Unione di Banche Italiane S.p.A. (ISP) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen, and welcome to the conference call of Intesa Sanpaolo for the presentation of the combination with UBI Banca hosted by Mr. Carlo Messina, Chief Executive Officer. My name is Cecilia, and I will be your coordinator for today's conference. [Operator Instructions] Today's conference is being recorded. At this time, I would like to hand the call over to Mr. Carlo Messina. Sir, you may begin.

So good morning. I'm here with Stefano Del Punta, our CFO; Paolo Grandi, our Chief Governance Officer and Head of M&A; and Stefano -- and Marco Delfrate and Andrea Tamagnini, Head of Investor Relations Officer. So we surprised you by launching a voluntary change offer on UBI Banca. That's for sure. But we considered this deal to be a unique opportunity to create an even stronger European leader that leverages a stronger Italian footprint. We believe this transaction will create value for all the stakeholders of both banks. But before I lay out in the rationale of this operation, let me underline who we are as ISP. We are one of European's most solid and profitable banking groups. Our group is the result of well-executed aggregation that has brought together the best of Italian banking sector. We have always welcomed new entities into our group with openness, and this has been our strength. This strength has also benefited our shareholders and stakeholders. We have supported the Italy's families and companies as one of the biggest lenders in Europe. We have protected and grown the savings of our clients even during Italy's crisis years. As one of Italy's leading employers, we have always protected jobs, and we have launched one of the most ambitious social impact programs. We did all of these while guaranteeing one of European's most generous cash dividend yields and while maintaining a rock-solid capital base. Now let me turn to today's announcement. Why have we decided to make this move? Because we are looking forward for future success. ISP has always been distinguished by its ability to look ahead. We show this in 2011 when before any other bank in Europe, we acted to significantly strengthen our capital base. That smart move allowed us to face the new normal requested by the ECB and led the foundation for a decade of strength that we enjoy today. Now European banking is moving into a new era, and the supervisor has been very clear on this point. Now we are moving into a new era. To be a leader in this next phase, you must bring together profitability, scale, investments and a focus on such a sustainable finance. So let's now turn to Slide 3 to discuss why we have chosen UBI Banca. UBI Banca is the best medium-sized bank in Italy, both in terms of balance sheet and its commitment to the real economy and sustainability. They are a smaller Intesa Sanpaolo. We want Italy's 2 best players to grow together and create a European leader in lending, wealth management and protection and in social and inclusive growth. UBI's CEO, so Victor Massiah, and management team have done an excellent job in creating a solid and well-run bank that is a perfect fit with Intesa Sanpaolo. Yesterday, UBI announced a new business plan, and I believe that Intesa Sanpaolo can be an enabling factor in achieving and exceeding those goals. And I would be happy for them to deliver the plan from inside Intesa Sanpaolo. It is important to note that UBI Banca and ISP have similar business models and share similar corporate culture and values. In fact, some of UBI's management are former ISP people. Just as we are, UBI Banca is strongly dedicated to supporting the Italian real economy, and they share the same strong commitment to sustainable and inclusive growth. The shared approach will facilitate integration into a combined group. Turning to the details of the transaction, let's now have a look on Slide 4 at industrial rationale. This transaction will strengthen our ability to create value for all stakeholders through the combination of 2 very strong banks. Execution risk is very low because UBI and ISP share similar corporate cultures and business model. Together, we can create additional value by easily, easily delivering cost revenue synergies. We estimate annual pretax synergies of about EUR 730 million with no social costs, with no social costs. The combination will support revenue growth by boosting our customer bases by minimum 3 million clients, mainly in the fast-growing Tripoli regions of Italy and consolidate our leadership in Italy. In Wealth Management, the combination will bring customer financial assets to over EUR 1.5 trillion, EUR 1.5 trillion of wealth management. The combined 2019 revenues of ISP and UBI come to around EUR 21 billion, and in 2022, we expect the combined entity to generate a net income exceeding EUR 6 billion. That puts us at the very top of euro's best banks. This finance will enable us to invest more in the areas that are strategic to future success, like digital innovation and employee training. We consider this to be conservative estimate. So I repeat, very conservative estimate. For