15 September, 2016

Italy Bank Mergers & Acquisitions (UniCredit Page 3)


Photo: A UniCredit Banca branch in Roma. UniCredit Banca is UniCredit SpA's retail banking unit.


Credit: Special thanks to my dear friends Don Trynor and Rupert Pacudan for taking this photo during their Grand Tour of France, Switzerland and Italy.


UniCredit SpA (formerly known as UniCredito Italiano)

Italy’s UniCredit is a banking behemoth that came into being only in 1998 when Credito Italiano SpA acquired UniCredito SpA for ITL 19.5-trillion (USD $10.96-billion) to become UniCredito Italiano.

Between 1998 and 2003, UniCredito Italiano consolidated four other domestic regional banks, whose brief histories are explained below. The bank formally changed its name to UniCredit SpA in 2008.

Glossary:

Cassa di risparmio (casse di risparmio in plural) literally means "Chest/ Case of Savings," or savings banks in English.  In Italy, casse di risparmio are often small, state-owned savings and credit institutions controlled or managed by a municipal or regional or provincial government agency.

Monte di pietà (monti di pietà in plural) literally means "mount of compassion" in English.  They are usually church-sponsored charitable pawnbrokers that provided deposit and lending services to the poor and working class during the Renaissance period. Many of Italy's monti di pietà can trace their origins to the mid-1500s.  The monti di pietà eventually evolved into, or were taken over by the casse di risparmio (savings banks) in the 19th century.


Caritro SpA

Caritro can trace its lineage to the 1841 establishment of Cassa di Risparmio di Rovereto and the 1855 founding of Cassa di Risparmio di Trento. Rovereto and indeed the province of Trentino at the time was part of the Austro-Hungarian Empire. During the turbulent times of World War I, C.R. di Rovereto had to suspend operations. When peace returned in 1919, Trentino was transferred to Italy under the Treaty of Saint-Germain. During an economic crisis in 1934, C.R. di Trento and C.R. di Rovereto merged to become the Cassa di Risparmio di Trento e Rovereto.

Fast forward to 1992, C.R. di Trento e Rovereto in compliance with the Amato savings bank reform law was split into a joint-stock bank called Caritro SpA and its holding entity Fondazione Cassa di Risparmio di Trento e Rovereto. In 1998, the holding foundation transferred Caritro SpA to UniCredito Italiano in exchange for a minority stake in UniCredito Italiano.


CRTrieste-Banca SpA

In 1842, the Monte Civico e Commerciale was founded by the Trieste municipal government and chamber of commerce. Trieste at the time was an Italian-speaking region of the Austro-Hungarian Empire along the present-day Italian-Slovenian border. In 1877, the institution changed its name to Cassa di Risparmio Triestina. With the dissolution of the Austro-Hungarian Empire at the end of World War I, Trieste was transferred to Italy.

In 1938, the savings bank changed name once more to Cassa di Risparmio di Trieste. At the end of World War II in 1945, the southern part of the Trieste province was transferred to Yugoslavia (present-day Slovenia). C.R. di Trieste thus lost some its branches and operations in the areas that were handed over to Yugoslavia.

During the 1980s, C.R. di Trieste opened representative offices in Eastern Europe, namely in Koper, Slovenia (also known as Capodistria in Italian), Prague and Budapest. In 1992, C.R. di Trieste was split into joint-stock bank CRTrieste-Banca SpA and its holding foundation.

In 1998, UniCredito Italiano first acquired a 28% interest in CRTrieste-Banca, a prelude to its eventual full acquisition of the regional bank.


Banca dell’Umbria 1462

In 1908, the Cassa di Risparmio di Perugia was established. Amongst the other financial institutions it amalgamated in the 20th century was the 1972 acquisition of Monte di Pietà di Perugia, which was founded in 1462 and the earliest recorded monte di pietà in Italy.

The separation of Cassa di Risparmio di Perugia into the limited-liability bank and its holding foundation happened in 1992. In 1999, the bank adopted the new name Banca dell’Umbria 1462, taking advantage of its remote lineage to the original Monte di Pietà in Perugia that was established in 1462.

In 2000, UniCredito Italiano’s Rolo Banca 1473 unit bought 71.8% of Banca dell’Umbria 1462 for Eur 315-million.


Cassa di Risparmio di Carpi SpA

In 1843, the Duke of Modena approved the creation of the Cassa di Risparmio di Carpi as a savings bank. Like other savings bank, C.R. di Carpi had a history of funding local socio-economic, educational and infrastructural projects. For example, the bank’s 1927 article of association required that 30% of the bank’s profits be directed to chartable and public works.

