Foreign banks’ forays into Greece have been littered with failure. Just ask the French. But Italy’s UniCredit (CRDI.MI), which on Monday purchased 9% of Alpha Bank for about 300 million euros, should have better luck.
UniCredit CEO Andrea Orcel is not launching a massive lending push in the country, which is what hurt Crédit Agricole (CAGR.PA) and Société Générale (SOGN.PA) more than a decade ago. Instead, the Italian group is looking to cement a wider partnership between the two banks. This will include merging the lenders’ Romanian units and Alpha distributing UniCredit’s asset-management products in Greece. That should help Orcel on his quest to boost fee income. The former bank M&A adviser has found a reasonably efficient way to achieve all of this. Lenders typically have to deduct equity stakes in one another from their capital ratios, but only past a 10% ownership threshold. Handily, Greece’s financial-crisis bailout fund had 9% of Alpha that it wanted to sell, allowing UniCredit to pick up a meaningful chunk in one go without triggering any kind of capital penalty.
Nor is the valuation too rich, at roughly half of Alpha’s tangible book value per share – in line with local rival Piraeus Financial (BOPr.AT). Probably the most reassuring news for investors in the Italian bank is that Orcel has no plans to raise its stake. UniCredit hasn’t requested regulatory permission to buy more and doesn’t envisage doing so, according to a person familiar with the matter. For shareholders, then, UniCredit’s mini-Greek adventure is unusual but easily tolerable. (By Liam Proud)
(The author is a Reuters Breakingviews columnist. The opinions expressed are their own.)
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