instance, we do not consider any synergies from a lower cost of risk resulting from actions to reduce the NPL stock or from a lower cost of funding. This combination is earning per share accretive by around 70% versus ISP 2019 earning per share, and rewarding our shareholders with high and sustainable dividends will always remain a priority. That's why we are committing changing from payout ratio to a dividend per share of EUR 0.20 in 2020 and above EUR 0.20 in 2021. We will deliver this while maintaining a solid capital position and continuing to reduce NPLs at no cost to shareholders, including through the disposal of minimum EUR 4 billion portfolio of UBI's gross nonperforming loans in 2021 and reaching a gross NPL ratio of less than 4% according to the EBA definition. As you can see, this is a compelling value proposition for ISP and UBI shareholders. Please go to the next Slide, #5. This 5 -- this slide is really fundamental in the story of this transaction. All of the integration charges and all of the additional loan loss provisions to facilitate the minimum EUR 4 billion reduction in NPLs will be covered by the negative goodwill generated by the transaction. This means the combination is at no cost to shareholders. As usual in Intesa Sanpaolo history, 0 cost to shareholders. Also the combination will boost cost reduction and derisking beyond the ambitious targets we set in our 2018-2021 Business Plan. Lastly, please note that our common equity Tier 1 ratio will remain above 13%, in line with our 2021 Business Plan projection. Slide #6. We expect the combination to lead the substantial value creation, leveraging on our proven track record in managing aggregation, including the recent integration of the 2 Veneto banks that went very smoothly. We foresee strong synergies on both the revenue and cost sides, equal to about EUR 730 million pretax. More than 2/3 of this will come from cost synergies with a very conservative approach, about more than EUR 500 million net of the agreement with BPER Banca to sell branches and related asset and liabilities equivalent to about 5% of the 2019 combined cost base. Revenue synergies of about EUR 220 million will increase the amount of total synergies and will be equivalent to around 1% of the 2019 combined revenue base but, again, mainly deriving from Insurance business. The largest contribution comes from the full integration of the product factories with 0 execution risk. Let me repeat that our synergy estimates are based on a conservative outside-in analysis. The negative goodwill arising from the transaction would be utilized to cover around EUR 1.3 billion of pretax one-off integration costs, about EUR 880 million after taxes, fully expenses in 2020 and additional loan loss provision for the NPL reduction to the disposal of a EUR 4 billion portfolio of UBI's gross NPLs. Again, the execution risk is absolutely under control, very limited, and the operation can be done at no cost to shareholder. Slide 7. Let me stress that the transaction is an attractive value proposition for all stakeholders involved, both for UBI and for ISP. Shareholders will benefit from high and sustainable cash dividends while maintaining a solid capital base and further improving asset quality. The combined group can create additional value by enhancing revenue generation from an enlarged customer base and delivering synergy without adding any complexity to the organization. Clients will benefit from a group that we've been able to pump up an additional EUR 10 billion per year in credit to the real economy for the coming 3 years. We will also have unique client reach in all regions of Italy. The group's people will benefit from new professional development opportunities and an improved ability to attract and retain talent. Our strong commitment to supporting core business growth and generational change will be delivered at no social cost. Exit will all be on a voluntary basis, and we will hire one young worker for every 2 voluntary exits, so completely friends with trade unions that are and still remain fundamental for the relation of Intesa Sanpaolo. So we rely on trade unions. Broader society will benefit from our shared commitment to sustainable and inclusive growth. We are creating one of the leading impact banks. Let me also remind you that the dividends distributed by ISP to the banking foundations that currently make up part of our shareholding are, in turn, used by this foundation for social and cultural programs. The contribution that these foundations make represent more than half of total funds granted by all Italian banking foundations. Slide #8. I'm sure that as an analyst on this call, you are more interested in the synergies from the combination and the smart way in which we are able to do the operation at no cost to shareholders. But for me, one of the most important aspect of this combination is the opportunity to play an even greater role as the engine of Italy's sustainable and inclusive growth, so also demonstrating that, in Italy, it is possible to take decision and to have responsibility of decision and not to postpone decision as