UniCredit, Mediobanca chiefs repeat no merger-source
MILAN, Jan 7 (Reuters) - The heads of Italy's Mediobanca (MDBI.MI) and UniCredit (CRDI.MI) told each other there was no industrial sense in merging, a source close to the situation said, as they met a day after the banks denied a report they might.
"During the meeting, both sides reiterated what was said in the statements of yesterday, that no project exists for a merger ... because neither side can see an industrial basis," the source, who requested anonymity, said on Wednesday.
The meeting between Mediobanca Chairman Cesare Geronzi and UniCredit Chief Executive Officer Alessandro Profumo lasted about an hour at UniCredit's headquarters. It had been scheduled some time ago, the source added.
UniCredit is Italy's second-largest bank and fifth in Europe, while Mediobanca is the country's top investment bank and about a quarter of UniCredit's size, at 6.5 billion euros.
On Tuesday, leading business daily Il Sole 24 Ore said shareholders were weighing a merger between investment bank Mediobanca and retail-focused UniCredit, citing reliable sources. The banks both denied any such project existed.
On Wednesday, Il Sole 24 Ore said "the plan remains at the centre of informal discussions among shareholders," after stock in both companies had risen sharply.
Shares in UniCredit ended down 2.5 percent on Wednesday while Mediobanca stock edged up 0.75 percent.
Geronzi sold his previous bank, Capitalia, to UniCredit in 2007. Last year, Geronzi clashed with Profumo over the role of management at Mediobanca, eventually agreeing to give Mediobanca managers seats on the board.
But since then, Profumo has been the one under pressure, as his bank struggled to meet targets on capital strength. He made a U-turn in October and asked shareholders to help the bank raise 6.6 billion euros of funds, partly through a 3 billion euro capital increase which kicked off on Monday.
A merger with Mediobanca could provide UniCredit with about 2 billion euros in extra capital, Cheuvreux analysts said and raise its Core Tier 1 ratio to 6.9 percent.
Mediobanca is underwriting UniCredit's rights issue and is expected to become temporary custodian of 6.8 percent of the bank as the high pricing of the recapitalisation makes it unlikely shareholders will subscribe to it.
That would make it the biggest shareholder in UniCredit, ahead of CariVerona, with just over 5 percent, and the Libyan Central Bank of Libya which has 4.61 percent.
UniCredit in turn is the main shareholder in Mediobanca with an 8.66 percent stake. And last month, CariVerona said it had raised its stake in Mediobanca to 3.136 percent.
At the time, that move sparked speculation CariVerona was looking for leverage at Italy's leading insurer Assicurazioni Generali (GASI.MI), where Mediobanca is the top shareholder with a 15.6 percent stake.
For a FACTBOX on the two banks, double click on [ID:nL7580344]
(Reporting by Gianluca Semeraro, writing by Jo Winterbottom; editing by Elaine Hardcastle)
