European Event-Driven Analyst

Jesus Rodriguez Aguilar

Event-Driven

Banca Monte dei Paschi di Siena / Event-Driven

Banca Monte dei Paschi di Siena (BMPS IM)

<ul>
<li>The Italian government sold a 15% stake in <a href="https://www.smartkarma.com/entities/banca-monte-dei-paschi-di-sien" target="_blank" data-smartkarma-citation="entities:21162:1" rel="noopener">Banca Monte dei Paschi di Sien (BMPS IM)</a>, reducing its holding to 11.7%, signaling potential acquisition interest.</li>
<li>
<a href="https://www.smartkarma.com/entities/banco-bpm-spa" target="_blank" data-smartkarma-citation="entities:28121:1" rel="noopener">Banco BPM SpA (BAMI IM)</a> and <a href="https://www.smartkarma.com/entities/anima-holding-spa" target="_blank" data-smartkarma-citation="entities:21153:1" rel="noopener">Anima Holding (ANIM IM)</a>’s recent share purchases in BMPS suggest strategic positioning for a potential future acquisition within the Italian banking sector.</li>
<li>BMPS's improved financial performance, attractive valuation (5.2x Fwd NTM P/E and 0.6x P/BVPS, and heightened investor interest create favorable conditions for a merger or acquisition.</li>
</ul>


The Italian government sold a 15% stake in Banca Monte dei Paschi di Sien (BMPS IM), reducing its holding to 11.7%, signaling potential acquisition interest.

Banco BPM SpA (BAMI IM) and Anima Holding (ANIM IM)’s recent share purchases in BMPS suggest strategic positioning for a potential future acquisition within the Italian banking sector.
BMPS's improved financial performance, attractive valuation (5.2x Fwd NTM P/E and 0.6x P/BVPS, and heightened investor interest create favorable conditions for a merger or acquisition.


Monte Dei Paschi Poised for Strategic Merger Opportunity

US-EU Index Rebalances / Quantitative Researcher

Dimitris Ioannidis

Global Financial Data and Analytics Platform

ORTEX

ORTEX is a global financial data and analytics platform providing real-time securities lending and short interest data, index rebalance data, holdings and insider transactions, trading signals, corporate actions and news,  stock machine learning and factor scores and other analytics. The majority of the data are downloadable and accessible through APIs.

<ul>
<li>
<a href="https://www.smartkarma.com/entities/aib-group-plc" target="_blank" data-smartkarma-citation="entities:43916:1" rel="noopener">AIB Group (AIBG IE)</a> is expected to experience an increase in free float from 75% to 80% in November 2024 due to the Irish Government reducing its stake this month.</li>
<li>
<a href="https://www.smartkarma.com/entities/commerzbank-ag" target="_blank" data-smartkarma-citation="entities:21596:1" rel="noopener">Commerzbank AG (CBK GR)</a> is forecasted to have a ~2% points free float decrease in Global and European Indices as <a href="https://www.smartkarma.com/entities/unicredit-spa" target="_blank" data-smartkarma-citation="entities:21234:1" rel="noopener">UniCredit</a> bought more than what the German Government sold.</li>
<li>The UK Government continues slashing its stake in <a href="https://www.smartkarma.com/entities/natwest-group-plc" target="_blank" data-smartkarma-citation="entities:21008:1" rel="noopener">NatWest Group (NWG LN)</a> with potential further free float increases coming in November and December 2024.</li>
</ul>



AIB Group (AIBG IE) is expected to experience an increase in free float from 75% to 80% in November 2024 due to the Irish Government reducing its stake this month.

Commerzbank AG (CBK GR) is forecasted to have a ~2% points free float decrease in Global and European Indices as UniCredit bought more than what the German Government sold.
The UK Government continues slashing its stake in NatWest Group (NWG LN) with potential further free float increases coming in November and December 2024.


