UNCFF Unicredito SPA (PK)

   By Pietro Lombardi 
 

UniCredit SpA (UCG.MI) has reached a deal to cut its stake in Turkish bank Yapi ve Kredi Bankasi AS (YKBNK.IS) to below 32% in a further step aimed at simplifying its shareholding structure.

The move, which analysts see as a step to potentially exit Turkey, comes ahead of the Italian bank's new strategic plan to be presented Tuesday and follows a string of disposals in recent years that have helped simplify the bank's structure and boost its capital.

The Italian bank currently holds roughly 41% of the Turkish bank through a joint venture, Koc Financial Services. UniCredit will exit the joint venture and its partner, Turkey's Koc Group, will take full control of it, the bank said Saturday. The joint venture currently holds roughly 82% of the Turkish bank.

As part of the deal, Koc Financial Services will sell a 31.93% stake in Yapi Kredi to UniCredit and 9.02% to Koc.

UniCredit expects to report overall charges of roughly 1 billion euros ($1.10 billion) related to the deal, whose consideration will be close to nil in terms of cash, it said. The transaction, which should be completed in the first half of next year, should improve the core Tier 1 ratio, a key measure of capital strength, by mid-single-digit basis points.

"The transaction is part of UniCredit's on-going strategy to simplify its shareholdings and to optimize its capital allocation," it said.

"Stage 1 of exiting [is] Turkey completed," Jefferies said.

The move "supports our case on balance-sheet simplification driving strategic flexibility and additional capital return to shareholders."

The bank, which is Italy's largest, has sold a number of assets in recent years, including Polish lender Bank Pekao SA and asset manager Pioneer. More recently, it sold its stakes in online lender FinecoBank SpA (FBK.MI), and Mediobanca SpA (MB.MI). As part of a strategy it launched to address a number of issues, including a large pile of bad loans, the bank also cut costs, sold soured loans and raised EUR13 billion of fresh capital.

Write to Pietro Lombardi at pietro.lombardi@dowjones.com

(END) Dow Jones Newswires

December 02, 2019 01:59 ET (06:59 GMT)

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