On the face of it, UniCredit’s purchase of Alpha Bank’s Romania business is primarily about Romania. Romania, indeed, is the most obvious country where UniCredit should be expanding via M&A. It is a relatively high growth and liberal country where UniCredit has a substantial if arguably subscale presence. But the bank has passed by other opportunities to grow via M&A in this market, notably a recent auction of Hungarian group OTP’s Romanian business.
UniCredit is paying €300 million in cash for Alpha’s Romanian operations, with the Greek bank retaining a 9% stake in its subsidiary. This will cost UniCredit only 15 basis points in capital, which is not much considering the bank is running with excess capital of more than 400bp. That will keep investors who are hungry for share buybacks and dividends satisfied.
Yet a corollary of the deal with Alpha will see UniCredit expand in a fellow southern European EU country, Greece – albeit for now only in life insurance and asset management. Even if Andrea Orcel has stepped back from the obvious scope to take M&A opportunities in Italy, this will placate those inside the bank who would like to see a more aggressive approach to growth.
