Thank you, Alberto. Good morning, everyone. Thank you for attending this first presentation of Unicaja after merging with Liberbank. Before going into the presentation, I would like to inform you that we will be hosting a strategy day on December 10th, which I hope you can all attend. We will now review the main developments since the merger. Going to slide three. As you can see on the left-hand side, we keep making progress with the integration. The next important milestone for us is to close an agreement with the labor unions for the implementation of the transformation plan that we have been discussing. We expect to close this before year-end. I would like to emphasize a couple of other things. The first one on corporate governance is that right after the merger, we put in place the executive committee.
We have already approved all the remaining committees. The second one is on IT. We have been working for quite some time, and we have a detailed roadmap, which is well on track. The target for the core banking IT migration is second quarter of next year. Next slide shows the final merger adjustments in the purchase price allocation exercise. As you may well know, in this exercise, we accounted for all the assets and liabilities coming from Liberbank according to IFRS 3. I am not going to get into all the details, but you can see final valuation adjustments of EUR 994 million net of taxes. This is slightly above our initial number, mainly because of two reasons.
Wholesale assets and liabilities implied around EUR 90 million higher adjustment than initially expected. Nevertheless, this will have a positive impact on NII going forward. Credit provisions were around EUR 100 million higher after taking the most conservative approach from both entities on the different portfolios. This will allow us to enjoy a lower cost of risk going forward. We also have two additional adjustments that do not have an impact on capital. The first one is the cancellation of a macro hedge that is offset by another hedge, and the second one is the write-down of EUR 225 million of deferred tax assets and EUR 23 million of goodwill. Finally, as you can see on the bottom left of the slide, we still have some restructuring charges to account for in Q4 after we close the negotiations with the unions.
To summarize the slide, we currently hold a 13.6% CET1 fully loaded ratio without taking into account the final restructuring charges. This is a very comfortable capital position for a bank with our risk profile and especially after deploying capital in order to improve the profitability of the bank going forward. On slide five, we have an update on our cost synergies initiatives. On the top left of the slide, you can see that we are upgrading our expected cost synergies. We will obviously give you more detail in our strategic review, but initial analysis are going well, and we expect to be able to do a bit more than initially estimated. We are upgrading our target from around EUR 192 million to around EUR 210 million cost synergies in 2023.
On the bottom left of the slide, you can see a summary of the specific measures that have already been taken. The initiative related to the agreed level of absenteeism for employees coming from Liberbank will bring EUR 40 million of yearly savings and the intangible write-down, EUR 50 million. These two measures account for EUR 55 million of yearly savings already. On top of that, we have closed 153 branches since we announced the merger. This will also imply some savings as well. On the right-hand side, we show our estimated cost base for 2023. You can see we are looking at around EUR 770 million for the year 2023.
This would be around EUR 190 million lower than the combination of both banks in 2020, a circa 20% cost reduction. We expect an inflation cost and additional investments to be partially absorbed with business as usual savings initiatives. On slide six, we want to show you a few initiatives that we could consider quick wins as they could generate revenue synergies in the short term. On the left side of the slide, we are showing an opportunity based on the off-balance sheet business growing. We are confident we can generate additional EUR 80 million from this business by 2023. Regarding the asset allocation, current best internal practice portfolio is 30 basis points more profitable. Also, the internal best practice was able to improve profitability by more than 20 basis points in just two years.
If we are able to have a similar asset mix in the entire portfolio, we would improve around EUR 35 million per year. On top of that, on top of this asset mix, there is additional EUR 45 million we expect to generate just from achieving initial volume growth. Right now, we do not compare all that well with the sector in terms of penetration of mutual funds over total customer deposits. We are at around 13% when the sector is at 18%. We are assuming we can get closer to the sector average in the next couple of years, and that would mean additional EUR 45 million in fees. Another initiative, and a very clear one, is residential mortgages, which is a key product for us.
We do not have an estimated number here, but on the chart, you can see the loan book growth in the last three years from internal best practice. On the right-hand side, you can see how Unicaja new lending has gone up by 50% this quarter versus the same quarter last year. This is a very positive news for us in a difficult quarter with the summer and the integration taking place. We expect this momentum to continue. Lastly, a few other initiatives. This is public information. We currently have three agreements on the life insurance business. We are in negotiations to restructure that business, and we will keep you updated on the process. Also, the distribution agreement from Liberbank with Caser will start generating an additional EUR 6 million-EUR 8 million starting in 2023.