In compliance with the Amato Law, C.R. di Carpi in 1991 was split into the for-profit Cassa di Risparmio di Carpi SpA and the holding charitable foundation Fondazione Cassa di Risparmio di Carpi. In 2000, UniCredito Italiano (via its Rolo Banca 1473 unit) bought 73.8% of Cassa di Risparmio di Carpi for Eur 238-million. By 2003, UniCredito Italiano had taken full control of C.R. di Carpi when the minority shareholdings were bought out.


Recent transactions (from 1998 onwards):

  • In 1999, UniCredito Italiano bought 50.1% of Poland’s No. 2 bank, Bank Pekao for Euro 1.03-billion (USD $1.0-billion).
  • In 2000, UniCredito Italiano bought 50.6% of Splitska banka d.d. for Eur 48-million. Splitska banka was Croatia’s No. 3 bank with a network of 70 branches. Following a Eur 10-million capital injection, UniCredito Italiano’s stake in the Croatian bank was raised to 62.6%.
  • In 2000, UniCredito Italiano bought another 51% of Slovakia’s Pol’nobanka for Eur 30-million. Pol’nobanka had 45 branches. One of UniCredito’s predecessors, Cassamarca, had held a 5% stake in the Slovak bank since 1995.
  • In 2000, UniCredito Italiano bought Boston-based Pioneer Group’s global investment management division, Pioneer Global Asset Management, for ITL 2.68-trillion (USD $1.23-billion).
  • In 2000, insurance giant Generali sold its 36.9% interest in CRTrieste-Banca to UniCredito Italiano, which had had a 28% interest since 1998. Subsequently, UniCredito Italiano launched an offer for the remaining shares held by the public, raising its total stake in CRTrieste-Banca to 79%.
  • In 2000, UniCredito Italiano along with Allianz AG, bought 98% of Bulbank AD, Bulgaria’s No. 1 bank, for Eur 360-million (USD $344-milion). UniCredito Italiano took up 93% of Bulbank, while Allianz’s share was 5%. Bulbank had 28 full branches plus 51 representative offices.
  • In 2000, UniCredito Italiano took a 10% stake of Zagrebačka banka d.d., Croatia’s No. 1 bank.
  • Between 2002 and 2003, the various retail banks under the UniCredito Italiano umbrella were merged into UniCredit Banca as part of the S3 project. The S3 project referred to the three core segments of the group: retail banking, enterprise banking and private banking.
  • In 2002, UniCredito Italiano bought 82.5% of Demirbank Romania, continuing its aggressive expansion in the Central and Eastern European market.
  • In 2002, UniCredito Italiano and partner Allianz took full control of Croatia’s Zagrebačka banka d.d. With this purchase UniCredito Italiano now controlled Croatia’s No. 1 and No. 3 banks. In order to comply with Croatia’s anti-monopoly regulation, the Italian lender agreed to sell its 62.6% of stake in Splitska banka to HVB Group’s Bank Austria unit for Eur 94-million. Later in 2005 though, when UniCredito Italiano took over HVB Group and Bank Austria, it indirectly re-acquired control of Splitska banka, and was required to sell it a second time.
  • In 2002, UniCredito Italiano bought 50% of Turkey’s Koc Financial Services from Koc Holding for USD $240-million. Koc Financial Services controlled the 115-branch Kocbank.
  • In 2002, UniCredito Italiano bought 85.2% of Czech Republic’s Živnostenská banka A.S, which operated 8 branches and 19 agencies.
  • In 2005, UniCredito Italiano’s 50% owned Turkish joint-venture Koc Financial Services bought 57.42% of Yapi ve Kredi Bankasi A.S. for Eur 1.16-billion.
  • In 2005, UniCredito Italiano took over all of Germany’s HVB Groupand its 77.5% owned Bank Austria Creditanstalt and Bank Austria Creditanstalt’s 71.2% owned Bank BPH (of Poland) for Eur 15.4-billion. UniCredito Italiano also made an offer to acquire the 22.5% of Bank Austria Creditanstalt not yet owned by HVB Group for Eur 2.63-billion, and the 28.8% of Bank BPH not yet owned by Bank Austria Creditanstalt for Eur 1.48-billion. The total offer for 100% of HVB Group, Bank Austria Creditanstalt and Bank BHP was thus Eur 19.5-billion (USD $24.5-billion). The enlarged UniCredito Italiano will have over 7,000 braches in 19 countries serving more than 28-million clients.
  • In 2006, due to opposition from the Polish banking regulator over UniCredito Italiano’s control over both Bank Pekao and Bank BPH (Poland’s No. 2 and No. 3 banks), UniCredito Italiano withdrew its Eur 1.55-billion offer for 28.8% of Bank BPH, though it still indirectly owned 71.2% of the Polish bank BPH through its purchase of Germany’s HVB Group.
  • In 2006, UniCredito Italiano’s subsidiary Bank Austria bought Russian stockbroker ATON for USD $424-million.
