BNP Paribas on Tuesday extended its reach outside France when it agreed to take full ownership of Italy’s second-largest consumer finance house in a deal with Intesa Sanpaolo worth up to €1.15bn ($1.66bn).
The French group, which earlier this year became the eurozone’s largest bank by deposits when it took over Fortis of Belgium, said it would increase its stake in Findomestic from 50 per cent to 75 per cent this year for €500m.
It said it would complete the transaction by 2013 in a second stage worth between €350m-€650m.
The deal strengthens BNP Paribas’ presence in Italy, turning it into a fully integrated bank incorporating Banca Nazionale del Lavoro, which it bought in 2006.
Intesa said it would use some of the deal proceeds to strengthen its core tier one ratio, a measure of financial strength, which at 7 per cent is at the lower end of the scale for European banks.
BNP Paribas, which has proved to be one of Europe’s most resilient banks during the financial crisis, announced the take-over of Findomestic as it unveiled higher-than-expected net profits of €1.6bn, directly benefiting from its takeover of Fortis and a surge in revenues from its equity business.
The group posted a 6.6 per cent increase in net profits in the second quarter over the same period last year and a 3 per cent increase over the first three months of the year.
Net profit was boosted by a €261m contribution from Fortis, consolidated for six weeks to the end of June, and by a goodwill gain from the Belgian bank of €815m, partly offset by writedowns elsewhere.
Second-quarter group revenues of €9.99bn were up 32.9 per cent on the same period last year and 5.4 per cent ahead of the first three months of the year.
BNP Paribas’ tier one capital ratio stood at 9.3 per cent at the end of June, a rise of 50 basis points in three months on the back of two profitable quarters.
Baudouin Prot, chief executive, said the group was “extremely solid”.
BNP Paribas failed to repeat a bumper first quarter in its corporate and investment division as rivals moved back into the fixed income market.
The drop in fixed income revenues was offset by a return of BNP Paribas’ equity and advisory business.
Provisions for bad loans rose to €2.35bn, up from €1.83bn in the first quarter, with the cost of risk increasing particularly in its personal finance activities and in UkrSibbank, its Ukrainian operation.
Credit costs in BancWest, the group’s Californian retail operation, appear to be stabilising.
Intesa and BNP had been engaged in a dispute over control of Findomestic and its value dating back to the end of 2007, and had to go to arbitration to agree a value for the business.
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