(Adds details from calls)
By Giulio Piovaccari and Andrea Mandala
MILAN, Feb 8 (Reuters) - Italy’s BPER Banca has agreed to buy the banking unit of its top shareholder Unipol for 220 million euros ($249 million) in a deal that also freed the bank of 1.3 billion euros in bad loans, it said on Friday.
BPER, Italy’s sixth-largest bank, said the deal with Unipol would boost its assets by around 17 percent and add more than 500,000 units to its client base.
The acquisition of 258-branch Unipol Banca will increase BPER’s network to almost 1,500 branches, with potential gross synergies of 85-95 million euros per year, the lender said.
The extraordinary costs of integration will amount to about 70 million euros, BPER Chief Executive Alessandro Vandelli told analysts, adding that the estimate was a “prudent” one.
Unipol had cleaned up its banking unit by spinning off its bad loans to prepare it for the sale.
The sale allows Unipol, which controls Italy’s second-biggest insurer UnipolSai, to pull out of direct management of a small bank “to take on the role of long-term stable investor” in one of the country’s main banking groups.
Unipol holds a 15 percent stake BPER Banca, but the group’s chief executive Carlo Cimbri said on Friday it would make use of a European Central Bank authorisation to raise it to 20 percent.
BPER shares extended their gain to over 10 percent after Cimbri said Unipol plans to raise its stake.
The two groups, both headquartered in the northern Emilia Romagna region, already have an insurance joint venture in place.
As part of the deal with BPER, Unipol also agreed to pay 130 million euros to buy a portfolio of BPER Banca’s impaired loans with a gross book value of 1.3 billion euros.
Also on Friday, BPER said it would take full control of its Banco di Sardegna (BdS) unit in a deal involving a share swap and a 180 million euro payment that minority shareholder Fondazione di Sardegna will use to buy a new hybrid bond issued by BPER.
Purchasing Banco di Sardegna’s minority shareholdings will boost BPER’s fully-phased core capital by 50 basis points.
BPER Banca said the various transactions announced on Friday, which are expected to be finalised by the end of the third quarter, would increase the bank’s 2021 earnings per share by 33 percent.
They will allow BPER to lower its gross impaired loan ratio to 11.6 percent form 13.8 percent at the end of 2018, in line with the 11.5 percent target for end-2020 set in the lender’s current non-performing exposures (NPE) plan.
Vandelli added however that BPER is working to update its impaired loan sale plan by next month, and that it was important for the bank to lower its gross NPE ratio to below 10 percent as quickly as possible.
Barclays advised BPER and IMI BdS’ shareholder Fondazione di Sardegna.
$1 = 0.8821 euros Reporting by Giulio Piovaccari; Editing by Jan Harvey