FILE PHOTO: Andrea Orcel, the head of the UBS investment bank, arrives to give evidence to the UK Parliamentary banking inquiry on Libor interest rates in London January 9, 2013. REUTERS/ Olivia Harris/File Photo
July 29, 2021
By Valentina Za and Giuseppe Fonte
MILAN (Reuters) – UniCredit said on Thursday it would discuss a potential deal with the Italian government to buy Monte dei Paschi, a move that could see the Tuscan lender return to private ownership four years after it was rescued by the state.
In a statement UniCredit said it and the government had approved a potential transaction involving the commercial operations of Monte dei Paschi with a “carefully defined perimeter”.
Italy rescued Monte dei Paschi from the verge of collapse in 2017 but has found it hard to sell as potential buyers baulked at the legal risk and bad debt accumulated by the Tuscan lender following years of mismanagement.
UniCredit had been seen by the government as the preferred buyer but chief executive Andrea Orcel, who took over at the bank earlier this year, has until now expressed little enthusiasm for pursuing such a deal.
Reuters reported on July 21 that the government was reportedly working on making Monte dei Paschi attractive to UniCredit despite Orcel’s public reticence.
UniCredit said the deal it was exploring would exclude all “extraordinary litigation” relating to Monte dei Paschi, as well as its non-performing loans. It would be “neutral” on the bank’s capital levels.
UniCredit said that under these terms, a deal “would lead to a significant increase in future profitability for the group”.
“During the due diligence period, we will perform detailed analysis and assess whether we are able to design a transaction that can meet those agreed parameters,” Orcel said in a statement.
“Then, and only then, will we have the elements to decide whether to proceed,” he added.
(Reporting by Valentina Za and Giuseppe Fonte; Writing by Rachel Armstrong; Editing by Kirsten Donovan and Aurora Ellis)