UniCredit SpA (UCG), Italy’s largest lender, is offering 9.1 percent of its Polish unit for as much as 159 zloty ($51.3) a share as part of a plan to free up capital and boost profit.
The sale of as much as 23.9 million shares in Bank Pekao SA (PEO), Poland’s second-largest lender, is valued at 3.98 billion zloty ($1.3 billion) based on yesterday’s closing price. The stock is being offered in a range of 155 zloty to 159 zloty, according to the term sheet of the placement obtained by Bloomberg.
“The placement enables UniCredit to optimize the capital allocation within the group and leverage the released capital to continue to support the organic growth of its franchise in central and eastern Europe,” the bank said. Pekao will remain “core” to UniCredit’s strategy and the Italian bank is “fully committed” to its Polish unit, it added.
The Italian bank will own at least 50.1 percent in Pekao after the sale, it said in a regulatory statement late yesterday. UniCredit is reviewing its strategy in central and eastern Europe, selling assets and cutting costs to improve profitability as Europe’s sovereign-debt crisis and Italy’s third recession in a decade weigh on earnings. The lender has targeted 1.5 billion euros in savings by 2015 as it seeks to lift profit to 6.5 billion euros.
Pekao stock fell 5.7 percent to 157 zloty as of 3.20 p.m. in Warsaw, while UniCredit shares declined 1 percent to 4.75 euros in Milan.
UniCredit’s core Tier 1 capital may improve between 10 basis points and 13 basis points under Basel III rules, Chief Executive Officer Federico Ghizzoni told reporters yesterday.
“The sale will have a positive impact on capital via capital gain, higher minorities and lower goodwill,” Alberto Cordara an analyst at Bank of America Merrill Lynch, who has a “buy” recommendation on the stock, wrote in a note today.‘ ‘We take the view that the additional capital buffer may ultimately be used against more credit losses.”
UniCredit’s loan-loss provisions decreased to 1.81 billion euros in the third quarter from 1.84 billion euros a year earlier, helping bosting profit to 335 million euros in the period.
The announcement comes less than a week after the Polish government sold a $1.7 billion stake, or 12.2 percent, in PKO Bank Polski SA (PKO), the country’s largest lender. Poland sold more than it initially planned citing “high” demand, the government said on Jan. 24.
UniCredit has agreed to a one-year lockup period regarding sales of additional shares of Pekao.
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