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News from Italy |
UNIQUE ITALIAN PROBLEM FOR UNICREDIT |
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3/18/2009
- Italy's most troubled bank Unicredit got a boost on Wednesday, as it managed to just surpass the downbeat forecasts for its 2008 performance. Though the bank still has a worrying raft of problems to contend with, the market also took comfort from the fact it will soon be the country's best capitalized bank.
Unicredit (other-otc: UNCFY - news - people ) reported net profits for the fourth quarter of 505.0 million euros ($658.7 million), a decline from the 1.2 billion euros ($1.6 billion) a year ago, but ahead of analyst estimates of 351.0 million euros ($457.8 million). The bank also said that it may seek 4.0 billion in aid from the Austrian and Italian governments. According to Nomura analyst Paola Biraschi, this would raise the bank's core tier 1 capital to 7.1%, from 6.45% at the end of last year, making it the "most strongly capitalized banking Italy."
For this reason, and its cheap valuation given the dive in its share price, she now prefers the bank to a number of competitors, including Banco Popolare (other-otc: BPSAF - news - people ), which is tapping the state for aid and plans to restructure a troubled leasing division, as well as Intesa Sanpaolo (other-otc: ISNPY - news - people ). (See "Italian Banking Bailout Kicks Off.")
Shares of the bank rose 7.2%, or 7 euro cents (9 cents), to 1.04 euros ($1.35), on Wednesday morning in London.
Unicredit has bucked the largely healthy performance of Italian banks through the crisis. With little foreign business, and revenues coming from traditional retail and commercial banking businesses, the sector managed to sale through last year without a bailout. They've only had to consider strengthening their capital to deal with the global problem of rising defaults on personal and corporate loans, and to put them on a par with other European banks that have had to strengthen their base.
In that world, Unicredit stands out as somewhat of a sore thumb: The bank already tapped shareholders in a rights issue last October. (See "UniCredit Tries To Boost Its Reserves.")
The bank's troubles stem from its international presence, including in eastern Europe, but especially the acquisition of German subprime lender HVB back in 2005. The division, which includes investment banking operations, reported a net loss of 671.0 million euros ($875.2 million) last year, after making a profit of 2.1 billion euros ($2.7 billion) the year before.
"It's clear that the commercial and retail banks are much better positioned to weather the downturn than the larger banks such as Unicredit," said Enrico Camerinelli, senior analyst at Celent in Italy. |
Fonte: Forbes.com
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