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The Timing Might Not Be Right… Yet

04 June 2018 by lberuti

Today marked the third day of recovery in Italian risk. The risk premia of ISPIM ( Intesa Sanpaolo SpA ) and UCGIM ( UniCredit SpA ) actually ended the session through their closing levels of Friday 25th May at 123bps and 116bps respectively. In fact, the latter got an extra kick today as it was reported in the press this morning that a possible merger between the Italian bank and SOCGEN ( Societe Generale SA ) could be under consideration. It is not a bolt from the blue, as a combination of these financial institutions, which ranked among European largests, has been a frequent topic of speculation in the past 10 years. If UCGIM’s CEO Mustier’s past career makes it even more credible, analysts were not entirely convinced. UCGIM is only half way through its 3-year restructuring plan. There are still plenty of unknowns regarding Italy’s new government. The political and regulatory backdrop would be a significant hurdle to come up with an attractive deal. Nevertheless, while UCGIM was the best performer in the financial sector, SOCGEN was one of only a handful of names that did not participate in today’s rally.