was announced but which said the bank should continue to rationalise its minorities.

"We see UBI's capital ratios as appropriate. Nevertheless and regardless of the incoming asset-quality review, UBI should keep pursuing the rationalization of minorities which could add up to 75 basis points" to the bank's core capital under Basel III, the brokerage said.

It raised its price target on UBI to 8.1 euros and held its "outperform" rating on the stock.

UBI said it would at the same time reap a 57 million euro net gain from selling Aviva a further 30 percent stake in two life bancassurance ventures that were previously jointly controlled.

A banking analyst who declined to be named said the overall impact of the renegotiated accord on UBI's capital was broadly neutral.

Aviva (>> Aviva plc) and UBI extended existing commercial distribution accords, due to expire in 2015, until the end of 2020.

Aviva shares rose 1.5 percent.

(Refiles to add dropped word 'units' in second paragraph)

(Reporting by Valentina Za; Editing by John Stonestreet)

Stocks treated in this article : UBI Banca Scpa, Aviva plc
Valeurs citées dans l'article : UBI Banca Scpa, Aviva plc

ę Reuters 2014
Stocks mentioned in the article
ChangeLast1st jan.
AVIVA PLC 0.64% 392.7 Delayed Quote.19.99%
BEST INC. 0.00% 1.06 Delayed Quote.-48.04%
RISE, INC. 0.00% 26 End-of-day quote.8.33%
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Financials
Sales 2021 46 772 M 64 985 M 64 985 M
Net income 2021 2 245 M 3 119 M 3 119 M
Net cash 2021 8 664 M 12 038 M 12 038 M
P/E ratio 2021 6,95x
Yield 2021 5,63%
Capitalization 15 425 M 21 443 M 21 431 M
EV / Sales 2021 0,14x
EV / Sales 2022 0,15x
Nbr of Employees 28 596
Free-Float 97,1%
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Aviva plc Technical Analysis Chart | AV. | GB0002162385 | MarketScreener
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Mean consensus OUTPERFORM
Number of Analysts 21
Last Close Price 390,20 GBX
Average target price 464,14 GBX
Spread / Average Target 19,0%
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Managers and Directors
Amanda Blanc Chief Executive Officer & Executive Director
Jason Michael Windsor Chief Financial Officer & Director
Mark George Culmer Non-Executive Chairman
Nitinbhai Babubhai Maganbhai Amin Chief Operating Officer
Michael Mire Independent Non-Executive Director
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