(Alliance News) - Banco BPM Spa announced Friday that it has signed a binding term-sheet with Crédit Agricole Assurances SA for the establishment of a long-term strategic partnership in bancassurance in the non-life/protection sector.

The term-sheet envisages CAA's acquisition of a 65 percent stake in Banco BPM Assicurazioni and, subject to the bank's repurchase of the stake currently held by Cattolica Assicurazioni, a 65 percent stake in Vera Assicurazioni, which, in turn, holds 100 percent of Vera Protezione, and the establishment of a 20-year business partnership in the property/casualty/protection sector.

100% of the insurance companies is estimated at EUR400 million and for the purchase of 65% CAA will pay Banco BPM EUR260 million.

The sale price is subject to adjustment after due diligence and will be paid in cash on the closing date. In addition, earn-out and claw-back assumptions are envisaged depending on the achievement of the targets set by the parties and put and call options in the hands of CAA and Banco BPM, respectively, on the stakes to be sold.

The transaction will have a positive impact on Banco BPM's fully loaded adjusted CET1 ratio estimated at 13 bp1.

At the same time, Banco BPM will retain a significant pro-rata contribution from the expected profits of the insurance companies, as well as benefit from the commission flow from the commercial agreement.

"We are extremely pleased with the agreement reached with Crédit Agricole," said Giuseppe Castagna, CEO of Banco BPM. "The partnership with CAA will allow Banco BPM to leverage the industrial expertise of Europe's largest player in bancassurance. Thanks to this agreement, we have been able to fully exploit the potential of our Non-Life/Protection sector, building on the positive experience gained in a success story such as Agos."

The term-sheet provides for the subsequent signing of the final agreements on the sale of the stakes in the insurance companies and commercial agreements with the aim of reaching the closing of the transaction indicatively by the end of 2023.

The closing is subject, as is customary for this type of transaction, to a due diligence phase, the approval of the relevant supervisory authorities and the repurchase of the stake in Vera Assicurazioni as a result of Banco BPM exercising its call option on Cattolica Assicurazioni.

Banco BPM's stock trades in the red by 0.4 percent at EUR3.35 per share.

By Chiara Bruschi, Alliance News reporter

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