Understanding, FT fleas the ratings. Messina optimism for the Ops on Ubi

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-> “Intesa-Sanpaolo is the banking stock with the highest stock market valuations in Europe. Why?”. While in Italy the Antitrust Authority has opened the investigation into theOps of the first Italian bank on Ubi and le quotations on the markets of the European credit groups have collapsed for the economic consequences of the spread of the epidemic of Coronavirus, the Financial Times lights a beacon on the value of the shares of the group led by Carlo Messina noting as Intesa, according to price-to-book value ratio, be there bank valued at higher multiples than other credit institutions in the Old Continent.

agreement sanpaolo 05

In an incomprehensible way“, Is the first lunge of the emblazoned financial newspaper of the City, given that “Italy – recalls the FTit was the first nation among European states to be hit hard from COVID-19“, With the European Commission which for 2020 foresees a thud of the Italian economy of 9.5%, a value far enough from -6.5% of Germany.

“The trend and the economic prospects have rekindled investors’ concerns about the solidity of Italian public finances and like the other national banks, Intesa-Sanpaolo is still heavily exposed to Italian sovereign debt“, Explains the FT reminiscent of financial storm eight years ago on tricolor credit during the euro-debt crisis and like the agency Fitch just have downgraded, as a consequence of the downgrading of the rating of the country, all the major national institutions, bringing their own creditworthiness a BBB, one step away from the loss of theinvestment grade.

Massiah Victor1

“And despite these pressures – notes the FTIntesa’s valuations are still double compared to those of national competitors such as UniCredit or di peer Europeans such as Barclays, Santander and Bnp Paribas“. Among the points in favor of Ca ‘de Sass, “Bank fans quote the strength of commission income, such as those from asset manager and of private banking. The success of the business insurance he was born in Health branch, sector which could now benefit from the great demand for protection after the outbreak. Intesa also has ratios much stronger balance sheets than many competitors“. IS “optimistically, Messina underlined all the positive aspects” of the business in the presentation of the quarterly report a few weeks ago. “The bank even has promised a huge dividend payout – 75% – if the supervisor reviews its lines in terms of coupon payment “.

Carlo Messina CEO Intesa Sanpaolo

And from here begins the second lunge on Intesa by analysts of the London newspaper, a reference point for the international financial community. “Taking an optimistic outlook is one thing. To be blasé is another “, comments the FT. “Understanding – is the explanation – he has barely € 800 million set aside for credit losses in the first quarter. UniCredit, despite being less exposed on the Italian market, 1.3 billion“.

Also on the cost of risk analysts from Jefferies they point out how Intesa’s are optimistic projections. “While UniCredit expects the cost of risk to rise to 2.4% on the national credit portfolio, Intesa estimates growth of 1% across the board. Some of the differences can be justified by the better quality of the loans, but here it seems it is a great act of faith was made. ”

Intesa Sanpaolo today

“At the same time, the operations of trading of the bank did not go badly, but at least in part this is due to the fact that Understanding took more risks “. The FT therefore on one side suspect that Ca ‘de Sass is too confident in having to bear possible credit losses in the futurethus making few provisions, on the other, he believes that despite Intesa boasts a constantly strong record on this, it is not very sustainable, also considering the market volatility at this stage, continue to count on the great contribution of the trading for the coming quarters.

The reason for this “painting more prospects for the business compared to what competitors don’t do ”? “Skeptics believe that Intesa does not want to destabilize the hostile offer on Ubi Banca“, Because if he started saying that actually the business is deteriorating would indirectly give reason to the group led by Victor Massiah, according to which it is not possible to complete the operation in these market conditions.

“Understanding – then adds the FT – did not even consider that the scenario could blow up the operation. Indeed, it is made even more necessary in an overcrowded credit market. “But success is not guaranteed“, Notes the newspaper of the City reminiscent of the unlucky goddessl carried out in the past in the middle of the crisis like the wedding between Lloyds-Hbos and those between Rbs-Abn Amro.

“Understanding – concludes the FT – it could achieve better results, thanks to a stronger capital position and a more robust income mix. But the outperformance of Intesa should be extremely high to be able to offset all the risks to which it is exposed – such as the recession, the increase in non-performing loans and the greater exposure to sovereign debt – and even in this case it would remain to be justified a substantial premium assessment compared to any other bank in Europe “.

@andreadeugeni





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