it is happening each day in our environment. The culture that UBI and ISP share also extends to each bank's emphasis on contributing to society. Together, we can do much more. And for the real economy, together, we will increase lending for Italy's families and companies by a massive EUR 30 billion over the next 3 years. So EUR 30 billion more credit, 3 years. For the green economy, we will add the EUR 10 billion to the EUR 50 billion that we have already announced to finance Italy's new grid deal. And our dedicated Circular Economy credit facility will grow by EUR 1 billion to a total of EUR 6 billion. Together, we will create one of the leading impact banks with a new unit dedicated to sustainability located in Brescia and Bergamo. We will increase the lending capacity of our Fund for Impact by EUR 250 million to EUR 1.5 billion. So this means that we will increase our ability to finance students, young mothers and all people that have difficulty in accessing to credit. Embedded in ISP current Business Plan are concrete actions to help those in need. These contributions in terms of meals, beds, clothing and medicines will increase significantly. And as I have mentioned already, we expect to hire 2,500 young people to promote generational change and support employment as in the expectation of the trade unions. So this, for me, is one of the most important results of the combination. So creating value for our shareholders, we will create significant value for our community and for Italy. That's fundamental for Intesa Sanpaolo, to be and to remain the Italian flag for the international investors and for the Italian community. Please go to Slide 10, transaction structure. ISP is proposing a voluntary public exchange offer on all ordinary shares of UBI at a ratio of 17 newly issued ordinary shares for 10 shares tendered, equivalent to an exchange ratio of 1.7. The total consideration is about EUR 4.9 billion. To preemptively address antitrust concerns, so to manage the antitrust, ISP has reached a binding agreement, so binding agreement, with BPER Banca to sell for cash around 400, 500 branches of the combined branch network and related assets and liability. So already done and closed. Furthermore, ISP has reached a binding agreement with UnipolSai to sell for cash the insurance activities of these branches. Already done and closed. The offer will be subject to ISP acquiring at least 66.67% of UBI Banca's share capital. We may waive this condition at our own discretion, provided that at least 50% plus one share of the capital UBI Banca is tendered. Now let's go to Slide 12. Here, you can see our assumed time line for the transaction. The offer period will take place in July. Please go to Slide 14. As part of the transaction, we are moving to address competition issues by selling from 400 to 500 branches and related asset and liabilities of the combined entity to BPER, and we will do this as soon as possible after the conclusion of the offer. A strengthening BPER Banca, that is a very good bank, will further benefit Italy's real economy more broadly. So creating and reinforcing a European champion with a strong Italian footprint between Intesa Sanpaolo and UBI and reinforcing a very good bank in Italy like BPER with a very good shareholder like Unipol. Let's now go to Slide 14 (sic) [ Slide 15 ]. Here, you can see the main financial metrics of the combined entity after the BPER Bank agreement. Let me draw your attention to the fact that, together, we'll have over EUR 1.1 trillion in customer financial assets, EUR 1.1 trillion in customer financial assets, one of the strongest in Europe by far. Slide #17. The combination not only creates an undisputed leader in Italy but will also boost our positioning in the top league of the European banking. As you can see in these rankings, we would significantly consolidate our #3 position in the Eurozone by market cap right below BNP Paribas and Santander. We would also jump to #7 in terms of revenue generation, up from being tied in the 10th place with ING. So we'll -- we will have more revenues in comparison with UniCredit, Credit Suisse, Crédit Agricole, and we will close to Deutsche Bank in terms of revenues. Slide #18. As you can see here, the combined group will reinforce ISP leadership in Italy across all the most attractive business segments with a market share in the region of 20% in loans, deposits, asset under management and life insurance. The combined footprint will provide unmatched customer reach. But through the largest domestic network and with the best branch footprint, it will give us a leading position in all regions and provinces, especially in the Tripoli north of Italy, which represent 56% of the Italian GDP. Slide #19, let's center into the synergies. You can see the details of the expected cost and revenue synergies. Again, we consider this to be really very conservative. The synergies are based on an outside-in analysis and do not take into account possible additional benefits from improvement in funding, product innovation, credit risk management and contingency on cost base. As I mentioned previously, all