Crédit Agricole rises to 9% in Banco BPM, the third Italian bank

Posted Apr 8, 2022, 0:45 AMUpdated on Apr 8, 2022 at 1:04 am

A year after its acquisition of the regional bank Credito Valtellinese (Creval) for 855 million euros, Crédit Agricole is back on the offensive in Italy. The mutual bank announced Thursday evening that it had acquired, “following purchases on the market and an operation with a first-class financial institution”, a 9.18% stake in the capital of Banco BPM.

Based on Thursday evening’s share price, Crédit Agricole’s participation in the capital of the third Italian bank represents an investment of 383 million euros. It remains to be seen how this initiative will be perceived by the shareholders of the French group, anxious to see their dividend preserved. It should in any case support the course of Banco BPM.

Coveted bank

With around 4 million customers, 1,400 branches and 22,000 employees, Banco BPM is indeed coveted from all sides, including by its big competitor UniCredit, which is trying to hound its rival Intesa San Paolo. By putting a foot in its capital, Crédit Agricole immediately displays its ambitions, even if the group says it has not sought authorization from the supervisory authorities to cross the threshold of 10% of the capital.

“This transaction underscores Crédit Agricole’s very positive assessment of the intrinsic qualities of Banco BPM: a solid franchise, favorable financial prospects and a strong and efficient management team”, the group said, underlining its “solid relations” with BPM and their partnership in consumer credit within the Agos joint venture.

Positive reception

“Crédit Agricole is willing to broaden the scope of strategic partnerships with Banco BPM,” says the group headed by Philippe Brassac, leaving little doubt about the role it intends to play in the consolidation of the Italian banking market. The Green Bank, which generates nearly 15% of its income in Italy, considers this country as its second domestic market after France.

Banco BPM welcomed the approach of its French partner, with whom it had held discussions at the end of 2020. “The quality and importance of the investor, as well as the appreciation he expressed for our bank” represent “ a clear recognition of the value and potential of Banco BPM”, reacted the Italian bank in a press release. “The purchase of the stake was not agreed in advance,” she said.

Uncertain context

If it is for the moment only a statement, the movement of Crédit Agricole intervenes in a context dominated by uncertainties. After the Covid crisis, the banking sector is facing the geopolitical shocks marked by the war in Ukraine and its potentially devastating fallout on the economy with the surge in raw materials.

Crédit Agricole itself is particularly exposed to Russia and Ukraine, where it has more than 2,200 employees. In March, the group calculated its total exposure to these two markets at 6.7 billion euros, nearly half of which was carried by its investment banking subsidiary CACIB. It recorded record net income last year, exceeding 5 billion euros.

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