April 27, 2018 / 9:27 AM / a month ago

Moneta Money Bank shareholder seeks dividend cap, M&A drive

PRAGUE, April 27 (Reuters) - Moneta Money Bank shareholder Petrus Advisers is calling for the Czech lender to cap its dividend payouts at 70 percent of net profit and pursue acquisitions in central Europe.

In a letter to the Czech bank, Petrus Advisers said acquisitions should be a strategic fit with Moneta’s business and earn a premium above the cost of capital of more than 150 basis points.

“In coming years, we recommend the dividend policy be changed so no more than 70 percent of net profit is paid out,” London-based Petrus Advisers said. “The remainder should be preserved for profitable growth, or distributed in alternative ways.”

“We want you to concentrate on the Czech market with the potential to expand your well-managed existing business lines to other markets in the region,” it added.

The shareholder said it would put a proposal forward at the next general meeting.

Its managing partner Klaus Umek said in a phone interview the fund was starting to seek other shareholders’ support. He said the dividend would stay high but be more sustainable.

“We have seen the telecoms industry, we have seen UK builders and so many industries where people overpay (dividends) and then suddenly can’t ... and the stock falls into oblivion,” he said, adding part of shareholder remuneration could “ideally” include share buybacks.

Moneta has a 100 percent free float and no dominant shareholder. Petrus Advisers holds 2.3 percent, Umek said.

Moneta, the sixth largest Czech bank which debuted on the Prague bourse in 2016, has been paying shareholders an increased dividend to bring down excess capital - most recently proposing a payout of 104 percent of 2017 earnings. It is also monitoring for potential acquisitions.

Petrus Advisers said in the April 24 letter the bank should be allowed to issue up to 25 percent of common shares over a three-year horizon to finance acquisitions.

Moneta held its annual general meeting on April 25. The bank said in a statement releasing the shareholder letter that management would discuss Petrus Advisers’ proposals and respond within 30 days. (Reporting by Jason Hovet; Editing by Mark Potter)

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