Italian Banking Groups to Merge

Nick Parmee

22 May 2007

The boards of UniCredit and Capitalia have greenlighted a merger and called the shareholders’ meetings needed to get final approval. The deal is seen as an opportunity to consolidate two major banking groups in a key core market with a positive growth outlook. The hope is that the merger will be a good fit in Italy in segments seen as attractive, such as consumer credit, leasing, factoring and personal financial advisory, while the benefits in investment banking and private banking and asset management will be of an add-on nature. With a pro-forma market capitalisation of €96.7 billion ($130.3 billion) the group will raise its European profile (top by market capitalisation and fifth by total assets in the Eurozone). The corporate and private banking activities of Banca di Roma, Banco di Sicilia and Bipop-Carire will be transferred to the UniCredit Italian reference banks for these businesses, UniCredit Banca d’Impresa and UniCredit Private Banking. In asset gathering and trading online, Fineco Bank will become the group flagship. With the aim of benefiting from economies of scale and the Pioneer global brand, the Capitalia asset management subsidiaries will be regrouped under PGAM with combined assets under management of €280 billion, of which €156 billion in Italy. The merger is expected to be presented to the extraordinary shareholders’ meetings of UniCredit and Capitalia between the end of July and the beginning of August 2007 and is expected to be completed at the beginning of the last quarter of 2007.