Finally, there is a couple of very important business, very important businesses where we know we can improve, by just working with our existing customer base of 4.5 million clients. These are payments and consumer lending. Payments has been evolving quite positively, and we expect this, to continue. In consumer lending, we aim to improve our footprint. The final slide on the merger is a recap about coverage levels. With the additional provisions from the PPA, we currently sit on a 72% NPL coverage ratio and 67% NPA coverage ratio. This, together with a conservative loan book, where around 75% is public sector and pure retail lending, will allow us to have a very low cost of risk of around 20 basis points in by 2023. Foreclosed assets coverage is at 62% now.
This is a very comfortable coverage level for us to speed up the disposal of our foreclosed assets. We expect the NPA ratio to be below 5% in 2023. Another drag for the sector in recent years has been legal charges, so we have also booked for provisions for these risks. Now, getting into the activity of the third quarter. Please keep in mind that this quarter includes just two months of Liberbank into Unicaja legal accounts. Although we have tried to normalize all the information backwards on a like-for-like basis to facilitate comparability. Business activity remains very strong. Our core two products, mutual funds and residential mortgages, keep delivering good YoY growth, even in a challenging quarter with the integration and the summer holidays.
Mutual funds are up 27% year-on-year, and we are gaining market share from the competition. Residential mortgage book is up 4% year-on-year, and the new lending in the quarter was 10% higher than the same quarter last year. On profitability, net interest income has suffered this quarter due to three reasons that we think are temporary. The first one is the repricing of the loan book to lower Euribor that is almost over. The second one is the lower contribution of the ALCO portfolio. The third one is the extra liquidity that came in this quarter, mainly deposits from the public sector. We are in the process to reverse these impacts.
We plan to continue deploying part of the liquidity into our growing loan book, transferring on-balance-sheet products to off-balance sheet, and lastly, reducing the negative carry we have on some deposits, charging negative rates to corporates and public sector at a larger extent. Regarding fees, there is some very good news. It is up 3.3% quarter-on-quarter and 22% in the year. This is a result of significant growth in mutual funds, residential mortgages, insurance, and payments. Asset quality is still going in the right direction. The final impact on COVID crisis seems to be less negative than initially expected. The current cost of risk in the quarter was 29 basis points, and as I pointed out, we are positively looking forward. Coverage levels, I have already commented.
After the PPA, you can see very comfortable levels both on NPLs and NPA. Finally, about capital, CET1 fully loaded ratio stands at 13.6%, pending of final restructuring charges. We have a very comfortable capital position for our risk profile, and we expect to keep generating capital organically. Brief ending note on dividends, our target is to distribute 50% of results. Now, Juan Pablo will review the business activity in this quarter in more detail. Thank you.
Thank you, Manuel. Let's start now with customer funds. You can see here a significant increase in public sector deposits in the quarter. This is explained by the reception of some NextGenerationEU funds. This had a cost on NII in this quarter, although this would be something transitory as those funds start moving to the different projects. Actually, we wanted to focus a little bit more on these institutional deposits on the right, and you can see that right now we've got EUR 21 billion, of which we are charging negative rates of 20 basis points on EUR 2.9 billion of them.
As commented, we are currently working on this deposit base, and we expect to charge negative rates on a higher amount deposits in the short term. Regarding off-balance sheet funds, they keep doing really well. They are up almost 13% versus last year, and the most profitable product right now are the mutual funds that are 27% up. Here we see a big opportunity going ahead, not only thanks to a better mix, as the CEO just commented, but also switching deposits and other less profitable off-balance sheet products into mutual funds. Next slide, we take a closer look to our mutual fund business. On the left side, you can see the AUMs evolution in the last four years.
We are growing at 7% compound growth rate, and this is accelerating during the last quarters. This compares to 20% growth over the same period of time of the best internal practice. Again, here, we see a big opportunity applying the best practice to a larger network. We will provide more and more details in December on our strategic review. On the top right, net inflows in the third Q shows that the integration is not distracting the network, the opposite here. On the bottom right, the most important part, our growth is translating into increased fees that grows above the increase of the AUMs.
Moving to the next slide, as it happens every third Q, there is an impact from the seasonality, together with the payback of EUR 700 million pension advancement, sorry. Going through the main portfolios, our corporate book is falling after a strong 2020, supported by the ICO loans. Mortgage stock keeps growing even in this quarter, and consumer is flat year-on-year, although this is already changing right now as we speak, with new production increasing thanks to pre-approved loans and top-up loans with existing customers are getting more traction. On the right-hand side, the breakdown of our portfolio in line with previous quarters, around 75% is pure retail and public sector.
Moving to the new mortgage is almost EUR 1 billion in the quarter, and this is 10% higher than third quarter last year. This is very good news as this was a challenging quarter and we have not lost commercial momentum in a competitive market, in a competitive quarter. It's also a great starting point to grow more, thanks to applying the best practice across the entire network, as commented. As always, we say mortgages are not only reflected in NII but also fee income as our usual cross-selling is over three additional products. Consumer lending is slightly below the same quarter last year.