structuring costs are to be expensed in 2020 and will be covered by the negative goodwill from the transaction. Slide #20 will give you some color on the cost synergies, so Slide #20. You can see that the annual pretax cost synergies are expected to be around EUR 510 million with no social costs. Around EUR 340 million of this will come from personnel costs, and we are expecting 5,000 exits, all voluntary. We will leverage our execution experience as well as our good relations with the unions to ensure this goes smoothly. As I said, all exits would be voluntary, and we will hire one young person for each 2 voluntary exit. Again, I rely on our strong relation with the trade unions, and I want them to participate in the creation of this incredible champion. Savings in administrative expenses of around EUR 170 million are mainly related to improved operational efficiency of the combined entity, the integration of the 2 banks' ICT systems and the alignment of UBI to ISP best practices. Slide #21. Here, you can see that annual pretax revenue synergies are expected to be around EUR 220 million, net of the impact from overlaps in the 2 banks' customer base. Part of this benefit will come from our ability to align UBI's commercial proposition to ISP best practices and integrate the product factory, thereby optimizing their productivity. But the reality, the [Audio Gap] in casualty insurance and life insurance to be distributed by our very strong insurance franchise. Slide #22, credit quality. As I mentioned before, the combination will accelerate NPL deleveraging behind our Business Plan target and, again, at no cost to shareholders, thank to a smart use of negative goodwill from the transaction. And my expectation is that we can have much more benefit than what we are just looking in this slide. Slide #23, high and sustainable cash dividends while maintaining strong capital. For years, ISP has been a cash dividend machine. We have done this while maintaining a low risk profile, thanks to sound asset quality and a solid capital position and [indiscernible] [ lovers ] of dividends. Let me stress that this commitment will continue in the coming years. And in particular, we will distribute an expected dividend per share of EUR 0.20 for 2020 and more than EUR 0.20 per share for 2021. We will do this while maintaining a common equity Tier 1 ratio of more than 13%, in line with our Business Plan projections and without taking into consideration the lower requirement from capital optionality, as defined by Article 104a of CRD V, so changing our dividend policy from payout ratio into dividend into absolute terms. So we can't rely on a certain dividend for the next 2 years. Slide #24 -- 25, sorry, for final remarks. Let me conclude, highlighting that what I believe are the main points of today's announcement. First, the transaction will reinforce our leadership in Italy, an attractive own market. New scale will drive growth and deliver value that benefits all our stakeholders. Our customers will gain in the form of more lending and more competitive and innovative banking. Our people, and I mean both UBI and ISP, so for me, people now is the combination of the 2, will benefit from career opportunities as part of larger and stronger group while our shareholders will enjoy the reward of our growth plan through high and sustainable dividends. The transaction will also reinforce our standing in Europe, and European banking is moving into a new era that requires profitability, scale, investments and a focus on socially sustainable finance to emerge as a leader of this new phase, and we are the leader of the new phase. UBI Banca is the best medium-sized bank in Italy, both in terms of balance sheet and its commitment to the real economy and sustainability. And we want to bring together the 2 best player in Italy to ensure future growth. This will create a European leader in lending, wealth management and protection and in social and inclusive growth. We do all of this confident that there is a low level of execution risk. ISP and UBI have similar cultural -- corporate cultural and business model, and both banks have deep experience in managing integration projects. As the CEO, I will pay particular attention to this area and to motivation of people. So my strong commitment would be to motivate Intesa Sanpaolo people but also to motivate UBI people. The good news is that integration process will be made easier by the fact that UBI and ISP have highly talented and expert management team. Underpinning this for our shareholders is the fact that this deal makes solid financial sense. The synergies we can create are immediately value-enhancing, and the value that we create will reinforce our ability to invest and secure future dividend flows. And together, we are stronger. Together, we are stronger. And together, we have a potential for growth that is greater than had we remained apart. And with this combination, we can increase also the strength of Italy in Europe, creating a clear European leader with Italian footprint. Thank you for your time and attention, and I'm now happy to answer your question.

