Banco BPM weighs sale, tie up for payments unit

Bloomberg

Banco BPM SpA is considering a possible sale or partnership for its payments unit, as Italy’s third-largest bank shifts strategy in a bid to maximise shareholder value.
“We are examining all the options for our merchant-acquiring business, including a disposal or a joint venture agreement,” Chief Financial Officer Edoardo Ginevra said. “In past Banco BPM’s moves to value its assets were done to finance de-risking, now our purpose is to ensure significant remuneration for shareholders.”
Banco BPM is moving away from restructuring and shifting towards sustainable returns by strengthening and reviewing areas like asset management, private banking, consumer credit and insurance while pushing forward digitalisation.
Ginevra said he’s confident the bank can post higher full-year profit, reduce provisions for bad loans and provide a dividend payout of at least 40%, if the Russian invasion of Ukraine doesn’t create overly disruptive effects.
“I expect 2022 profit somewhere in between last year’s net income and the 2023 target,” the CFO said. “For dividends, we have a commitment of a payout ratio of 40%, but we are confident we can go higher, having already distributed 50% for 2021.”
Since its creation from the 2017 merger between Banco Popolare and Banca Popolare di Milano, Banco BPM has curbed risk, cut costs and reshuffled businesses.
In November the lender announced a strategy targeting more than 1 billion euros ($1.1 billion) of profit by 2024. For the fourth quarter Banco BPM reported higher-than-expected profit and surprised investors with a decision to distribute a cash dividend of 19 euro cents per share, or a 50% payout ratio, on 2021 earnings.
The bank’s share price doesn’t reflect its fundamentals and future profitability, Ginevra said, arguing that current levels reflect legacies of restructuring.
Banco BPM trades at about 0.32 times its tangible book value compared with 0.72 times for Italy’s largest bank Intesa Sanpaolo SpA and 0.37 for UniCredit SpA.