Precious details of the Italian job
Earlier this month Unicredit revealed its strategy for 2006-2008, presenting some of the details concerning the Unicredit and HVB merger. According to the president of Unicredit, Alessandro Profumo, savings from the merger of Pekao and BPH in Poland should reach EUR 60 (zł.241.33) million in 2008. The income growth of the merged banks will be seven percent annually and the cost-to-income ratio will drop from 53.3 percent in 2005 to 46 percent in 2008.
"The seven-percent-income growth is a conservative forecast. Pekao has a good history of underestimations. If the management board is wrong, the forecast is likely to be underestimated rather than overestimated. Perhaps it is not underestimated by as much as half, but the growth could be eight, nine, or 10 percent," said Marek Jura, the head analyst with DM BZ WBK. However, he admits it is not exactly known how Unicredit plans to achieve these savings. The first forecasts were about EUR 100 (zł.402.41) million.
"The plans are quite ambitious, especially with the predicted growth of investment funds. BPH had 10-percent income growth last year, while Pekao's growth was weaker. If we compare the planned annual income growth of seven percent with Pekao's results, a significant improvement is observed," said Andrzej Powierża from BDM PKO BP.
In April, the Polish government and Unicredit signed an agreement in which the Italian investor obliged itself to sell 200 BPH branches to an independent entity. If, within six month following this agreement, changes crucial for the bank's division in banking law are introduced, the first branches for sale will be separated from BPH and the rest will merge with Pekao. Should the law remain unchanged, Pekao will takeover the whole of BPH and only then selected assets will be designated for sale.
Unicredit is supposed to separate the BPH branches for sale by October 19. According to Parkiet, the Italians plan to hang onto the best-located BPH branches with the best customers.
The total savings resulting from the merger of Unicredito and HVB - the largest cross-border merger in Europe - will reach EUR 900 (zł.3,620) million in 2008.
The key elements of Unicredit's strategy for Poland are the integration of IT systems and bank operations, cost control and effective risk management. The company also plans to concentrate on retail operations, focusing on assets, consumer loans sales and credit cards.
Poland's other largest bank, PKO BP, refused to comment on its strategy or discuss any action it may take to defend its position as market leader. "Due to the current changes in the PKO BP management board, it is not certain whether the strategy accepted at the end of last year will still be in force. It is difficult to predict PKO BP's operations," said Jura.
