Approval of 2017 Draft Financial Statements

2017 Draft Financial Statements approved by the Akros BoD

 

• Net income from banking activities amounted to €58.1 million (€55.6 million as at 31 December 2016, +4%); net commissions increased to €26.1 million (€15.7 million as at 31 December 2016, +66%); profit from current operating activities before tax amounted to €12.1 million (€7.2 million as at 31 December 2016, +67%); net profit amounted to €8.1 million (€6 million as at 31 December 2016, +33%).

Common Equity Tier 1 ratio was 24.2% (18.6% as at 31 December 2016).

• Banca Akros confirmed its leading position in market making and in bond and equity brokerage, ranking 2nd in the list of brokers active on behalf of third parties on Italian bond markets, with a market share of 14.8%, and 4th on the Electronic Stock Exchange (MTA) of the Borsa Italiana, with its share increasing to 7.2% (Source: Assosim).

Coinciding with the entry into force of the Mifid II regulation, Banca Akros further developed its innovative offer of dynamic best execution services to institutional customers, with the introduction, alongside the consolidated SABE system for bond markets, of two systems dedicated to equity markets and ETFs.

• The Bank participated in the main equity and debt capital market transactions carried out in Italy during the year, consolidating its position as a key player in the SPAC (special purpose acquisition company) segment. Its Advisory activities include the role of Co-Arranger in the disposal of a €693 million portfolio of NPLs of the Parent Company (known as Project Rainbow).
• In Private Banking, assets under management amount to approximately €1.2 billion (+1% compared to 31 December 2016).
• It is expected that in 2018, the demerger of the Private Banking business in favour of Banca Aletti and of the Corporate & Investment Banking business from Banca Aletti in favour of Banca Akros will be completed, in accordance with the guidelines set out in the Banco BPM Group’s 2016-2019 Business Plan.

 

Milan, 6 February 2018 – The Board of Directors of Banca Akros – Investment bank and Private Banking of the Banco BPM Group, chaired by Graziano Tarantini and led by Chief Executive Officer Marco Turrina – approved the results as at 31 December 2017.

“The company’s management ensured positive income results were achieved, making progress compared to the 2016 financial year, and efficient use of regulatory capital, including through continuous development and innovation in the offer of products and services to customers, supported by the quality of human and technological capital employed. A reduction in operating costs was also obtained, as well as ensuring timely management and control of risks, in compliance with the guidelines formulated by the competent corporate bodies and the Parent Company. The prevailing conditions of particularly low volatility on the main financial markets, even in a historical comparison over a number of years, nevertheless conditioned the development of customer flows in trading, brokerage and Private Banking activities. However, the contribution of Investment Banking activities on primary equity and bond markets increased, thanks to participation in many stock market listing transactions and share capital increases for companies, advisory and fund raising activities in favour of SPAC, subscription and placement of bond issues, as well as advisory activities relating to the securitisation and sale of non-performing loans. In synergy with the Group’s commercial structures, Banca Akros intends to further develop the range of value-added services offered to customers, expanding the operations of Investment Banking alongside its traditional trading, market making, brokerage and financial risk hedging activities, particularly in order to facilitate customers’ access to capital markets and M&A transactions, for the consolidation and internalisation of Italian companies”, commented Chief Executive Officer Marco Turrina.

The Bank achieved a net income from banking activities of approximately €58.1 million (€55.6 million in 2016); net commissions increased to €26.1 million (€15.7 million as at 31 December 2016, +66%). After recognition of an impairment loss of €1.5 million – due to the estimated shorter useful life of the software as a result of the IT reorganisation of the Group to which it belongs – and the contribution paid to the Single Resolution Fund of €1.2 million, profit from continuing operations before tax reached €12.1 million, up by approximately 67% compared to €7.2 million in 2016. Net profit stood at around €8.1 million, up by approximately 33% compared to €6 million in 2016.