As commented before, we are already seeing a change in the trend, and we expect in Q4 to show a better performance with new production growth at double digit for the year. Corporate lending has slowed down a little bit due to the extra liquidity coming from ICO loans, and ICO loans also affect the total new lending comparison. In the next slide, we show a little more detail on our two biggest portfolios. You can see the main KPIs of the residential mortgages. In terms of geographic exposure, we have a leadership position in our original regions, and we are also able to grow and generate good volumes in other big cities that we like, as it is the case of Madrid.
On the bottom of the slide, mortgage moratoriums have almost expired in full. On slide 16, before moving into the financial results, a quick look to our ESG focus. This is very important for us as we want to play a key role in the environmental issues we're facing. For instance, this quarter, we launched a green mortgage. This is just part of our sustainability action plan that integrates ESG in our business model. Now moving to the next slide, we start with the financial results. Here, probably we will comment more in detail in the next slide, so let me here just to highlight the main items. First, the NII decrease is something temporary, and we will reverse in the next quarters.
The main impacts are coming from the lower Euribor that is almost over, the restructuring of the ALCO and increasing excess liquidity. Fee income is performing really well, up 21% compared to the same quarter last year. Regarding OpEx, personal expenses, so already part of the synergy is coming from the exit of Liberbank employees on agreed leave. You can see next quarter the full savings from the more than 700 employees on agreed leave. Depreciation, you can already see almost EUR 3 million savings coming from two months lower amortizations on the back of Liberbank intangible write-downs. Credit impairments keep coming down. Regarding other profits or losses, we expect to be lower in the next quarters.
Now, going into a bit more detail in slide 19. On the left side, you can see Euribor is 14 basis points down compared to the same quarter last year. This is the main reason why customer spread is 6 basis points down quarter-over-quarter. On the right-hand side, we show the front book and back book of the total loan portfolio and our main book, the residential mortgage. You can see there the front book for the total portfolio is influenced by the yield of consumer lending, which, as we explained a few slides before, we expect to increase its relative weight on the loan book.
In the next slide, I will spend a bit more time here to show the quarterly evolution of the NII. We have three main impacts this quarter, which should be transitory. First one, if we talk about lending, here we have the impact from the repricing to the lower Euribor, which is almost over, and we could even start to see some positive repricing in the short term. As you can see, loan volumes continue to support the NII. All in all, we expect lending to increase its contribution to NII in the next quarters. Second block, the lower contribution of the ALCO portfolio as we restructure part of the portfolio in the integration process, and we have some liquidity to reinvest.
Third, the increase in liquidity in the quarter, mainly from the public sector deposits, cause a negative carry, and we expect this to revert in the short term. Finally, you can see the wholesale issuance have a positive impact of EUR 6 million in the quarter. This is thanks to lower interest rates, and this is a consequence of the PPA adjustments that we were commenting before. Moving now to the next slide, we can probably focus on the right. You can see banking fees, this is mainly payment and current account maintenance fees increased 25% during the first nine months of the year. Mutual funds are performing even better, 28%.
Insurance is also growing at double digits in the first nine months. All in all, fees are growing almost 20% during the first nine months of the year. In the next slide, talking about OpEx, we believe we are moving fast. Since the merger was announced, we have already closed 10% of the branch network, and the average number of employees decreased by 9%. As we explained before, this is already reflecting in our P&L, and it will be even more visible in the next quarter. We also expect to close an agreement with trade unions before year-end. Next slide, you can see cost of risk is normalizing.
As we have already seen, in the recurring cost of risk in the quarter is down to 29 basis points. Then we had a non-recurring impact of EUR 16 million. We will provide more and more detail in the strategic review presentation, but we wanted to share with you that our expectation is cost of risk to normalize at 20 basis points by 2023. As we have always commented, the strong coverage levels at top level among the listed banks, together with a conservative loan book with 70% of the exposure being mortgages and public sector make us comfortable with this guidance. Now I pass the word to Pablo.
Thank you, Pablo González. Let's move now to asset quality. On the top left-hand side, you can see the good evolution of NPL coverage that stands now at 72%. NPL entries were affected this quarter by a reclassification of a small portfolio. At the bottom, you can see that half of our NPLs are coming from mortgages. Following up on this, on the top right hand, you can see a bit more detail regarding the coverage ratios by portfolios. We believe it explains by itself, especially in portfolios with a strong collateral and low LGD, like the mortgage portfolio. Lastly, at the bottom, we show a comparison with the sector. You can see that we stand with lower NPLs, higher coverage, and as explained before, with more collateral than our peers. On the next slide, foreclosed assets were 1% down quarter-on-quarter.
