MILAN Italy's Banca Popolare di Milano (BPM) (PMII.MI) is targeting a tenfold increase in its net profit over the next three years, as it pledges to give institutional investors greater voice in long-awaited governance changes that also preserve its cooperative nature.
BPM, one of 15 Italian banks under scrutiny by the European Central Bank in a Europe-wide check up of the sector, posted on Tuesday a 2013 net profit of 29.6 million euros ($41 million). Under a new business plans it sees that rising to 295 million euros in 2016.
Analysts had expected the bank to post a net profit of 52.8 million euros last year, according to a Thomson Reuters SmartEstimate.
The bank is aiming to launch a 500 million euro capital increase after reimbursing in June state aid for a corresponding amount.
BPM said the pre-underwriting contract with banks guaranteeing the share sale had been modified and was no longer subject to preliminary approval of the governance changes by the Bank of Italy and shareholders.
The Bank of Italy has asked BPM to reform its governance in order to increase investor control over management and give shareholders more influence based on the size of their stakes.
The bank said the capital increase would bring its core tier 1 ratio to 8.38 percent from 7.21 percent at end-2013. Once the Bank of Italy removes additional risk-weighting it has imposed on BPM because of the governance issues, the core capital ratio should rise to 10.35 percent.
BPM targets a Common Equity Tier 1 ratio of 12 percent in 2016.
($1 = 0.7212 euros)
(Reporting by Valentina Za; editing by Agnieszka Flak)