European Governments' Bank Sell-Off: Boosting Confidence and Occasionally Free Float

Equity Bottom-Up

Banca Monte dei Paschi di Siena / Equity Bottom-Up

<ul>
<li>The Italian Treasury sold an additional 12.5% stake in <a href="https://www.smartkarma.com/entities/banca-monte-dei-paschi-di-sien" target="_blank" data-smartkarma-citation="entities:21162:1" rel="noopener">Banca Monte dei Paschi di Sien (BMPS IM)</a>, raising €650 million as part of re-privatization efforts following the 2021 failed attempt.</li>
<li>The Treasury's divestment makes BMPS more appealing for buyers. BMPS still trades at attractive valuation multiples. The bank announces approval from the ECB for a €0.25 cash dividend per share. </li>
<li>Economy Minister Giorgetti and PM Meloni aim to boost competition through privatization, favoring a merger with another mid-sized Italian bank, possibly BPER Banca or Banco BPM.</li>
</ul>


The Italian Treasury sold an additional 12.5% stake in Banca Monte dei Paschi di Sien (BMPS IM), raising €650 million as part of re-privatization efforts following the 2021 failed attempt.
The Treasury's divestment makes BMPS more appealing for buyers. BMPS still trades at attractive valuation multiples. The bank announces approval from the ECB for a €0.25 cash dividend per share. 
Economy Minister Giorgetti and PM Meloni aim to boost competition through privatization, favoring a merger with another mid-sized Italian bank, possibly BPER Banca or Banco BPM.


Financials Credit Analyst

Hank Calenti, CFA

CreditContinuum

Credit

Executive Summary: <a href="https://www.smartkarma.com/entities/unicredit-spa" target="_blank" data-smartkarma-citation="entities:21234:1" rel="noopener">UniCredit (UCGIM)</a> shocked bond markets recently by announcing that it would not be paying the coupon on its CASHES legacy Tier 1 notes. Subsequently, adding confusion to this saga, Bloomberg reports that some investors received notification of a coupon payment. Operational risk anyone?Nonetheless, we believe value can be had in the firm’s Senior Non-Preferred (NPS) securities. Rated Baa2, BBB- and BB+ by Moody’s, S&amp;P and Fitch respectively, these securities are Bank of America Merrill Lynch index eligible, which aids in their liquidity.The real risk for UCGIM bondholders going forward is two-fold. One, the firm may engage in consolidation beyond absorbing a cleaner <a href="https://www.smartkarma.com/entities/banca-monte-dei-paschi-di-siena" target="_blank" data-smartkarma-citation="entities:21162:1" rel="noopener">Banca Monte dei Paschi di Siena (BMPS IM)</a>. The risk here is over-extending into another asset quality quagmire. Two, investor risk perceptions regarding Italy could deteriorate. We think the former, that is excessive M&amp;A activity, is more likely than the latter over the near term.Cancelling the CASHES coupon payment shortly after Mr. Orcel’s arrival is not a good omen. Possibly paying a coupon that was set to be cancelled is even worse. Nonetheless, we see UCGIM’s Senior Non-Preferred debt as offering an attractive risk/ reward opportunity.

Executive Summary: UniCredit (UCGIM) shocked bond markets recently by announcing that it would not be paying the coupon on its CASHES legacy Tier 1 notes. Subsequently, adding confusion to this saga, Bloomberg reports that some investors received notification of a coupon payment. Operational risk anyone?Nonetheless, we believe value can be had in the firm’s Senior Non-Preferred (NPS) securities. Rated Baa2, BBB- and BB+ by Moody’s, S&amp;P and Fitch respectively, these securities are Bank of America Merrill Lynch index eligible, which aids in their liquidity.The real risk for UCGIM bondholders going forward is two-fold. One, the firm may engage in consolidation beyond absorbing a cleaner Banca Monte dei Paschi di Siena (BMPS IM). The risk here is over-extending into another asset quality quagmire. Two, investor risk perceptions regarding Italy could deteriorate. We think the former, that is excessive M&amp;A activity, is more likely than the latter over the near term.Cancelling the CASHES coupon payment shortly after Mr. Orcel’s arrival is not a good omen. Possibly paying a coupon that was set to be cancelled is even worse. Nonetheless, we see UCGIM’s Senior Non-Preferred debt as offering an attractive risk/ reward opportunity.

