BPER strategic growth - Creating shareholder value through the acquisition of a sizeable going concern - BPER Istituzionale
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BPER strategic growth
Creating shareholder value through the
acquisition of a sizeable going concern
Alessandro Vandelli - CEO
18th February 2020
0Agenda
1 BPER at a glance
2 Overview of the Transaction
3 Strategic rationale
4 Preliminary identification of the going concern
5 Expected impacts
6 Closing remarks
1BPER at a glance 1
Branches network Key financials
One of the largest banking 2
N. branches: 1,349 Key financials 2019
groups in Italy focused on
traditional business P&L (€m)
4 2 Market shares1
61 Greater than 7.5% Total banking income 2,276
#6th banking group by total 49 Between 5% and 7.5%
61 333 Between 2.5% and 5% Operating expenses (1,687)
asset Lower than 2.5%
11 LLPs (449)
33 17
9 Profit before taxes 417
97
10
Net income 380
88
96 40
Key shareholders 30 B/S (€bn) Gross Net
334
38
Loans to customers 55.3 52.0
19.7%
o/w Performing 49.2 49.0
o/w NPEs 6.1 3.0
42.8%
36
Direct deposits 58.1
10.5%
Indirect deposits 117.4
4.3%
% on total
Asset quality Gross Net
North West 10%
22.6% North East 29% NPE ratio 11.1% 5.8%
Center 18% NPE Coverage 51.0%
Unipol Gruppo South & islands 43%
Fondazione di Sardegna Regulatory capital (€bn)
Other Bank Foundations Widespread national presence and CET1 capital FL 4.2
Other institutionals strong multi-regional footprint RWAs FL 34.6
Floating CET1 ratio FL (%) 12.0%
Notes
1 Market share by branches
2 Including contribution from Unipol Banca and Arca SGR since 1st July 2019 2Overview of the Transaction 2
Acquisition of a going concern from Intesa Sanpaolo including up to #400-500 branches, c. #1.2m
clients and €20-23bn of loans significantly enhancing competitive positioning in Italy
On 17 February 2020, the Board of Directors of BPER Banca approved the execution of an agreement with Intesa Sanpaolo, pursuant to which BPER
will purchase a going concern from Intesa Sanpaolo (the “Transaction”), subject to, inter alia, the completion of the voluntary public exchange offer
launched by the same Intesa Sanpaolo on the entire share capital of UBI Banca
Overview of the going concern perimeter Transaction highlights
Loans to customers: €20-23bn Acquisition in cash
Key guiding principles
RWA: maximum €15.5bn1
Price consideration equal to 0.55x
Clients: +#1.2m P/CET1 of the going concern
allocated capital at the reference
Branches: #400-500 (mainly located in northern Italy, with a specific focus on Lombardia) date2
Asset quality: in line with UBI at the reference date2
Capital increase via rights issue up
Allocated capital: in line with UBI CET1 ratio at the reference date2 (12.3% as of FY’19) to max €1bn to finance the
Transaction
Only including assets and liabilities strictly related to the branches acquired (i.e. not
including head office and central structures, and no obligations envisaged with reference to
‒ Pre-underwriting agreement
current distribution agreements)
signed with Mediobanca with
The going concern perimeter has been preliminary identified based on public information reference to the entire rights issue
and is subject to changes provided that the abovementioned criteria are all met amount
Notes
1 Including credit and operational risk RWA 3
2 The determination of such parameters will occur at a specific reference date, which is currently expected to be 30 June 2020.Overview of the Transaction 2
Preliminary timetable
February 17th 2020 Transaction announcement
Q2 2020 BPER Extraordinary General Meeting
H2 2020 BPER capital increase via rights issue
December 2020 Closing
4Strategic rationale 3
Paving the way for further sound and sustainable growth
1 Creating shareholders value enhancing profitability, improving asset quality and maintaining a strong capital
position
2 Significant scale increase
3 Strengthening of group presence in the more productive and dynamic areas of the country (in
particular Lombardy)
4 Operating efficiency benefits (no head/back office legacy)
5 Further potential value creation through cross selling of BPER products to the newly acquired customers (no
obligations envisaged with reference to current distribution agreements)
