Intesa Sanpaolo SpA Chief Executive Officer Carlo Messina said there’s no chance that Italy’s biggest bank can undertake cross-border mergers or acquisitions in the near future as there are no suitable assets to acquire.
(Bloomberg) — Intesa Sanpaolo SpA Chief Executive Officer Carlo Messina said there’s no chance that Italy’s biggest bank can undertake cross-border mergers or acquisitions in the near future as there are no suitable assets to acquire.
While cross-border M&A is needed “if you want to become a clear leader,” the real problem are targets, Messina said Tuesday in an interview with Bloomberg Television’s Francine Lacqua. “So, for the time being I can tell you that there is no possibility to make acquisitions for us.”
The CEO said that big targets, like Credit Suisse Group AG are complex to understand, while for smaller targets there are valuation issues. “Credit Suisse could have been a clear opportunity in the past but the situation of the bank is difficult to understand and for a bank like us we cannot make any kind of move that can dilute our strengths,” he said.
Intesa’s biggest rival in Italy, UniCredit SpA, has a major business unit in Germany and activities across eastern Europe.
Intesa will instead push ahead with organic growth seeking to expand the bank’s more lucrative activities such as insurance, private banking and asset management, Messina said. The CEO has long pledged some of the most generous investor rewards among European lenders, and rising rates are now allowing banks to charge more for credit while funding costs and defaults for now remain low.
Intesa announced new targets after fourth-quarter net income rose above expectations. The executive said last week he is targeting a net income “well above” €5.5 billion this year, a figure considered too conservative by some investors.
Intesa shares fell last week after the bank announced new profit goals. The shares recovered in the following days and traded at €2.49 ($2.668) as of 11:30 am.
How much the bank will exceed its targets will depend on the level of official interest rates, Messina said in the interview.
Read More: Intesa Targets Fail to Impress Investors After Profit Beats
Adani Exposure
Intesa Sanpaolo has “very little, not significant exposure” to Adani’s group of companies, Messina also said. “Our exposure is concentrated in project financing.”
Allegations of stock manipulation and accounting fraud from New York-based investor Hindenburg Research against Adani Group are piling pressure on companies exposed to the Indian conglomerate.
Most bank exposure to Adani-related project finance is likely secured, Messina said.
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