By Pamela Barbaglia
LONDON (Reuters) - Italy's UniCredit, is carrying out a feasibility study of its payments processing operations which involves sounding out potential buyers, sources familiar with the matter said.
UniCredit, which is facing investor discontent over its weak share price, stretched capital position and low profitability, is reviewing options for its payments business following a spate of deals in Italy for similar operations, they told Reuters.
The Italian lender began contemplating a sale of the business last year, the sources said on Friday, adding that the process remains at an early stage.
If it were to go ahead with a sale, UniCredit would need to carve out payment processing into a standalone platform.
And a final decision is not expected until after UniCredit has resolved questions over the future of 60-year-old chief executive Federico Ghizzoni, who some top shareholders want replaced.
The sources said UniCredit, which declined to comment, hopes to achieve a valuation similar to that rival Intesa SanPaolo got earlier this month when it sold its payments arm Setefi to a consortium of Advent, Bain Capital and Clessidra for 1 billion euros (0.77 billion pounds) on May 2.
With core earnings of about 40 million euros, UniCredit's payments business could be worth up to 500 million euros ($561 million) depending on the synergies that prospective bidders would extract, one of the sources said.
Intesa's Setefi was valued at more than 10 times its core earnings after drawing interest from several private equity funds including London-based CVC and Permira, which lost out to the consortium led by Advent and Bain.
The same private equity firms tried last year to secure control of Italian payments specialist Istituto Centrale delle Banche Popolari (ICBPI), later acquired by Setefi's new owners in June in a 2.15 billion euro deal.
INFORMAL TALKS
UniCredit has recently held informal talks with parties who bid for Setefi to test their appetite, the sources said.
The bank held off selling the unit last year because of wider management uncertainties over shoring up capital.
Ghizzoni has repeatedly said the bank has no plans for a capital increase.
The Milanese bank, whose transitional CET 1 ratio stands at 10.5 percent, against a minimum requirement of 10 percent set by the European Central Bank (ECB), is reviewing the sale of other assets to improve its capital position.
Reuters reported on Thursday that UniCredit was assessing the possibility of reducing some of its holdings, including trimming stakes in FinecoBank, Turkey's Yapi Kredi and Poland's Bank Pekao.
