Financials & FinTech research, Galliano’s Financials Research

Victor Galliano

Financials & FinTech research

Financials & FinTech, EM & Developed Markets

Galliano’s Financials Research

Galliano's Financials Research provides fundamental research in Emerging Markets financials, including FinTech, as well as financials in select Developed Markets.

The investment style applied is generally value oriented, although Growth At Reasonable Price (GARP) strategies can also be used where appropriate. 

Our investment research approach aim is often contrarian, looking to capitalise on overly sceptical or optimistic consensus views. In terms of valuation techniques, the focus is on PBV ratio to ROE, PE multiples and dividend yield, as well as the application of PEG ratios and, where appropriate, Sum of the Parts (SOTP) valuations.

Thematic (Sector/Industry)

<ul>
<li>Italian, and other Southern Europe, sovereign bond spreads continue to narrow as the market expects further stimulus measures from the ECB to be announced on the 25<sup>th</sup> July</li>
<li>Italian banks have big exposures to domestic sovereign bonds, which should be supportive of capital ratios in the near term</li>
<li>We do not expect the rosy scenario on tightening sovereign bond spreads to continue over the medium term; we see a real risk of more political confrontations between Rome and Brussels and of increased conflict within the Italian coalition itself</li>
<li>Based on CET1 ratios, we see <a href="https://www.smartkarma.com/entities/unicredit-spa" target="_blank" data-smartkarma-citation="entities:21234:1" rel="noopener">UniCredit SpA (UCG IM)</a> and <a href="https://www.smartkarma.com/entities/intesa-sanpaolo-spa" target="_blank" data-smartkarma-citation="entities:21200:1" rel="noopener">Intesa Sanpaolo (ISP IM)</a> as best positioned to absorb a widening of sovereign spreads over the medium term</li>
<li>Italian banks are out-of-favour, deep value stocks, and we recognise that Eurozone banks generally are challenged by the negative interest rate climate</li>
<li>Still, we believe that <a href="https://www.smartkarma.com/entities/unicredit-spa" target="_blank" data-smartkarma-citation="entities:21234:1" rel="noopener">UniCredit SpA (UCG IM)</a> stands out among the Italian and European banks</li>
</ul>


Italian, and other Southern Europe, sovereign bond spreads continue to narrow as the market expects further stimulus measures from the ECB to be announced on the 25th July
Italian banks have big exposures to domestic sovereign bonds, which should be supportive of capital ratios in the near term
We do not expect the rosy scenario on tightening sovereign bond spreads to continue over the medium term; we see a real risk of more political confrontations between Rome and Brussels and of increased conflict within the Italian coalition itself
Based on CET1 ratios, we see UniCredit SpA (UCG IM) and Intesa Sanpaolo (ISP IM) as best positioned to absorb a widening of sovereign spreads over the medium term
Italian banks are out-of-favour, deep value stocks, and we recognise that Eurozone banks generally are challenged by the negative interest rate climate
Still, we believe that UniCredit SpA (UCG IM) stands out among the Italian and European banks


Italian Banks - Sovereign Bond Risks at Bay for Now, Reveal a Good Value Equity Opportunity

