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Unipol, the Stock Exchange approves the bad bank

 

The bad bank plan weights on the biannual report of Unipol, but the Stock Exchange approves it with the securities of the holding (+2.32%) and of Unipol Sai (+0.96%) both rising. The insurance company closes the first semester of 2017 with a loss of 390 million euro due to “the effects of the restoration plan of the banking division”, which implies a strengthening of the coverage of the impaired credits and the creation of a bad bank. However, net of the adjustments, the profit should have been 390 million euro, growing compared to the 276 million of the first semester of 2016.

In detail, for what concerns Unipol bank, the adjustments on credits and other financial activities totalled 396 million, this has brought the coverage of bad loans to “excellence levels, with 80% for the bad loans, 40% for the unlikely to pay, and 70.4% for the impaired credits in total. This operation prepares the path for the announced creation of the bad bank of Unipol, a company that will receive at the beginning of 2018 3 billion NPLs and of which Unipol and Unipol Sai, current partners of the bank, will remain its shareholders in order to manage and collect the impaired credits. The negative effects on the bi-annual results of Unipol will be reabsorbed at the end of the year with the transfer to Unipol Sai of Linear and Unisalute, in an operation among correlated parts, for a total of 875 million euro. In this way, “the return perspectives will remain basically unchanged” for what concerns the financial year of the holding. “We expect for the next three year for the bank alone a growth with a profitability of 7-8% at the conclusion of the plan”, stated the Unipol managing director, Carlo Cimbri in a conference call with the analysts, “as long as the bank stays within the group” since there is still the intention to find a partner.

A considerable clean up, therefore, that has had its effects also on Unipol Sai, that, despite closing positively the first semester of the year with a profit of 282 million, slightly more than the 280 million of the same period of the previous year, had to take into account the negative impact amounting to 150 million connected to the restoration of the bank. During the semester the collection has dropped from 6.7 to 5.6 billion, a fall connected to the life segment (-36,4% with 1,9 billion), opposite to a steady trend for the damage one (-0,3% with 3,7 billion), and with a combined ratio set at 96.1%  (97.9% net of reinsurance). The solvency indicators have improved with an individual solvency ratio risen to 256%, from the 243% at the end of 2016, and the consolidated solvency ratio based on the equity gone from 212% to 218%.

Source: http://mobile.ilsole24ore.com/solemobile/main/art/finanza-e-mercati/2017-08-05/unipol-borsa-approva-bad-bank-081148.shtml?uuid=AEtK2G9B&refresh_ce=1

Translator: Cristina Ambrosi

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