MILAN, Jan 12 (Reuters) - Shares in UniCredit slid
further on Wednesday after a person familiar with the matter
said Italy's second-biggest bank was among potential suitors https://www.reuters.com/article/otkritie-m-a-unicredit/italys-unicredit-among-suitors-for-russias-otkritie-bank-source-says-idUSKBN2JL1OI
looking at Russia's Otkritie Bank.
By 0835 GMT, UniCredit shares were down 1.9% against a flat
Italian banking index. The stock dropped 1.1% on
Tuesday, bucking a higher sector.
Russia's central bank, which owns Otkritie following a 2017
bailout, is looking to divest its stake either through a sale or
a bourse listing.
With 45 billion euros in assets, Otkritie is Russia's
seventh-largest bank and a merger would increase five-fold
UniCredit's risk-weighted assets in the country.
UniCredit has been operating in Russia since 1989 through AO
UniCredit Bank, one of the country's largest commercial banks.
Despite the attractive returns delivered by Russian lenders,
analysts flagged the geopolitical risks associated with an
enlarged presence at a time of flaring tensions between
Washington and Moscow over Ukraine.
Otkritie doubled its profits in January-September 2021 with
a return on equity (ROE) of 14.7%, versus the 6.1% ROE of euro
zone banks in the first quarter of 2021.
As a consequence, Russian lenders such as Sberbank
trade at book value, while many European lenders offer a
discount - thus providing a paper profit to an acquirer.
"UniCredit's interest in expanding in Russia runs counter to
a trend in recent years in which foreign lenders scaled back
their local presence as Western sanctions and compliance risks
(money-laundering scandals) weighed on their business," Banca
According to Jefferies "it is unclear to what extent any due
diligence is being done more as normal management duty to
shareholders versus a specific serious intent to pursue an
Chief Executive Andrea Orcel said in December when
presenting a new business plan that UniCredit would consider
mergers and acquisitions in countries where it operates if it
helped strengthen its franchise and meet its return targets.
"While this would strictly fit with UniCredit's stated
guidance to consider 'in-market' consolidation opportunities,
the news is likely to be met with some scepticism/caution given
scale of the business (Otkritie equity around 6.5 billion euros)
and potential implications for excess capital return," Jefferies
(Reporting by Valentina Za and Andrea Mandala
Editing by Mark Potter)