As at 31 December 2017, the Common Equity Tier 1 ratio was 24.2% (18.6% as at 31 December 2016); the Leverage ratio was 14.5% (11.1% as at 31 December 2016).

Market making and trading activities confirmed the positive contribution of trading in equity derivatives and government bonds, domestic bonds and Eurobonds. The Bank participated, as Co-Dealer and market maker, on behalf of the Ministry of the Economy and Finance, in the placement of the eleventh and twelfth issue of BTP-Italia expiring in May and November 2023, respectively, on the Electronic Bond Exchange (MOT) of the Borsa Italiana.  The development of trading in financial risk hedging and management instruments (interest rate, exchange rate and commodity) for institutional and corporate customers continued positively, also as part of joint coverage with the Parent Company, with special attention to the specific target represented by the Mid Corporate segment.

In brokerage on behalf of third parties (Source: Assosim) the Bank:

• Consolidated its presence in the bond markets, ranking 2nd in the list of brokers operating on behalf of third parties on Italian bond markets and, in particular, 4th on the DomesticMOT segment and 2nd on the EuroMOT segment of the Borsa Italiana (with a market share of 11.5% and 23.1%, respectively). The Bank was also ranked 3rd on the EuroTLX market (with a market share of 18.3%), and 1st on the Hi-MTF market and on the ExtraMOT market (with a market share of 25.2% and 29.7%, respectively).
• Ranked 4th on the Electronic Stock Exchange (MTA) of the Borsa Italiana (with a market share increasing to 7.2%), 1st on the SeDeX market (with a market share of 25.8%) and 4th on the ETF Plus market (with a market share of 5.6%).
• Ranked 3rd in options on the FTSE MIB index (with a market share of 8.8%).

The offer to customers of brokerage services on equity markets also relies on the activities of ESN – European Securities Network LLP, the European equity research and trading partnership set up by Banca Akros with seven other independent European investment banks active in their respective national markets, which provides broad corporate access to investors in individual countries, thanks to the coverage of approximately 600 listed companies by 90 analysts and 130 sales and traders.

Following the entry into force of the new regulations on financial markets set out in the MiFID II Directive on 3 January 2018, the Bank promptly adapted its commercial offer and service model to the new reference framework. In particular, an innovative offer of dynamic best execution services to institutional customers was further developed, with the introduction, alongside the consolidated SABE system for bond markets, of two electronic brokerage systems dedicated to equity and ETF markets.

In Equity Capital Market activities, Banca Akros participated as Co-Bookrunner in the underwriting syndicate for the share capital increase of Unicredit, and as Joint Global Coordinator in the share capital increase of Il Sole 24 Ore. Banka Akros also acted as Joint-Bookrunner in the institutional offer for the listing of Indel B on the Electronic Stock Exchange (MTA) of the Borsa Italiana, as Co-lead Manager in the offers for the listing of the bank DoBank and Banca Farmafactoring, as well as the Gamenet company, and as Co-Manager in the listing of Pirelli. Furthermore, the Bank coordinated the takeover bids for Mediacontech, Best Union Company, Meridie and Alerion, in which it also acted as financial advisor to the bidder. In the Special Purpose Acquisition Company (SPAC) sector, where the Bank has long consolidated its leading role in the market, with investors showing considerable interest during the period, Banca Akros acted as Global Coordinator and Joint Bookrunner in the placement of Industrial Stars of Italy 3 on the AIM Italia market, and as Joint Global Coordinator and Joint Bookrunner in that of IDeaMI.

In the Non Performing Loan sales segment, Banca Akros was Co-Arranger in the auction for a portfolio of €693 million of real estate bad loans (known as Project Rainbow) offered for sale by the Parent Company Banco BPM.

