Italy’s Unipol lifts Popolare Sondrio stake in bank-insurance push

The second-largest insurer in the nation, Unipol Gruppo (UNPI.MI), an Italian financial firm, has increased its ownership of small lender Popolare di Sondrio (BPSO) (BPSI.MI) by more than twice as much. This development may encourage industry consolidation.

In order to purchase 10.2% of the Lombardy-based BPSO, Unipol paid 235.6 million euros ($248 million), which is 4.5% more than the closing price on Wednesday and 10.5% more than the average price for the previous month.

According to Equita, which managed the purchase alongside Mediobanca, BPSO is 15% more expensive than its comparable competitors, trading at 0.6 times its expected tangible equity in 2024–2025.

BPSO shares increased

On Thursday, BPSO shares increased 0.6% to 4.932 euros a share, which was less than the 5.1 euros that Unipol had paid.

In 2021, Unipol, the primary shareholder of BPER (EMII.MI), the fourth-largest bank in Italy, made its first investment in BPSO, thereby strengthening their insurance collaboration. It is also BPER’s partner for insurance.

After losing a legal struggle to prevent it, BPSO—which had long been viewed as a desirable target—became the last sizable cooperative bank in Italy to renounce its status, which protected it from possible takeovers.

Stakebuilding efforts by Unipol have long fuelled rumors of a potential partnership between BPER and BPSO.

In 2020, as part of bank Intesa Sanpaolo’s (ISP.MI) acquisition of rival UBI, Unipol chairman Carlo Cimbri forced BPER to purchase 600 branches in order to expand the network for his insurance products.

Unipol backed the branch acquisition by investing in an 800 million euro capital issue, giving it a nearly 20% share in BPER.

The 40% asset boost helped BPER go into a growth path and supported the Intesa-UBI merger. This came after years of fruitless attempts to close a deal with competitor Banco BPM (BAMI.MI).

BPER purchased struggling peer Carige last year with support from Unipol, all the while remaining occupied with branch integration.

Potential merger alternatives for Monte dei Paschi (BMPS.MI), which the state needs to reprivatise, include Banco BPM and BPER.

Rome has been forced, therefore, to consider potential share placements in order to work toward re-privatization obligations while it waits for a more long-term solution due to a lack of interested buyers in the near future.

US bank earnings decline due to decreased noninterest revenue

According to the FDIC, realized losses increased by $3 billion during the third quarter, while noninterest revenue decreased by $4.1 billion, or 5.2%.

In the third quarter, the government also revealed that banks’ unrealized losses on securities increased to $683.9 billion, a 22.5% increase mostly due to higher mortgage rates that have decreased the value of the mortgage-backed assets that banks hold.

The agency did point out that banks continue to have adequate capital despite these difficulties, that the rate of deposit flight has decreased, and that the amount of noncurrent loans that banks hold is still lower than it was before the pandemic.

“The third quarter saw the banking industry demonstrating resilience once again,” FDIC Chairman Martin Gruenberg stated in a prepared statement.

Reporters were not granted access to Gruenberg on Wednesday. Normally, he holds a press conference after the quarterly report on bank profits is released.

The Federal Deposit Insurance Corporation (FDIC) released its first quarterly report following controversy around claims of inappropriate conduct and sexual harassment. The board of directors of the FDIC said that a special committee would look into the allegations, including whether Gruenberg handled matters that were brought to his attention in a proper manner. Additionally, the FDIC Inspector General is looking into the situation.

Republicans in Congress have called for Gruenberg’s resignation numerous times, while other members have declared they are conducting their own investigations into the situation.

In a letter to Gruenberg on Wednesday, Sen. Joni Ernst, a Republican from Iowa, requested records pertaining to the FDIC’s previous handling of improper activity at the organization, including any settlements or non-disclosure agreements resulting from complaints.

“There must be serious consequences, including termination and criminal prosecution when warranted,” she stated.

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