UniCredit To Explore Options For Future Of Pioneer, Private Banking Profits Fall

Knud Noelle

14 May 2010

Italy’s UniCredit Group is exploring “all strategic options” for the future of if its asset manager Pioneer Investments, as it fears that organic growth may not suffice, the firm said. At the same time, the group has reported a drop in private banking operating profits, while its consolidated results were positive.

UniCredit has appointed Bank of America Merrill Lynch and its own UniCredit Bank to explore all strategic options to maximise Pioneer’s overall franchise value, it said in a statement, and a spokesperson for the group told WealthBriefing that “all really mean all”.

Roger Yates, Pioneer Investments’ chief executive will work together with UniCredit to oversee the process and evaluate the best options for Pioneer’s future.

The firm believes the time is right to start looking for new strategic options, as the asset manager is in the process of recovery from the financial meltdown.

The review is not driven by capital ratios and therefore time is not an issue, the group said. No deadlines for completion of the review have been fixed.

Pioneer's assets under management are around €185 billion ($234 billion), up about 20 per cent from its lowest point.

The group said that it observes rapid changes in the asset management landscape and therefore believes that Pioneer needs to increase its scale. However, organic growth may not be enough to achieve the right scale within an acceptable timeframe, the firm added.

At the same time the group issued its results, which saw a drop in its operating profits in private banking from €65 million in the first quarter of 2009 to €58 million in the first quarter of 2010.

Private banking operating income also fell from €205 million in the first quarter of 2009 to €196 million in the first quarter of 2010.

UniCredit Group’s asset management business fared better, reporting operating profits of €81 million for the first quarter of 2010, up from the previous year’s €68 million.

Operating income for asset management was at €202 million, up from €182 million in the first quarter of 2009.

Overall, the group reported net profit of €520 million, which represents an increase of 40.1 per cent quarter-on-quarter and an increase of 16.5 per cent year-on-year.

Operating income was at €6.81 billion, up 5.6 per cent compared to the last quarter and 3.7 per cent compared to the first quarter of 2009.

Operating profits were at €2.93 billion, up 10.9 per cent compared to the previous quarter and 6.9 per cent year-on-year.

Total assets at the end of March 2010 amounted to €949 billion, compared to €929 billion at the end December 2009. This represents an increase of 2.2 per cent quarter-on-quarter.