Event-Driven

<ul class="">
<li>The Italian bank system’s lack of concentration makes it, on paper at least, ripe for M&amp;A consolidation, and open to cross-border M&amp;A</li>
<li>The reality is, we believe, more complicated; Italian banks, exposed to the “triple jeopardy” of challenges, are viewed with caution by other Eurozone banks</li>
<li>Prospective Italian banking M&amp;A activity has more recently been domestic, due largely to Italian-specific challenges, which have acted as “poison pills”, and are still a drag on bank M&amp;A domestically</li>
<li>Investors are concerned that intra-Italian bank M&amp;A results in a “dilution” of returns, balance sheet erosion and credit risk concentration; this flies in the face of ongoing de-risking of balance sheets, that are still a work in progress</li>
<li>In the Italian bank M&amp;A map, we see, in general terms, that <a href="https://www.smartkarma.com/entities/intesa-sanpaolo-spa" target="_blank" data-smartkarma-citation="entities:21200:1">Intesa Sanpaolo (ISP IM)</a> and <a href="https://www.smartkarma.com/entities/unicredit-spa" target="_blank" data-smartkarma-citation="entities:21234:1">UniCredit SpA (UCG IM)</a> are the potential acquirers; <a href="https://www.smartkarma.com/entities/unione-di-banche-italiane-spa" target="_blank" data-smartkarma-citation="entities:21233:1">Unione Di Banche Italiane (UBI IM)</a>, <a href="https://www.smartkarma.com/entities/banco-bpm-spa" target="_blank" data-smartkarma-citation="entities:28121:1">Banco BPM SpA (BAMI IM)</a> and <a href="https://www.smartkarma.com/entities/banca-popolare-dell-emilia-rom" target="_blank" data-smartkarma-citation="entities:21165:1">Banca Popolare Dell'Emilia Rom (BPE IM)</a> are both potential acquirers of smaller banks and possible targets or merger candidates; <a href="https://www.smartkarma.com/entities/banca-monte-dei-paschi-di-sien" target="_blank" data-smartkarma-citation="entities:21162:1">Banca Monte Dei Paschi Di Sien (BMPS IM)</a> is in consolidation limbo, government-controlled and with yet more de-risking to do; <a href="https://www.smartkarma.com/entities/banca-carige-spa" target="_blank" data-smartkarma-citation="entities:21174:1">Banca Carige (CRG IM)</a> and <a href="https://www.smartkarma.com/entities/credito-valtellinese-sc" target="_blank" data-smartkarma-citation="entities:21175:1">Credito Valtellinese Sc (CVAL IM)</a> are, we believe, confined to being acquisition targets for banks with high risk appetites</li>
<li>Italian bank stock valuations are, in our view, driven by the challenged domestic macro-economic and political outlook; yet we would highlight, for the longer term, <a href="https://www.smartkarma.com/entities/unicredit-spa" target="_blank" data-smartkarma-citation="entities:21234:1">UniCredit SpA (UCG IM)</a><strong> </strong>as the quality name with an attractive dividend yield and higher payout potential, with <a href="https://www.smartkarma.com/entities/unione-di-banche-italiane-spa" target="_blank" data-smartkarma-citation="entities:21233:1">Unione Di Banche Italiane (UBI IM)</a> and <a href="https://www.smartkarma.com/entities/banco-bpm-spa" target="_blank" data-smartkarma-citation="entities:28121:1">Banco BPM SpA (BAMI IM)</a> as the higher risk, deep value stock picks</li>
</ul>


The Italian bank system’s lack of concentration makes it, on paper at least, ripe for M&amp;A consolidation, and open to cross-border M&amp;A
The reality is, we believe, more complicated; Italian banks, exposed to the “triple jeopardy” of challenges, are viewed with caution by other Eurozone banks
Prospective Italian banking M&amp;A activity has more recently been domestic, due largely to Italian-specific challenges, which have acted as “poison pills”, and are still a drag on bank M&amp;A domestically
Investors are concerned that intra-Italian bank M&amp;A results in a “dilution” of returns, balance sheet erosion and credit risk concentration; this flies in the face of ongoing de-risking of balance sheets, that are still a work in progress
In the Italian bank M&amp;A map, we see, in general terms, that Intesa Sanpaolo (ISP IM) and UniCredit SpA (UCG IM) are the potential acquirers; Unione Di Banche Italiane (UBI IM), Banco BPM SpA (BAMI IM) and Banca Popolare Dell'Emilia Rom (BPE IM) are both potential acquirers of smaller banks and possible targets or merger candidates; Banca Monte Dei Paschi Di Sien (BMPS IM) is in consolidation limbo, government-controlled and with yet more de-risking to do; Banca Carige (CRG IM) and Credito Valtellinese Sc (CVAL IM) are, we believe, confined to being acquisition targets for banks with high risk appetites
Italian bank stock valuations are, in our view, driven by the challenged domestic macro-economic and political outlook; yet we would highlight, for the longer term, UniCredit SpA (UCG IM) as the quality name with an attractive dividend yield and higher payout potential, with Unione Di Banche Italiane (UBI IM) and Banco BPM SpA (BAMI IM) as the higher risk, deep value stock picks


Italian Banks M&A - The Complex Italian Job

Italy

Banco BPM S.p.A. operates as a bank. The Bank offers private and corporate banking, loans, e-banking, investment, and other related services. Banco BPM serves customers in Italy.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Banco BPM SpA (BAMI IM)

Italian Banks - Sovereign Bond Risks at Bay for Now, Reveal a Good Value Equity Opportunity

Italian, and other Southern Europe, sovereign bond spreads continue to narrow as the market expects further stimulus measures from the ECB to be...

Victor Galliano

Italian Banks M&A - The Complex Italian Job

The Italian bank system’s lack of concentration makes it, on paper at least, ripe for M&A consolidation, and open to cross-border M&A The...

Victor Galliano

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)