Italian investor in UniCredit, Banco BPM sees 'strategic value' in deal

By Valentina Za

MILAN (Reuters) -An Italian investor in both UniCredit and Banco BPM said on Wednesday that a merger would have "strategic value", but any decision lay with management not shareholders.

Italy's No.2 bank UniCredit was preparing an offer for number three Banco BPM in 2022, before the Ukraine conflict forced CEO Andrea Orcel to focus on its Russia exposure.

Orcel had looked to move on Banco BPM soon after becoming UniCredit CEO two years ago, but instead entered talks with the government over a possible Monte dei Paschi acquisition that eventually fell through.

The comments by Fabrizio Palenzona, a former UniCredit deputy chairman who on Tuesday became chairman of banking foundation Fondazione CRT, refocuses attention on what is widely seen as the most obvious domestic deal for UniCredit. Fondazione CRT holds 1.9% of UniCredit and 1.8% of Banco BPM.

Pressure on UniCredit mounted after Intesa Sanpaolo in 2020 bought UBI, another northern bank, and speculation has resurfaced recently because of its rising share price, which has been lifted by large scale share buybacks.

Palenzona told la Repubblica newspaper that two decades ago then UniCredit CEO Alessandro Profumo had sent him to propose a friendly takeover offer to Banca Popolare di Milano (BPM).

"Profumo's idea was to strengthen UniCredit in Lombardy where it faces a gap compared to rivals. Twenty years later that gap is still there so the strategic value of the deal remains".

Born from the merger of BPM with Verona-based Banco Popolare, Banco BPM controls 12% of Lombardy's banking market, twice UniCredit's market share.

Orcel ruled out major mergers and acquisitions and said digital users meant UniCredit had an 11% market share in Lombardy when looking at deposits, against 6% of branches.

"Our stance (on M&A) is one of steady as she goes," he told a conference in Dublin.

(Reporting by Valentina Za and Cristina Carlevaro; Editing by Federico Maccioni and Alexander Smith)