[Operator Instructions] We will now take our first question from Jean-Francois Neuez from Goldman Sachs.

Indeed, the Business Plan is very clear, and the combination seems to have low execution risk. Now the only question I wanted to ask is twofold. The first one is on your take on UBI's lack of response so far and what you plan to -- in terms of action in the coming days and weeks to seek feedback as well as whether the BPER and Unipol offers to sell assets will remain in place if UBI doesn't accept the deal. And my second question is you have talked about EUR 2 billion badwill. On my rough calculation, there was potentially, at this price, maybe EUR 3 billion of badwill. I just wanted to know what assumptions you used there. I think you hinted at some upside on badwill on the preprepared remarks. So any color there would be appreciated.

So just starting from the demand on BPER and Unipol. If we will not have an acquisition, we will not have any kind of disposal. So we have a binding agreement that is based on the acquisition of UBI. And that's also related to the badwill because a portion of the badwill will be used to finance the disposal to BPER Banca of the portion of branches, assets and the liabilities. So it is already embedded all the transaction with the BPER and Unipol. So it's a closed deal. So it's something that has to be only executed in case of positive results from the acquisition. So response so far, so it is clear that we have to wait. My approach is totally positive, totally positive towards the management, the shareholders, the people working in UBI because I'm just talking not only to the CEO and to the management team, but I'm talking to the 50,000 people working into UBI. That's my proposal to people. I'm able -- and I demonstrate these points in this organization. I'm able to motivate people. So my expectation is that as soon as this transaction can be completed, we will be in a position to consider them as part of our family without any kind of decision between Intesa Sanpaolo and UBI. We will be a unique group with unique values and with unique opportunities of careers within this organization. The only point is to deliver results because it's fundamental for us, so delivering results. And so delivering their business plan is a master because only delivering business plan, it is possible to create value for shareholders and to use a portion of this value in order to give also to the community in terms of corporate and social responsibility. That is the rule of the game of our group. It's the rule of the game of UBI group. And so that I'm ready completely to have the very positive approach toward these people that I am considering just from now people of a unique group, like my people.

We will now take our next question from Alberto Cordara from Bank of America.

Well, I have 2 questions. When I look at your press release and listen to you, you have been moving from a payout dividend to an absolute dividend level, which is an unusual step and also -- so what you did in the previous plan. And also -- so in connection with this and also in connection with the use of the badwill, my question is whether you have discussed this with the regulator, if this has been approved. If you can give us a bit of color about this. And another issue that we want to ask is that I'm noticing that you are planning to put EUR 1.8 billion of loan losses to increase coverage of the NPL of UBI. But based on the current level of the [ sovereigns ] or the NPLs, that means essentially that you're going to cover the [ sovereigns ] 100%. If you can help me to understand also this point.

So Alberto, as usual, you are really smart because that the reason why I'm talking about very conservative assumption because the -- with the provision, we will cover 100% all of the bad loans of UBI and more than 50% all they are likely to pay. So this means that we have unique opportunity also to extra cover Intesa Sanpaolo nonperforming loans and to make further disposal or recoveries in the future or very low level of provision for the futures. That is why I'm strongly relying on net income generation for the future. So that's my expectation. We can create a clear champion also in credit quality because the amount of provision is so significant that we can easily become one of the best player in Europe. Looking at the payout ratio and dividend. It is not casual that -- and it is not something that cannot be strange if the supervisor made such a strong emphasis in the last months looking for consolidation, and we move to have a consolidation. So it is unbelievable that a bank that is one of the best performer in Europe can do something without discussion with the supervisor. The change in the -- in this analysis of a payout ratio, a dividend is also related to the fact that from badwill, net income and all the transaction, the disposal of branches, you cannot rely on specific net income per year. So it's fundamental for us to give evidence to the market that we remain a payer of dividend, taking a commitment on an amount that is in cash dividend in absolute terms. And so we decided to move into dividend per share, and we are absolutely -- we can -- we think that we can be in a position to have a positive view from the supervisor. Obviously, supervisor will approve the transaction at the timing specified. So I cannot tell you that I have the signing approval of this transaction. But it is unbelievable to make a move like this, that is the starting point of consolidation in Europe with not a favorable approach from the supervisor. And believe me, I'm very proud of this because Italy is demonstrating that we can be first mover in Europe. So that's something that I think that in a country in which we are looking at a lot of uncertainty from a political point of view, there's a leader that move and try to become a leader in Europe, also taking tough decision and taking responsibility at the right timing.

