UniCredit Sets High M&A Bar After Calling off Russian Deal

UniCredit will continue to investigate prospective mergers and acquisitions after rejecting a Russian deal due to geopolitical risks, but it will stick to its goal to return billions of dollars to shareholders, according to Chief Executive Andrea Orcel.

On Friday, the Italian bank announced better-than-expected 2021 earnings, with higher income and lower costs, and said it will return 3.75 billion euros ($4.2 billion) to shareholders through dividends and share buybacks.

Orcel, who joined UniCredit in April after serving as the head of investment banking at Swiss lender UBS, is depending on aggressive capital distribution plans to boost the bank’s market value.

UniCredit’s shares trade at a discount to rivals, making it more difficult to use them as currency in a merger, albeit they have benefited since Orcel vowed to raise over 16 billion euros in capital by 2024 and return it to shareholders.

UniCredit shares have risen 19 per cent since Orcel announced his approach on Dec. 9, compared to a 9% rise in the larger European banking market as of Thursday.