Financial statements for the first half of 2017

THE BOARD OF DIRECTORS OF BANCA AKROS APPROVED THE RESULTS FOR THE FIRST HALF OF 2017

• Net income from banking activities was €34.8 million (€34.7 million as at 30 June 2016); Net profit amounted to €4.5 million (€4.1 million as at 30 June 2016, +9% approx.) Common Equity Tier 1 ratio was 22.5%
• 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 14.4%, and 4th on the Electronic Stock Exchange (MTA) of Borsa Italiana, with a share of 7% (Source: Assosim)
• The Bank participated in the share capital increase of Unicredit, as Co-Bookrunner, and in the IPO of Indel B, as Joint-Bookrunner, as well as in the placement of a bond issue of Atlantia and one of Iccrea Banca, as Joint-Lead Manager and Bookrunner; Banca Akros also participated, as Co-Dealer and market maker, in the placement of the eleventh issue of BTP-Italia. The 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, the assets under management amount to approximately €1.2 billion
• Activities aimed at concentrating the Banco BPM Group’s Corporate & Investment Banking activities at Banca Akros are underway, in accordance with the guidelines set out in the 2016-2019 Business Plan

Milan, 28 July 2017 – The Board of Directors of Banca Akros – the Investment bank and Private Banking of the Banco BPM Group, chaired by Graziano Tarantini and led by the Chief Executive Officer Marco Turrina – approved the results as at 30 June 2017.

 

“In a context characterised by an overall positive outlook for the main operating markets, despite the persistence of particularly low volatility, even in a multi-year historical comparison, the company’s management ensured the achievement of positive and growing profitability results and high levels of capitalisation and liquidity. During the period, the expansion of the range of products and services and commercial action with customers continued. The Bank is also committed to leading the “CIB integration work-site” aimed at concentrating the Group’s Corporate & Investment Banking activities at Banca Akros, in accordance with the guidelines set out in the 2016-2019 Business Plan”, commented Chief Executive Officer Marco Turrina.

 

The Bank achieved a net income from banking activities of approximately €34.8 million (€34.7 million in the first half of 2016). After recognition of an impairment loss of €1.8 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, net profit stood at approximately €4.5 million, an increase of around 9% compared to €4.1 million in the first half of 2016. As at 30 June 2017, the Common Equity Tier 1 ratio was 22.5% (18.6% as at 31 December 2016); the Leverage ratio was 13.6% (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; in May, the Bank participated, as Co-Dealer and market maker, on behalf of the Ministry of Economy and Finance, in the placement of the eleventh issue of BTP-Italia, expiring in 2023, on the Electronic Bond Exchange (MOT) of 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 Borsa Italiana (with a market share of 11.9% and 19%, respectively), 3rd on the EuroTLX market (with a market share of 16.5%), and 1st on the Hi-MTF market and on the ExtraMOT market (with a market share of 26.1% and 27.5%, respectively), also thanks to the contribution of SABE, the proprietary system for the automatic search for dynamic best execution in compliance with MiFID regulations
• was confirmed in 4th place on the Electronic Stock Exchange (MTA) of Borsa Italiana (with a market share of 7%), and ranked 4th on the ETF Plus market (with a market share of 5.9%) and 2nd on the SeDeX market (with a market share of 20.2%)
• ranked 3rd in options on the FTSE MIB index (with a market share of 5.6%)

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.

In the Equity Capital Market business, Banca Akros participated, as Co-Bookrunner, in the underwriting syndicate for the share capital increase of Unicredit of €13 billion, which was successfully concluded in February. The Bank also acted as Joint Bookrunner in the institutional offer for the listing of Indel B on the Electronic Stock Exchange (MTA) of Borsa Italiana and coordinated the takeover bids for Mediacontech, Best Union Company and Meridie.

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 as Joint Lead Manager and Bookrunner in the placement of a fixed-rate bond issue by Atlantia, expiring in 2025, for a total of €750 million, with institutional investors. In the Financial Institutions segment, Banca Akros participated, as Joint-Lead Manager and Bookrunner, in an institutional issue by Iccrea Banca, at a fixed rate and expiring in 2020, for a total of €600 million. The Bank participated in more than fourteen issues by leading Italian and foreign issuers, including the European Investment Bank (EIB) and the German KFW.

The 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) for an amount of €150 million, 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 administration amounted to approximately €1.2 billion at the end of the first half of the year.

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

The Parent Company sent to the Supervisory Authority the request for authorisation pursuant to Article 57 of the Italian Consolidated Law on Banking. Based on the timing envisaged for the issue of this authorisation, and also taking into account the additional deadlines established by the applicable rules on demergers, it is currently estimated that the two transactions may become legally effective in the first few months of 2018.