5Strategic rationale 3
BPER has a successful M&A track-record given it has achieved significant scale and strengthened
its performance and balance sheet also through the acquisition and merger of a number of banks
Total assets evolution 2000-2019 (€bn)
100-105
79
71 71
62 62 61 65
35
22
2000 2001 2012 2013 2015 2016 2017 2018 2019 2019PF
Strategic
Target Growth
Total assets
9.7 1.4 1.1 2.6 11.4 21-26
(€bn)
% on BPER total
45% 2% 2% 4% 16% ∼30%
assets1
Branches (#) 430 22 24 105 258 400-500
% on BPER 70% 2% 2% 9% 21% ∼33%
branches1
Notes
1 Calculated on previous year 6Preliminary identification of the going concern 4
Highly complementary branches network which will significantly enlarge BPER “multi-regional
presence” in the wealthiest northern Italian regions
BPER branches
+ Going concern = BPER branches pro-forma
Branches: #1,349 Branches: #4501 Branches: #1,799
4 2 4 2
61 257 318
49 49
61 333 30 91 333
11 11
17 44 61
33 42 75
9 9
97 97
10 126 10
88 38
96 40 19 20 115 60
4 30 4 30
334 4 334 4
38 38
% on total % on total % on total
36 36
North West 10% North West 64% North West 23%
o/w Lomb ardy 5% o/w Lomb ardy 57% o/w Lomb ardy 18%
North East 29% North East 0% North East 22%
Center 18% Center 28% Center 20%
South & islands 43% South & islands 9% South & islands 35%
#2.7m clients #1.2m clients #3.9m clients
Market shares
Notes Greater than 7.5%
1 Based on the mid point of the range of branches potentially included in the going concern (#400-500) Between 5% and 7.5%
Between 2.5% and 5% 7
Lower than 2.5%Preliminary identification of the going concern 4
Sizeable add-on with solid profitability confirming a clear strategic path
Contractual agreements signed Key B/S items (current estimate)
MIN MAX MIN MAX
_ Loans to customers (net) €20bn
_ €23bn
Loans to customers (net) €20bn €23bn
o/w Bonis €19.0bn €21.9bn
Incl. credit risk,
operational risk and MAX
RWA (Cap) o/w NPE €1.0bn €1.1bn
other RWA €15.5bn
MIN2 MAX3
Deposits €18.0bn
_ €20.7bn
In line
CET1 ratio (%) with UBI1 12.3%
MIN MAX MIN2 MAX3
Branches _ Indirect deposits €24.5bn
_ €28.1bn
#400 #500
As envisaged in contractual agreements with ISP
Notes
1 At last reporting date before closing of the Transaction (currently envisaged at 30.06.20)
2 Based on €20bn of loans to customers 8
3 Based on €23bn of loans to customersPreliminary identification of the going concern 4
Compelling pricing which represents a discount to average trading multiples observed for key peers
P/CET1 20191 P/E 20211
0.72x 9.1x 9.2x
7.9x
0.58x
0.55x 0.55x
~5x
Selected BPER UBI Going Concern
Going Selected BPER UBI Going Concern
Going
peers 2 concern peers 2 concern
Transaction implied multiples significantly lower vs Italian listed banks average for a going concern which is
characterized by a lean cost structure and a compelling profitability
Further value upside for BPER shareholders from potential synergies
Notes
1 Bloomberg as of 17.02.20
2 Include Intesa Sanpaolo, UniCredit, UBI, BancoBPM and Credem 9Preliminary identification of the going concern 4
Expected internal financial metrics – Sensitivity analysis to credit risk RWA density and loans to
customers
PRICE PAID for the going concern (€m) NET INCOME of the going concern (€m)
Loans to customers (€bn) Loans to customers (€bn)
20.0 21.5 23.0 20.0 21.5 23.0
40% 669 711 750 40% 154 167 180
Credit risk RWA
Credit risk RWA
density
density
45% 737 783 827 45% 152 165 177
1 1
56% 892 950 1,005 56% 148 160 172
Estimated assuming a P/CET1 of 0.55x applied on allocated
capital @12.3%2 of going concern RWA3
Notes
1 Preliminary estimated based UBI Banca individual credit risk weight based on latest available report
2 In line with UBI CET1 ratio. It will be based on UBI last reporting date before closing of the Transaction (currently envisaged at 30.06.20) 10
3 Including credit risk RWA, operational risk RWA equal to €1.5bn and other RWA mainly related to real estate and other assets (assuming a 100% risk weight)Preliminary identification of the going concern 4
Expected internal financial metrics – Price consideration and badwill generated
Key assumptions Price consideration and badwill generated (€bn)
Loans to customers: €21.5bn
1.42
Credit risk RWA density: 45%