This is very clear, and congratulation for the bold move.

We will now take our next question from Christian Carrese from Intermonte.

I had a question on the synergies coming on the revenue side. You specified in one slide that some of the synergies will come from the product integration of the product factories of UBI Banca. Can you elaborate a little bit on that issue? Because today, UBI has most of all of the product factories still in-house. And some assets, like also the custodian business, the acquiring business that you just sold, is going to -- to devaluate the real estate assets. There are some also -- apart from the product factories, has also some DTA that could be used by Intesa Sanpaolo. So I was wondering what is your -- what are your thoughts on those factories. You would be prepared to sell minorities or just to integrate into your network. And the second question is on dividend. You said that you changed the dividend policy, so now DPS instead of dividend payout. But you stated that you are expecting more than EUR 6 billion net profits in 2022. So in theory, you could've -- you could give still a payout guidance rather than a DPS guidance. So if you can elaborate a little bit.

So we can do all we want. We decided to give clear indication of cash dividend because I think that it is clear for investors that we can pay cash dividend, and that's finish of the story. For the future, we decided to give a clear indication that what we create to the merger of these 2 group is a champions in net income generation. There is no other group, apart from Santander and BNP Paribas, that can create such a net income in Europe. And also without considering 2021, if you put together net income of Intesa Sanpaolo, UBI and the synergies, you have the third net income generator in the Eurozone and probably the fourth in Europe. So in any case, we remain one of the strongest player at minus 40 basis points level of interest rates. So this means that we have a unique opportunity of rebound in the future in case of growth of interest rate. [indiscernible] is absolutely achievable. But talking about medium, long term, there's no need to give indication in terms of dividend. We will prepare the plan as usual, and then we will give all the indication. But considering that net income generation is for us something that will -- is achievable, and we will remain one of the top leader. And we want to remain within the 3 number, the 3 top player in Europe. So our scale in terms of net income, in terms of revenue generation, in terms of efficiency want to remain at the top level in Europe. So the first question is a combination of product factory, revaluation of assets, DTA, that I cannot understand what is the relation between synergies in this point, but I will try to elaborate on all the different items so you can have all my view on synergies...

In the sense of capital creation. So in theory, selling some product factories, you could boost capital further.

But there is no revenue synergies.

No. Sure.

So talking about revenues here, we have no intention to sell product factories. We are buyer of product factory. That's our business model. Other player are selling all the jewels in order to create condition to have extra capital and to put in a position to sell possible future payment or dividends. We have a completely different story. We buy product factories. We want to own 100% of product factories. That's the story with Intesa Sanpaolo and will remain the story with Intesa Sanpaolo. So we do not realize to any kind of disposal. DTA, we will see in the future when we'll prepare the Business Plan. On synergies coming from revenues, the majority of synergies is coming from Insurance business because we will increase by EUR 3 million the base of clients and the possibility to sell our insurance product to the combination of the UBI clients, and this will bring us a significant boost in terms of revenues in the next year.

We will now take our next question from Domenico Santoro from HSBC.

Well done actually for taking the courage. I do have a number of questions from the -- on the numbers per se. When I look at your core Tier 1 target, which is 13% in 2021 or 12% not including the DTA. I'm just wondering whether you have included here some regulatory headwinds for the next 2 years, not related to Intesa specifically because we know that DTA guidelines is limited, but more for UBI itself that has presented the plan yesterday. Because working out the numbers and also the potential cash-in that you're going to get from the sale of branches, I get a number which is much higher. So a bit more visibility on this would be helpful. And second, can you also explain us how did you work out the EUR 5 billion net profit for a target for 2022? I'm sure you give a look at the plan yesterday of UBI that presented a net profit target of EUR 650 million for the year. I just want to understand whether we should consider any double counting in terms of cost synergies that -- considering that they have presented also a head count reduction program of almost 2,000 people.

