MILAN (Reuters) – Italian bank Intesa Sanpaolo’s current market value, which tops that of other euro zone lenders, indicates that investors are reassured by its strategy of holding off on “bold” merger and acquisition moves, its CEO said.
Asked about rival UniCredit’s possible attempt to take over Germany’s No.2 bank Commerzbank, Carlo Messina told CNBC television that Intesa would generate value for shareholders internally, through technology investments.
“We are now the most valuable bank in the euro zone… so probably focusing on not being bold in M&A is something that is reassuring a number of investors,” he said.
Intesa’s 72 billion euro ($78.5 billion) market value currently puts it ahead of the other two euro zone heavyweights, BNP Paribas and Santander, which are worth around 71 billion euros each.
Messina said that, despite being the most valuable euro zone bank at present, Intesa had room to grow further based on the multiples to their earnings at which U.S. banks trade.
He said Intesa traded at between seven and eight times its forecast earnings but that it could be worth more if a multiple of 10 times earnings were applied to Intesa’s recently upgraded goal of a 2025 net profit of 9 billion euros.
“If the value is 10 times net income, you can arrive at 90 billion euros, not making any kind of acquisition, but working on your internal ability to generate sustainable net income,” he said.
Messina said the political resistance to UniCredit’s interest in Commerzbank, as well as the Spanish government’s hostility to BBVA’s bid for Sabadell, was a result of populistic pressure and should not come as a surprise.
He reiterated that a UniCredit-Commerzbank deal would not amount to an authentic cross-border merger, because UniCredit’s German business would allow it to cut costs by expanding locally.
($1 = 0.9175 euros)
(Reporting by Valentina Za, editing by Giulia Segreti, Alvise Armellini and Jan Harvey)
