UniCredit S.p.A.: Italian Banking Giant with European Reach

UniCredit is a leading European banking group with a significant presence in Italy. The bank manages €499.5 billion in deposits and €418.4 billion in loans. Its products and services are marketed through a network of 3,039 branches, primarily located in Italy. Income is distributed geographically across Italy, Germany, Central Europe, Eastern Europe, and Russia.

The European Commission has approved UniCredit's acquisition of Banco BPM, subject to the divestment of 209 physical branches to address competition concerns in local banking markets [1]. The approval comes after a thorough investigation by the commission, which found that the merger would raise competition issues in 181 local areas across Italy. Both banks have significant branch networks serving retail consumers and small and medium-sized enterprises (SMEs).

UniCredit, Italy's second-largest banking group by assets, has committed to selling the branches in problematic overlap areas. This move aims to preserve competition in local markets for deposits and loans. The commission stated that these commitments fully address the competition concerns, ensuring that the combined market shares of the merged entity would remain moderate following the transaction [1].

The decision is conditional upon full compliance with the commitments, which will be monitored by an independent trustee under commission supervision. The commission concluded that following the branch divestments, the transaction would no longer raise competition concerns for retail banking and small business services. At the regional level, the commission found no competition concerns for large corporate client banking services, as several established competitors would remain active in the market after the merger [1].

UniCredit operates primarily in Italy, Germany, and Central and Eastern Europe, with smaller operations in the UK and US. The bank provides retail, commercial, and private banking services alongside insurance and asset management. Banco BPM, currently Italy's third-largest banking group by assets, was formed in 2017 through the merger of Banco Popolare and Banca Popolare di Milano. The bank focuses on retail, commercial, and investment banking services within Italy, along with insurance and asset management offerings [1].

UniCredit recently announced the issuance of a Tier 2 subordinated bond with a 12-year maturity, callable after seven years, targeted at institutional investors [2]. This issuance confirms the bank's solid base of fixed income investors and its ability to access the market in various formats. The amount issued stands at EUR1 billion, with a fixed coupon of 4.175% until June 2032, based on an issue price of 99.9%, equivalent to a spread of 180 basis points over the relevant mid-swap rate. The bond is expected to receive ratings of 'Ba1' from Moody's, 'BBB-' from S&P, and 'BBB-' from Fitch.

References:
[1] https://www.fstech.co.uk/fst/European_Commission_Approves_UniCredits_Acquisition_Of_Banco_BPM.php
[2] https://www.marketscreener.com/quote/stock/UNICREDIT-S-P-A-33364083/news/UniCredit-Issues-EUR1-Billion-Tier-2-Subordinated-Bond-50270043/