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Rumors about a possible merger between the French and Italian
banks have been doing the rounds for several years and have
re-emerged after Jean-Pierre Mustier, a former investment
banking boss at SocGen, was appointed earlier this year to run
UniCredit.
This was highlighted on Monday by a report from Italian news
agency Ansa which said talk of a tie-up was circulating in
financial markets.
"It's market speculation that the bank does not intend to
comment on," a UniCredit spokesman said when asked about the
market rumors.
Societe Generale also said it did not comment on market rumors.
A source inside UniCredit told Reuters recently some managers at
the bank believed Mustier's endgame was a tie-up with the French
bank.
An investment banker at another bank also mentioned such a
scenario. This banker said Mustier, who is expected to launch a
share issue in the first quarter of next year, would likely
raise more than the bank needed to increase its market
capitalization with a view to a SocGen deal.
Such a tie-up could take place 12-18 months after the share
sale, the banker said.
Two other sources close to the situation said a tie-up between
the two banks was unlikely because of regulatory and
constraints.
Banks in Europe face pressures to consolidate to help to tackle
the problem of low profitability and heavy bad debts, but
cross-border deals have always proved tricky.
Mustier, who took the helm of UniCredit in July, is considering
tapping the market for 10 billion to 13 billion euros ($11
billion-$14 billion), four sources familiar with the matter said
on Saturday.
That would be more than initial expectations for a 7 billion -8
billion euro cash call and would increase UniCredit's market
value to between 24 billion and 27 billion euros. This compares
with SocGen's current market value of about 32 billion euros,
according to Thomson Reuters data.
UniCredit, which is also selling assets, is expected to announce
the capital increase together with the results of a strategic
review on Dec. 13.
UniCredit's shares spiked 5.6 percent higher after the Ansa
report, but were flat by 1101 GMT. SocGen also rose more than 2
percent after the report before paring gains to stand about 1
percent higher.
(Reporting by Gianluca Semeraro, Paola Arosio, Pamela Barbaglia
and Maya Nikolaeva, writing by Silvia Aloisi. Editing by Jane
Merriman)
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