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Andrea Orcel has insisted UniCredit is focused on pursuing a “standalone strategy” after talks with the Italian government collapsed last week over an acquisition of state-owned rival Monte dei Paschi di Siena.
But the former UBS dealmaker, who has led Italy’s second-largest lender for six months, did not rule out future M&A deals for UniCredit.
Speaking to analysts following publication of the group’s third-quarter results on Thursday morning, Orcel said: “Do we need M&A to generate more value for investors? We do not.
“Is there M&A that at the right conditions can both strengthen our franchise . . . and create even more value for investors? Yes there is, if the terms and conditions are the right ones. Otherwise it will destroy value and we will not do that.”
The fate of MPS has sparked infighting in the coalition government led by former European Central Bank president Mario Draghi.
Orcel did not rule out a future deal for MPS, saying “for the time being [the window] has closed for us”.
He would not be drawn on MPS’s fate, but added: “As an Italian and head of a group that has a significant operation in Italy, I wish the outcome is as positive as possible because it’s in the interest of everybody.”
UniCredit reported a 55 per cent rise in profits compared with a year earlier.
The bank’s €1.1bn of pre-tax profits for the third quarter were 21 per cent ahead of analyst forecasts, while its €4.4bn of revenues also beat expectations.
UniCredit said it had increased lending across its regional divisions, with the exception of eastern Europe, as the economic recovery had led to a rise in demand for credit.
Italy’s second-largest bank is the latest lender to announce it had benefited from a rise in demand for corporate borrowing and mortgages, as businesses and consumers in Europe and the US grow in confidence on the back of a successful coronavirus vaccine rollout.
The bank raised its outlook for underlying net profit for the year from €3bn to €3.7bn on the back of rising revenues. It booked €297m of provisions for soured loans in the quarter, significantly below what analysts expected.
UniCredit’s share price rose 0.8 per cent to €11.51 in early trading.
“The market expected a good set of results, nevertheless we see them as positive for the stock, given the trends in core revenues and improved guidance,” said Azzurra Guelfi, an analyst at Citigroup.
The bank also said that Orcel would unveil his new strategic plan for the group, which would focus on simplification and digitisation, at an investor day on December 9.
Talks between UniCredit and the Italian Treasury over the acquisition of MPS, the world’s oldest bank, collapsed over the weekend after the two sides could not agree on the size of a costly recapitalisation.
Negotiations over the deal have occupied half of Orcel’s time in charge of UniCredit and he had hoped to announce an agreement at the bank’s third-quarter results.
UniCredit had been pushing for a capital injection into MPS of up to €7bn, but the Treasury indicated that it was unwilling to provide much more than its initial projection of €2bn to €2.5bn.
The Treasury is now expected to pursue a standalone plan for MPS, which is likely to include a further capital increase.
Analysts have speculated whether Orcel will now look for another domestic acquisition or concentrate on growing UniCredit organically.
Orcel has already reorganised UniCredit’s management team, simplified its structure and reduced duplicate roles. The executive committee has been cut from 27 to 15, while the bank’s geographical structure has been redesigned to improve efficiency and reduce complexity.