UniCredit's board on Monday approved the launch of a strategic in-depth review under its new chief executive as it seeks to boost its capital position and improve profitability. Italy's biggest bank by assets last month appointed French investment banker Jean-Pierre Mustier as its chief executive, a choice which a source said is likely to lead to a multi-billion euro capital increase and asset sales.
Mustier, who will take on his new role on Tuesday, faces a difficult task at UniCredit. The bank's shares have fallen more than 60 percent this year, weighed down by investor concerns over its profitability, a high pile of bad loans and a weaker balance sheet compared to major European rivals.
"There will be specific focus on capital optimisation opportunities, further cost reduction, cross selling across group entities and above all further improved risk discipline," the company said in a statement on Monday.
The lender said all of its assets will be subject to the review and any "incremental value creating opportunities, potentially also via disposals, will be evaluated". The bank said it will be more proactive in how it manages its non-core credit portfolio.
The lender said strategic assets such as German bank HVB, its central and eastern Europe division and its corporate investment bank will be developed further, increasing cross selling and synergies wherever possible.
The bank said separately it had launched a placement of up to 10 percent of online broker FinecoBank via an accelerated bookbuilding to institutional investors. UniCredit owns around 65 percent of the unit and plans to keep a majority shareholding after the placement, it added.
Speaking at an event in Milan, Mustier said the stake sale could boost UniCredit's CET 1 ratio - a measure of financial strength - by up to 7 basis points. UniCredit posted a CET 1 ratio of 10.5 percent as of end-March.
A source has previously told Reuters that Mustier was expected to launch a capital increase and would look to sell businesses such as Fineco, Polish unit Pekao and asset manager Pioneer, but not HVB. A sale of its Turkish business would also not be a priority, the person had added.
Mustier said on Monday the lender was working with Spain's Santander to find a solution to pursue a long-delayed deal to merge the two banks' fund management businesses.
The Financial Times said in a source-based report earlier on Monday that the two banks were set to abandon the deal over uncertainty after Britain's vote to leave the European Union.
UniCredit, the only Italian bank whose stability is deemed important to the global financial system, has been hit especially hard in a sell-off of European bank shares triggered by the British vote.
Italy has taken longer than other European countries to stabilise its banks after a long recession that followed the 2007-2009 financial crisis. Its banks are still carrying 360 billion euros in bad debts, or a third of the euro zone's total.
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