So [ note ] the accounting, the EUR 6 billion is coming from our inertial very conservative trend. They're very conservative trends, so below the -- what they have considered in the business plan, the consideration of the portion of synergies that will mature for 2022. So my expectation is that these figures is conservative in comparison with the business plan of UBI. But I'm not relying on figures that are not in my specific answer, giving figures to the market. So we take a conservative approach on these figures due to the information that we have today, but not making any double accounting with the business plan of UBI and not taking all their net income considered in their business plan. So looking at capital, we decided not to put the figures but to put a correlation with the original Business Plan, just to give it to the market that we are consistent with the original Business Plan. Our expectation is that figures can be much higher than our original expectation in the Business Plan. We have considered all the negative headwind and also some further conservative assumption. And so on capital, I'm pretty sure that we will over-deliver in the next futures.

So just a follow-up. That 5,000 people that will leave the bank, of which 1,000 you have been already very clear and you explained on the last call, they should, in a way, also include the one that UBI presented yesterday -- mentioned yesterday in the plan in reality. So the starting base is clear.

So in the 5,000 person that can leave on a voluntary basis, only on a voluntary basis can leave the organization are included 300 person of UBI already agreed with trade unions, the 100,000 that we have already agreed -- 1,000, sorry, 1,000 person that we have already agreed and all the others will enter looking at the potential that we have to exit in the group. So again, in my view is very conservative also this figure.

We will now take our next question from Giovanni Razzoli from Equita.

A couple of questions on my side. The first one is on the transaction with Unipol, where basically some are mistaking why you are buying the minorities of the life insurance product -- companies and selling them back to Unipol. I was wondering whether you can share with us whether the deal will have a material impact on your CET1, on the common equity one that you had indicated above 13% over the plan. And the second question, specific in qualification on the branch reduction of UBI. You're going to sell 400, 500 branches to BPER. UBI has planned 175 branch reduction as a part of the plan. I was wondering whether we can take the perimeter of the branches of UBI excluding those sold to BPER as the one that you are buying or whether we should assume an additional reduction. So we'd have an idea of perimeter of the assets sold and the contribution to the net profit.

So on branches, we will make an analysis related to the UBI branches on Intesa Sanpaolo branches. And on program of reduction of branches probably is based the one of UBI on overlapping that we have in some part of the group. By the end, we will make the synthesis of all these analyses. We will look at what is the position of the antitrust, and then we will decide the specific amount within the 140 and 50 --sorry, 100 branches and 500 branches, and we will decide what is the specific number and the specific branches that we would sell to BPER Banca. The main driver is the antitrust proposition because is a must for us. So it is not something that we want to do, but is a must. And it is the only way in which I decided we're entering to a transaction because I told in a clear way to the market in different occasion that Italy is the perfect environment for Intesa Sanpaolo, but we used to have a problem in term of antitrust. Through this agreement with BPER, we find a solution to the problem of antitrust and then we decide to create a transaction. But the number and the specific branches, we will analyze as soon as we have the full control of UBI. And then these 170 branches, we will analyze also in terms of overlap and we will decide. But it is something that we will evaluate in the future. Looking at Unipol, we will make disposal only of the Insurance parts of the business that is part of the 500 or 600, 500 or 600 branches network that we will give to BPER, and the impact should be more or less 10 basis points on our common equity ratio.

We will now go to our next question from Antonio Reale from Morgan Stanley.

I have 2 quick questions, please. First one, it's clear you've discussed this with the supervisor. However, how should we think about capital requirements for the combined entity? Also from your early exchanges with the SSM, could you just share your views on what the take is on M&A in general? I mean we all have our opinions. We hear the comments from Enria, but I would like to hear your thoughts as well on this, please. And the second question is given the nature of the deal, the financials and the industrial [ fleet ] we discussed, would you be willing to increase the price if needed to?