  • In 2006, UniCredito Italiano’s Bank Austria Creditanstalt unit bought 46.2% of International Moscow Bank from other minority shareholders for USD $810-million. Following the purchase, UniCredito Italiano’s held just over 90% of International Moscow Bank.
  • Back in 2002, UniCredito Italiano briefly owned both Zagrebačka banka, and Splitska banka, two of Croatia’s top banks. In order to satisfy Croatia’s anti-monopoly regulation, UniCredito Italiano sold Splitska banka to HVB Group in 2002, but only to gain it back when it bought out HVB Group in 2005. UniCredito Italiano was again required to sell Splitska banka in 2006, this time to France’s Société Générale SA for Eur 1.0-billion.
  • In 2006, Turkey’s Kocbank merged with Yapi ve Kredi Bankasi, the name Kocbank was retired. The enlarged Yapi Kredi became Turkey’s No. 4 bank with 643 branches. Following the merger, Koc Holding and UniCredito Italiano continued to co-own Koc Financial Services, 82% shareholder of Yapi Kredi.
  • Also in 2006, UniCredito Italiano sold 2S Banca, Italy’s No.2 securities custodian to Société Générale SA for Eur 579-million.
  • In 2007, UniCredito Italiano settled with the Polish banking regulator’s objection over its control of both Bank Pekao and Bank BPH and agreed to sell 200 of Bank BPH’s 480 branches, as well as the brand Bank BPH itself to GE Money for Eur 625-million (USD $893-million). GE Money is the financial services division of General Electric Co.
  • Also in 2007, UniCredito Italiano acquired Capitalia SpA Eur 21.83-billion (USD $29.47-billion). The combined Italian giant will have 9,000 branches around the world with 40 million clients. It will become the No. 2 bank in Italy and in Germany, as well as the No. 1 bank in Austria and in Central and Eastern Europe. Capitalia is the parent company of Banca di Roma, Banco di Sicilia, Bipop-Carire and MCC (MedioCredito Centrale).
  • Also in 2007, UniCredito Italiano took full control of International Moscow Bank by acquiring the remaining 9.97% of International Moscow Bank that it didn’t yet own for Eur 171-million (USD $229-million).
  • Also in 2007, UniCredito Italiano's Vienna-based Bank Austria Creditanstalt AG unit agreed to buy at least 85% of Kazakhstan's No. 5 bank AO ATF Bank for Eur 1.7-billion (USD $2.27-billion). Almaty-based ATF Bank had an 11.8% market share in Kazakhstan and operated 110 branches.
  • Also in 2007, UniCredito Italiano’s Bank Austria Creditanstalt unit bought Ukraine's Ukrsotsbank (USB) for Eur 1.61-billion (USD $2.2-billion). USB operated 497 branches.
  • In 2008, UniCredito Italiano formally changed its name to UniCredit SpA.
  • Also in 2008, in accordance with an agreement with Italy's anti-monopoly authority in the UniCredit-Capitalia merger, UniCredit sold 184 branches and their accounts and assets to 12 rival banks for Eur 747-million (USD $1.16-billion). The major acquiring banks were Banca Popolare di Milano, Credito Emiliano, Banca Carige, Banca Popolare dell'Emilia Romagna and Banca Popolare dell'Etruria e del Lazio.
  • In January 2016, UniCredit agreed to sell (transfer) its Ukrainian subsidiary PJSC Ukrsotsbank to Luxembourg-based, privately-held ABH Holdings (Alfa Bank Group) in exchange for a 9.9%-stake of ABH Holdings. ABH owns several banks in a few Eastern European countries. Ukraine's economy has been in tatters since its military conflicts with Russia over Crimea.
  • In July 2016, UniCredit sold a 10% stake in its Polish subsidiary Bank Pekao for EUR 749-million (USD $830-million, PLN 3.3-billion). Following the sale, UniCredit still holds a 40.1% stake in the Polish bank. Italy's banking sector has been battered by the 2008 global credit crisis and the sale is part of the strategy to bolster the Italian bank's capital ratio
  • In July and October 2016, UniCredit sold a total of 30% of FinecoBank SpA for EUR 880-million (USD $969-million). Following the sale, UniCredit's stake in FinecoBank was reduced to 35% from 65%. UniCredit inherited the direct bank when it took over Capitalia.
  • In December 2016, UniCredit fully divested its remaining 32.8% stake in Polish bank Bank Pekao to Polish insurer PZU and a Polish development fund for PLN 10.6-billion (EUR 2.57-billion). The sale boosted ailing UniCredit's capital and at the same time, returned a major Polish bank to Polish control, which had been a new Polish government policy for some time.
  • Later in December 2016, UniCredit also sold its Pioneer Investment subsidiary to France Amundi Asset Management for EUR 3.545-billion (USD $3.72-billion). Pioneer Investments had EUR 222-billion of assets under management. Amundi is on the Paris Stock Exchange but majority-owned by French bank Crédit Agricole.


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