Italy's biggest bank by holdings, UniCredit, said Monday it was going to cash in 3.86 billion euros (4.1 billion dollars) from the sale of its asset management firm, Pioneer, to France' Amundi, in a deal announced on the eve of a major restructuring plan.
On Tuesday, UniCredit is expected to present a recapitalization plan worth up to 13 billion euros, needed to cover expected losses on bad loans on its books. Asset sales help reduce the amount of money the bank would have to raise on capital markets.
In a statement, the lender said Amundi was going to pay 3.545 billion euros for Pioneer. In addition, UniCredit was due to receive a 315-million-euro extraordinary dividend from its subsidiary prior to its sale.
UniCredit is bolstering its capital after a near-fail mark in recent banking stress tests. Its CET 1 figure - a key index of financial strength that compares the bank's holdings to debt - stands at 10.8 per cent, against an industry standard of around 13 per cent.
The Italian lender - which owns Germany's HypoVereinsbank - said the Pioneer sale was going to result in a net capital gain of 2.2 billion euros in 2017, which would raise its CET 1 ratio by 0.78 percentage points.
UniCredit, steered by French chief executive Jean-Pierre Mustier since July, completed other sell-offs this year, including last week's divestment of Polish bank Pekao, due to raise at least 2.4 billion euros.
The bank is looking to shore itself up at a time when one of its Italian peers, Monte dei Paschi di Siena, is expected to require state help to recapitalize. Mustier has said he is confident that UniCredit was not going to need any form of public support.