Italian lender UniCredit is said to have halted its efforts to acquire Banco BPM after the former’s stock has fallen over 20% since Russia invaded Ukraine. According to Reuters sources, “A strong share price was critical to pulling off the deal to combine the second and third-largest Italian banks, with Banco BPM commanding a premium of at least 40%.” The sources added, “The deal is on hold. UniCredit needs to wait for its stock to recover and for the geopolitical environment to stabilise.” UniCredit had a credit exposure of €14.2bn ($15.7bn) to Russia as of last summer; a full write-off of its Russian business would cost UniCredit €1bn ($1.1bn) and shave-off 35bp off its best-quality capital ratio as per sources.
UniCredit’s USD 8% Perps have been trending lower from 108.75 levels in early Feb to 104.46 currently to yield 5.84%.
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