The Italian banking group UniCredit announced profits of €1.03 billion for Q22021, having primarily managed to drastically reduce the level of non-performing loans in its portfolio. This ongoing corporate adjustment policy to ever-decreasing costs makes Group Executive Officer of UniCredit Andrea Orcel to expect profits of over €3 billion for 2021.
The changes in the management structure imposed by the former investment banker Andrea Orcel and now Group Executive Officer of UniCredit, aimed at the sustainable corporate profitability of the group brought these results.
Photo by the website www.finanza.economia-italia.com
At the same time, UniCredit announced that it is starting discussions with the Italian government for the acquisition of the world’s oldest bank Monte dei Paschi di Siena, based in Tuscany, which was rescued in 2017 after a state liquidity intervention totaling €5.4 billion.
Discussions between the officials of the Italian Ministry of Finance and the senior executives of the Group of UniCredit have proceeded and the terms of its acquisition have been agreed.
The acquisition will include only certain profitable activities of Monte dei Paschi di Siena, excluding any bad debts and overdue loans that the bank has in its portfolio, as well as any other extraordinary litigation that has taken the path of justice.
The goal of the Italian Ministry of Finance and the top executives of UniCredit is on the one hand to create a sound loan portfolio throughout UniCredit that together with the acquired profitable activities attract even more capital given the increase that will be caused in its share.
The precarious and loss-making activities of Monte dei Paschi di Siena will remain in it, turning this loss-making part of the bank into a bad bank in which, after revaluation of any of its overdue loans at 2021 prices, they will be sold en masse to vulture funds at low prices. The aim is to take back the Italian state part if not the total liquidity injection of €5.4 billion that it allocated for its rescue in 2017.
These vulture funds will then hold mass auctions to get their money, causing social unrest in Italian society. It is certain that the Prime Minister of Italy Mario Draghi gave his “wish” to move this deal forward.
For the UniCredit Group, this acquisition is a one-way street, as it will become the second Italian bank (in capital value) and as its main rival and first Italian bank in capital value, Intesa Sanpaolo, acquired UBI in 2020, making it the largest Bank of Italy.
