Intesa Suspends Dividend Payment, Pushes Ahead With UBI Takeover Bid -- Update

--Intesa Sanpaolo has decided to suspend its dividend payment for 2019 following a recommendation from the ECB

--The bank is planning a shareholders' meeting after Oct. 1 to consider the distribution of the originally planned dividend

--Intesa is pressing ahead with a takeover bid for UBI Banca

 
  By Pietro Lombardi 
 

Intesa Sanpaolo SpA has decided to suspend its dividend payment for 2019 following a recommendation from the European Central Bank, and will move forward on its bid for smaller rival Unione di Banche Italiane SpA.

The Italian bank said Tuesday that the payment of its proposed cash dividend for 2019--19.2 euro cents (21.4 U.S. cents) a share--would be suspended and its entire 2019 net profit allocated to reserves. A proposal in this direction will be presented to the shareholders at a meeting scheduled for April 27.

"As Italy and the whole world face an unprecedented emergency, we have decided to adopt the guidance of Supervisory Authorities," Chief Executive Carlo Messina said.

The decision follows similar steps taken by other European banks, including Italian rival UniCredit SpA, after the ECB asked the region's lenders not to pay dividends or buy back shares during the coronavirus pandemic.

The eurozone's central bank wants banks to boost their ability to absorb losses and support the economy as the eurozone braces for a sharp economic slowdown caused by the pandemic. For this reason, it asked banks not to pay dividends for 2019 and 2020 at least until Oct. 1, adding that lenders should also avoid buybacks.

Intesa also said it will press ahead with a takeover bid for UBI Banca it launched last month.

"We are convinced that the combination, in this extraordinary moment, assumes even greater strategic value and represents for UBI Banca an even more compelling prospect: strong capital, robust coverage of impaired loans, scale, diversification and investment capacity are now even more valuable," Mr. Messina said.

The capital increase related to the offer will also be part of the shareholders' meeting in April, it said.

The suspension of the dividend will further reinforce Intesa's capital, taking its core tier 1 capital ratio to 15.2% as of Dec. 31, up from 14.1%. Including some recent regulatory changes, the bank's excess capital would stand at around EUR19 billion.

However, it plans to convene a shareholders' meeting after Oct. 1 to distribute part of the reserves to shareholders by the end of the year. This will be subject to some conditions, namely "indications that will be given by the ECB in respect of this and the group's solid capital position being preserved in respect of the evolution of the context following the Covid-19 epidemic," it said.

"We do believe that the distribution of cash dividends by banks with high levels of capital--able to fulfill their role in supporting families and businesses even in complex circumstances--is important for retail shareholders and remains a crucial support to the charitable initiatives undertaken by the Italian banking foundations that make up a part of our shareholding," Mr. Messina said.

Write to Pietro Lombardi at [e-mail]

(END) Dow Jones Newswires

March 31, 2020 07:53 ET (11:53 GMT)

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