UniCredit: CASHES Paid or Not, Senior Non-Preferred Offers Value

Financials & FinTech research, Galliano’s Financials Research

Victor Galliano

Financials & FinTech research

Financials & FinTech, EM & Developed Markets

Galliano’s Financials Research

Galliano's Financials Research provides fundamental research in Emerging Markets financials, including FinTech, as well as financials in select Developed Markets.

The investment style applied is generally value oriented, although Growth At Reasonable Price (GARP) strategies can also be used where appropriate. 

Our investment research approach aim is often contrarian, looking to capitalise on overly sceptical or optimistic consensus views. In terms of valuation techniques, the focus is on PBV ratio to ROE, PE multiples and dividend yield, as well as the application of PEG ratios and, where appropriate, Sum of the Parts (SOTP) valuations.

<ul>
<li>CASA’s enhanced offer for <a href="https://www.smartkarma.com/entities/credito-valtellinese-spa" target="_blank" data-smartkarma-citation="entities:21175:1" rel="noopener">Credito Valtellinese SpA (CVAL IM)</a> confirms the appetite for M&amp;A in Southern Europe, and Italy in particular</li>
<li>We expect Italian M&amp;A to be largely intra-country, as the key factors driving consolidation is the need for greater domestic scale given the lower for longer interest rates, especially in Europe, as well as the march of digital banking globally</li>
<li>After <a href="https://www.smartkarma.com/entities/intesa-sanpaolo-spa" target="_blank" data-smartkarma-citation="entities:21200:1" rel="noopener">Intesa Sanpaolo (ISP IM)</a>-UBI, and now potentially the conclusion of CASA Italia-CreVal, the focus is on the future of <a href="https://www.smartkarma.com/entities/banca-monte-dei-paschi-di-siena" target="_blank" data-smartkarma-citation="entities:21162:1" rel="noopener">Banca Monte dei Paschi di Siena (BMPS IM)</a> </li>
<li>A combination between <a href="https://www.smartkarma.com/entities/banco-bpm-spa" target="_blank" data-smartkarma-citation="entities:28121:1" rel="noopener">Banco BPM SpA (BAMI IM)</a> and <a href="https://www.smartkarma.com/entities/bper-banca-s-p-a" target="_blank" data-smartkarma-citation="entities:21165:1" rel="noopener">BPER Banca S.p.A (BPE IM)</a> now seems less likely; this implies that Banco BPM is a potential contender, once again, to combine with BMPS; the latter has largely de-risked its balance sheet, even if its core capital ratio is low</li>
<li>We would see a BPM-BMPS union as a major positive catalyst for a <a href="https://www.smartkarma.com/entities/unicredit-spa" target="_blank" data-smartkarma-citation="entities:21234:1" rel="noopener">UniCredit SpA (UCG IM)</a>  re-rating; even if Unicredit were to acquire BMPS, we believe that, at current valuations, a lot of the risks are discounted</li>
<li>Risks to our positive Unicredit view include Unicredit’s acquisition of BMPS on unfavourable terms, as well as worse than expected organic performance of revenue growth, given the challenging interest rate environment</li>
</ul>


