April 6, 2018 / 3:22 PM / 14 days ago

UBI Banca studying M&A options, chairman opposes any Monte dei Paschi deal

BRESCIA, Italy (Reuters) - UBI Banca (UBI.MI) is studying potential merger options as the sector consolidates, but its chairman said he would quit rather than agree to a linkup with Monte dei Paschi di Siena (BMPS.MI).

Speaking after the bank’s annual shareholders’ meeting, Supervisory Board Chairman Andrea Moltrasio said he would oppose any offer for Monte dei Paschi as long as he was in the job. “I would resign,” he said.

UBI Banca, Italy’s fifth-largest bank, has in recent weeks denied press reports casting it as a possible buyer for Monte dei Paschi, which is 68 percent owned by the state after an 8 billion euro ($10 billion) bailout last year.

Banking sources have told Reuters Monte dei Paschi needs to find a partner quickly. UBI two years ago examined a possible bid for the Tuscan bank but decided against it.

CEO Victor Massiah told reporters a new assessment would be necessary if UBI were asked again to look at Monte dei Paschi. “Two years ago conditions (for a bid) were not there ... we would have to conduct a fresh analysis,” Massiah said.

Massiah said UBI was weighing its options as Italian banks head toward an expected new round of mergers, but has had no contact with anyone so far.

“There is not just one option for UBI,” he added. “The positive thing - and I hope this will be increasingly true going forward - is that we’re among those who can help, rather than a bank whose problems need solving.”

Regulators are urging banks to merge to buttress profits in the face of tougher regulatory constraints and soaring investments needed to keep up with technological advances.

    REGULATORY PRESSURES

    Italian banks, traditionally focused on lending to the country’s myriad small businesses, have seen profits hit by loan losses following a deep recession and low interest rates.

    UBI last year acquired for a token sum three small banks which Italy rescued from bankruptcy in November 2015.

    Yielding to regulatory pressure like other major Italian banks, UBI has recently stepped up its clean-up goals, declaring it will cut soured debts below 10 percent of total lending by 2020.

    Massiah refused to provide any figures about bad loan disposals but said UBI was considering tapping a state guarantee to ease a sale.

    Asked about analysts’ concerns over the bank’s lower-than-average provisions against loan losses, Massiah said UBI had a higher share of secured corporate loans.

    “And if anyone had further doubts, I’d like to remind them the ECB (European Central Bank) analyzed in detail half our impaired loans and all of our corporate loans,” he said. “We booked the bulk of the extra provisions in 2017, the rest will be booked in the first quarter, which, as I said, will show good results.”

    Massiah said the bank was on track with its business plan overall and confirmed a forecast of “markedly better” 2018 results compared with last year.

    Editing by David Holmes

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