In the Debt Capital Market, the Bank participated in the placement of the following bond issues with institutional investors: as Co-Global Coordinator and Joint-Bookrunner in the issue of the Superstrada Pedemontana Veneta company, expiring in 2047; as Joint-Lead Manager and Bookrunner in two issues of the CMC Ravenna company, expiring in 2022 and 2023 and in two issues of the Atlantia company, expiring in 2025 and 2027; and as Joint-Lead Manager in an issue of the KOS company in two tranches, expiring in 2024 and 2025. As Joint Lead Manager, the Banka Akros also managed the private placement of a bond issued by Saras, expiring in 2022; as Co-Manager, participated in the issue of Esselunga in two tranches, expiring in 2023 and 2027; in the issue of Salini Impregilo, expiring in 2024; and in the issue of Nuovo Trasporto Viaggiatori, expiring in 2023. In the area of Financial Institutions, Banca Akros managed, as Joint-Lead Manager and Bookrunner, an institutional issue of Iccrea Banca expiring in 2020; as Joint Bookrunner, a Tier 2 subordinated issue of the Parent Company BancoBPM expiring in 2027; and, as Joint-Lead Manager in the area of securitisations, the Agos Ducato operation expiring in 2041. The Bank also participated in more than twenty issues by leading Italian and foreign issuers, including the European Investment Bank (EIB) and the German KFW.

Credit Advisory activity continued successfully in the Advisory activities, with Banca Akros involved in origination activities as part of the cooperation agreement signed with SACE (Cassa Depositi e Prestiti Group), in which Banca Akros acts as arranger, advisor and agent for loan operations with a warehouse guarantee and SACE as guarantor.

In Private Banking activity, carried out at the Milan offices and at the Rome and Turin branches, operations continued with the primary objective of monitoring customers and supporting their specific requirements, including in view of the planned demerger of the business unit in favour of Banca Aletti, in implementation of the Group’s 2016-2019 Business Plan. Total assets under management amounted to approximately €1.2 billion at the end of the financial year (+1% compared to 31 December 2016).

 

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Demerger operations approved in implementation of the Group’s 2016-2019 Business Plan

The guidelines of the 2016-2019 Strategic Plan of the Banco BPM Group envisaged the consolidation of Corporate & Investment Banking (CIB) activities at Banca Akros and, at the same time, the concentration of the Group’s private customers in Banca Aletti. Following the resolutions passed by the Board of Directors of Banco BPM in its meeting of 11 May 2017, as Parent Company, the Boards of Directors of Banca Aletti and Banca Akros, on 23 and 24 May 2017, respectively, approved two separate “partial” demerger projects involving the assignment:

• by Banca Aletti to Banca Akros, of the business unit comprised of assets and resources organised to carry out Corporate & Investment Banking activities
• by Banca Akros to Banca Aletti, of the business unit comprised of assets and resources organised to carry out Private Banking activities

Following the receipt of the authorisations pursuant to Article 57 of the Consolidated Law on Banking, the Extraordinary Shareholders’ Meetings of Banca Akros and Banca Aletti, on 20 and 21 November 2017, respectively, approved the aforementioned demerger plans. The Bank, having taken note of the positive progress of the preparatory activities for the above operations, and following consultation with the competent Bodies and Functions of the Parent Company, confirms, at this stage, the objective of implementing the demerger of the Private Banking business unit in favour of Banca Aletti on 1 April 2018 and that of the demerger of the Corporate & Investment Banking business unit in favour of Banca Akros on 1 July 2018.

Therefore, in view of the planned demerger of the Private Banking business unit to Banca Aletti, Banca Akros has applied IFRS5 in the preparation of its 2017 financial statements, classifying all balance sheet and income statement items relating to the demerged business unit under “Non-current assets and disposal groups held for sale” and “Liabilities associated with disposal groups held for sale” in the Balance Sheet and “Profit (loss) after tax on asset disposal groups held for sale” in the Income Statement.

Declaration of the Manager in charge of financial reporting

Luigi Lanzuolo, as Manager in charge of financial reporting, declares, pursuant to paragraph 2 of Article 154-bis of the Consolidated Law on Finance, that the accounting information contained in this press release corresponds to the records, books and accounting entries.

The 2017 financial statements will be made available within the terms of the law.