CASA’s enhanced offer for Credito Valtellinese SpA (CVAL IM) confirms the appetite for M&amp;A in Southern Europe, and Italy in particular
We expect Italian M&amp;A to be largely intra-country, as the key factors driving consolidation is the need for greater domestic scale given the lower for longer interest rates, especially in Europe, as well as the march of digital banking globally
After Intesa Sanpaolo (ISP IM)-UBI, and now potentially the conclusion of CASA Italia-CreVal, the focus is on the future of Banca Monte dei Paschi di Siena (BMPS IM) 
A combination between Banco BPM SpA (BAMI IM) and BPER Banca S.p.A (BPE IM) now seems less likely; this implies that Banco BPM is a potential contender, once again, to combine with BMPS; the latter has largely de-risked its balance sheet, even if its core capital ratio is low
We would see a BPM-BMPS union as a major positive catalyst for a UniCredit SpA (UCG IM)  re-rating; even if Unicredit were to acquire BMPS, we believe that, at current valuations, a lot of the risks are discounted
Risks to our positive Unicredit view include Unicredit’s acquisition of BMPS on unfavourable terms, as well as worse than expected organic performance of revenue growth, given the challenging interest rate environment


Southern Europe Banks: Focus on Italian Banks M&A

Italy

Banca Monte dei Paschi di Siena S.p.A. is an Italian bank offering a comprehensive range of banking and financial services, including retail and corporate banking, wealth management, investment banking, and insurance products. It primarily serves individuals, families, small and medium-sized enterprises (SMEs), and corporations. The bank was founded in 1472 and is headquartered in Siena, Italy.

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Banca Monte dei Paschi di Siena (BMPS IM)

Monte Dei Paschi Poised for Strategic Merger Opportunity

Italian government sells stake in BMPS, sparking acquisition interest amid improved financials and attractive valuation.

Jesus Rodriguez Aguilar

European Governments' Bank Sell-Off: Boosting Confidence and Occasionally Free Float

European governments are reducing stakes in AIB Group, Commerzbank AG, and NatWest, and triggering changes in free float percentages for European...

Dimitris Ioannidis

Reborn from Ashes and Possible Target

Italian Treasury sells 12.5% stake in BMPS, raising €650 million for re-privatization efforts. BMPS trades at attractive multiples and could be...

Jesus Rodriguez Aguilar

UniCredit: CASHES Paid or Not, Senior Non-Preferred Offers Value

Cancelling the CASHES coupon payment was not a good omen. Possibly paying the coupon is even worse. Nonetheless, UCGIM’s Non-Preferred Senior...

Hank Calenti, CFA

Southern Europe Banks: Focus on Italian Banks M&A

The prospect of Italian bank sector M&A in Italy is overly penalizing Unicredit shares for the risk of a BMPS deal. With the BPM-BPER union called...

Victor Galliano

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52-week Range

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Monte Dei Paschi Poised for Strategic Merger Opportunity

​Italian government sells stake in BMPS, sparking acquisition interest amid improved financials and attractive valuation.

Jesus Rodriguez Aguilar

European Governments' Bank Sell-Off: Boosting Confidence and Occasionally Free Float

​European governments are reducing stakes in AIB Group, Commerzbank AG, and NatWest, and triggering changes in free float percentages for European...

Dimitris Ioannidis

Reborn from Ashes and Possible Target

​Italian Treasury sells 12.5% stake in BMPS, raising €650 million for re-privatization efforts. BMPS trades at attractive multiples and could be...

Jesus Rodriguez Aguilar

UniCredit: CASHES Paid or Not, Senior Non-Preferred Offers Value

Cancelling the CASHES coupon payment was not a good omen. Possibly paying the coupon is even worse. Nonetheless, UCGIM’s Non-Preferred Senior...

Hank Calenti, CFA

Southern Europe Banks: Focus on Italian Banks M&A

The prospect of Italian bank sector M&A in Italy is overly penalizing Unicredit shares for the risk of a BMPS deal. With the BPM-BPER union called...

Victor Galliano

Italian government sells stake in BMPS, sparking acquisition interest amid improved financials and attractive valuation.

European governments are reducing stakes in AIB Group, Commerzbank AG, and NatWest, and triggering changes in free float percentages for European...

Italian Treasury sells 12.5% stake in BMPS, raising €650 million for re-privatization efforts. BMPS trades at attractive multiples and could be...