Total RWA: €11.6bn1
(0.78)
Net income: €165m
0.64
Price consideration: 0.55x CET1 capital
(0.15) 0.49
Additional loan loss provisions: €150mln
(gross) at BPER level to increase going
concern coverage
2 2
Going Concern Price paid Badwill PPA (additional Badwill post PPA
Full badwill recognition assumed at BPER allocated capital provisions on NPE)
Notes
1 Including credit risk RWA, operational risk RWA equal to €1.5bn and other RWA mainly related to real estate and other assets (assuming a 100% risk weight)
2 Gross of tax
11Preliminary identification of the going concern 4
Expected internal financial metrics – EPS accretion / (dilution)
Key assumptions EPS accretion / (dilution) as of 20211,2
Capital increase: €0.8bn-€1bn
Discount to TERP: 20-25% 0.61
0.58
Issue price based on 17.02.20 BPER closing 0.58 0.58 0.58
price 0.56
BPER standalone net income 2021E based
on latest consensus (€300m)
Going concern net income: €165m
Going concern return on investment1 in
the range of c. 15-20% on the basis of
loans to customers included in the
Capital increase @ €1.0bn Capital increase @ €0.9bn Capital increase @ €0.8bn
perimeter and related RWA density
EPS Pre (€) EPS Post (€)
Notes
1 Calculated as expected net income as % of price consideration
12Expected impacts 5
BPER to become the 5th largest Italian banking group by total assets and 4th by branches
Ranking by total assets (€bn, FY’19) Ranking by number of branches (#, FY’19)
PRE POST PRE POST
Unicredit 856 Intesa SP ~920 Intesa SP 3,752 Intesa SP 4,877
Intesa SP 816 Unicredit 2,387
Unicredit 856 Unicredit 2,387
Banco BPM 167 Banco BPM 1,727
Banco BPM 167 Banco BPM 1,727
MPS 132 1,575
MPS 132 #4 1,697 1
127 MPS 1,422
#5 ∼100 MPS 1,422
#6 79 #6 1,349
Credem Credem 459
48
Credem 48 Credem 459
BP Sondrio 365
BP Sondrio 41
BP Sondrio 41 BP Sondrio 365
Creval 362
Creval 24 Creval 24 Creval 362
Going concern
Notes
1 Based on the mid point of the range of loans to customers potentially included in the going concern (€20-23bn) 13
2 Based on the mid point of the range of branches potentially included in the going concern (#400-500) net of already defined closures within the business plan horizonExpected impacts 5
Increased scale and attractive financial impacts enhancing group KPIs1
Clients (#m) Total assets (€bn) Total deposits2 (€bn)
3.9 ~ 100 ~ 225
175
79
2.7
BPER BPER BPER BPER BPER BPER
FY'19 Pro forma FY'19 Pro forma FY'19 Pro forma
Gross NPE ratio CET1 ratio FL Cost / income
NPE In line with 2021
Coverage
51% > 46% > 46% In line with 2021
Business Plan Target
Business Plan Target
Pro Forma 11.1% Below 2021 74%
for going > 13%
business plan > 12.5%
concern @ target (< 9%) 12.0% < 59%
c. 10% ~ 8%
< 8%
Net NPE 5.8%
< 5.0%
ratio
~ 4.5%
BPER BPER BPER BPER BPER BPER BPER BPER
FY'19 2020E 2021E FY'19 2020E 2021E FY'19 2021E
Notes
1 Preliminary estimate of the going concern figures based on publicly available information assuming an amount of loans to customers equal to c. €21.5bn and RWA
credit risk density at 45% 14
2 Includes direct and indirect depositsClosing remarks 6
• Further growth and business development through the acquisition of c. #1.2m clients and #400-500
branches
• Operating efficiency benefits (no head/back office legacy)
Paving the way for further
sound and sustainable • Potential value creation through cross selling of BPER products to the newly acquired customers
growth (no obligations envisaged with reference to current distribution agreements)
• De-risking acceleration and solid capital position - gross NPE ratio at c. 8% (6%)
• Compelling pricing which represents a discount to average trading multiples observed for key peers
Value creation for • High return on investment (c. 15-20%)
shareholders
• Accretion in EPS by c. 6% in 2021
15Contacts for Investors and Financial Analysts
Gilberto Borghi Via San Carlo, 8/20 - 41121 Modena - Italy
Head of Investor Relations
+39 059 2022194
gilberto.borghi@bper.it
Giulia Bruni Via San Carlo, 8/20 - 41121 Modena - Italy
Investor Relations
+39 059 2022528
giulia.bruni@bper.it
Nicola Sponghi Via San Carlo, 8/20 - 41121 Modena - Italy
Investor Relations
+39 059 2022219
nicola.sponghi@bper.it
16Notes
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