No intention to increase price. We think that this is really a fair price, a very good price for UBI shareholders, and we have no intention to change our condition. This is a project for creating a champion. This is a project for creating a leader in Italy. This is a project for our country. This is a project to create finally a position in which Italy can be a leader in Europe. If they wanted to be with us in this project, this condition, we are happy. Otherwise, we will be -- remain happy, again, delivering on our Business Plan on a standalone basis. Supervisor and my perception, they made clear statement on this point. So I think that Enria is being clear in the past. They are looking for consolidation. There's also in my view, a geopolitical matter. So Europe cannot be a player in the future within U.S.A. and China if there is no reinforcement in the banking sector. Consolidation is a priority, consolidation, but in any case, driven by synergies and safe and sound conditions. So in this transaction, we are considering to make significant disposal of nonperforming loans so we can create a much better position in comparison of the starting point. So reducing nonperforming loans can create much better conditions in Europe because create much better condition in Italy. And my perception is that they are looking for -- and I'm completely positive on this point and the reason why I decided to start as a first mover into -- in the European landscape, I think that consolidation is not a matter of cross-border of domestic. What is important from my side is -- from what I understood is to create champions that can improve conditions of environment and improve the safe and sound view of the European landscape. And so this move, I think, that's my perception, is completely in line with the expectation of the supervisor.

Sorry, on the capital requirements for the combined entity, I mean I understand your comments. How should we think about them going forward? Do you expect any changes?

Absolutely, no. I don't -- I have no expectation that can change. And the view is, in my view, positive.

We will now take our next question from Delphine Lee from JPMorgan.

Yes. Just 2 questions on my side, 2 quick ones. On the DTAs, I just wanted to know if you have factored in any DTA benefits in your guidance or whether you could have better DTA recognitions or benefits, either through CET1. Or would it be possible for you to book that in the P&L through a lower tax rate? I mean just wondering how we should think about the combined DTA stock that you would have and the consumption of that. The second question is on the restructuring charges, which add $1.3 billion pretax. It looks very high. It's well above the cost synergies. So I was just wondering if -- what's driving that basically.

So that's a good point, our restructuring charges and the driver is, as usual, to have contingency plan and to remain with areas in which we can surprise the market. On DTA benefit, no benefit on capital position. I cannot exclude that we can have benefit on economic, but we will see in the next future.

We will now take our next question from Andrea Vercellone from Exane.

Two questions. One is on indirectly revenue synergies. The other one is on the restructuring charge. On the revenue synergies, you stated that the bulk of it comes from, essentially, insurance and other product factories. I was just wondering since UBI has agreement on the P&C side, which are not yet expiring, and same on the asset management, when can you switch these things onto your platform? On the life insurance, it's clear. To me, it's not clear on the P&C and on the asset management. And partially linked to this, does the restructuring charge also factor in the cost of paying potentially x amount of penalties to break these agreements or is purely to send into early retirements employees, IT systems write-down and so on?

Sorry, I lost the second question. Sorry, could you repeat, please? Sorry.

I just wanted to know whether in the EUR 1.3 billion restructuring charge, you have also a possible cost that may associated in breaking existing joint venture agreements that UBI has or if those, if they were to occur, come on top.

So we made a very conservative assumption, so it is already embedded any kind of impact. We do not expect to have impact or significant impact from this side. The majority of the synergies related to the agreement is made between insurance, property and casualties. That is the area in which we are investing a lot. A significant portion of the agreement of UBI is expiring within 2020 and then also an acceleration in other portion of their business in which we are aligning the performance of their network to the performance of the network of Intesa Sanpaolo but, as I told you, is a marginal part. The majority is coming from synergy revenues on Insurance business in the portion of Insurance business that is expiring within 2020.

I will now hand the call back to Mr. Messina for final remarks

So thank you very much. I just can add that we think that this transaction can really create a champion. This transaction is not friendly in a technical word, and we had no possibility to do in a different way this kind of transaction due to insider and all the other points related to the way in which it is possible to make offer. But believe me, we think that the management team of UBI is a strong management team. Victor Massiah is a very good CEO. Letizia Moratti is a very strong Chairman with the right approach in terms of value of what we consider fundamental from an ESG point of view and from an impact banking point of view. We hope that they can consider from a friendly point of view this transaction. But again, I want to reaffirm that I'm also talking to people working into UBI, and I'm ready to consider from the first day of this transaction to be made together their people as my people and to give them significant opportunity to become leader within our group. So thank you very much.

Thank you. That will conclude today's conference call. Thank you for your participation. Ladies and gentlemen, you may now disconnect.