Coverage ratio also increased significantly. This should support an acceleration of disposals going forward, which will have a reflection on P&L as we reduce the costs associated with these assets. Looking to NPAs altogether, our coverage stands at 67%. We think that it is interesting looking to the NPAs net of the coverage that reflects the coverage reinforcement and shows a net NPA ratio of 2.6%. As Manuel said at the beginning of the presentation, we expect the NPA ratio to be below 5% by 2023. Moving now to solvency. Let me explain the main movements in the bridge. First of all, the starting position is very strong, more than 16%, CET1 fully loaded. Then the PPA adjustments we saw at the beginning of the presentation that Manuel explained had a 178 basis point impact.
In addition to this, we generated DTAs from temporary difference that together with the impact on the thresholds had 82 basis points negative impact on capital. These are DTAs that will become capital thanks to the increase in profitability. Having said that, we also took a conservative approach and wrote off EUR 225 million of tax loss carry forward that were on balance sheet and were already deducted from capital. Next, the organic generation on the quarter was strong, 15 basis points. This continues to support our 50% payout dividend accrual that deducts 7 basis points from capital this quarter. All this brings CET1 fully loaded to 13.6%. This is the reported figure as of September twenty-first.
This figure still does not take into account the final restructuring charges which we will book once we close negotiation with the trade unions and we will inform you in due time. Very quickly on the next slide on solvency, we show the different capital ratios, and you can see we comply very comfortably with the SREP requirements. In December, we announced an issuance plan that will reinforce even more our capital ratios and allow us to comply with our MREL requirements. Moving to the next slide. You can see that the size of the fixed income portfolio have decreased in the last quarters. First, there were around EUR 3 billion maturities related to our so-called TLTRO portfolio. Then we have restructured the fixed income portfolio coming from Liberbank as the balance sheet and liquidity structure of the bank differ.
The size of the portfolio has decreased around EUR 7 billion during the last 12 months. This means we have the liquidity and room to invest. We are actually suffering the negative carry of that excess liquidity. As we commented in the second quarter results presentation, we believe the yields were too low and we were comfortable to pay that toll of the excess liquidity in the short term. I can tell you that we have started to reinvest part of that liquidity, and we are reinvesting at higher yields. Although in the fourth quarter, the ALCO contribution to NII will still be slightly lower than this quarter. Obviously, depending on how market evolves.
Another comment on the size of the portfolio is that we expect it to be lower than in the past as we allocate part of the excess liquidity to a growing lending book and off-balance sheet products. On liquidity, the message in the last slide is the strong liquidity position that we expect
To be more profitable and a bit more balanced in the future. On the right, we show capital market outstanding funding. These are mainly covered bonds and the EUR 600 million Tier 2 that we have issued. You can see the maturities, they are well spread in the next years, and coupons are relatively high. This is all from our side. Now we're ready for the Q&A. Alberto, please.
Thank you, Pablo. We have received many questions so far. We'll start on NII. Can we please explain the evolution in the quarter, and when should we expect to hit the bottom?
Yes, thank you, Alberto. I will take this one. We believe some of the impacts in the quarter are temporary. Actually we expect NII to reach the floor in the 4Q, probably a slight decrease versus 3Q, if any, and then start gradually recovering from that point. What we see going forward is that we can pull different levers. The first one is the loan book. This is the most important trigger that we have. As commented, lower Euribor is over, and this had a significant impact during the last quarters. Regarding volumes, we are very pleased with the performance of the network during the first two months of the merger.
Mortgage production increased by double digit. Consumer lending lagged a couple of months, but we are already seeing more activity. All in all, we expect volumes to grow and be more visible on NII. The second trigger are the customer resources that are causing a negative carry. Right now, as we commented, we got EUR 2.9 billion deposits, and this is charging negative rates, and this is a small part of our corporate and public sector deposits that amount to almost EUR 21 billion. We are reverting this already as we speak. We will charge to more deposits, and probably we could lose some of these deposits, but we are losing money.
With our liquidity position and loan to deposit ratio, that's not an issue. We also plan to accelerate the shift from on-balance sheet to off-balance sheet funds that will bring more fees. Lastly, the third block, the ALCO portfolio that had a lower contribution in the quarter. The size of the portfolio is smaller compared to March, as we have been waiting to reinvest the liquidity coming from the maturities and the sale of some bonds from the other bank that didn't fit in the current strategy of the bank. We prefer to wait, as yields were too low in the third Q. As Pablo already commented, we already started to invest part of that liquidity.
In any case, you should not expect the ALCO to go back to the same size as in the past, as we are planning to redeploy the cash with increasing customer loans. All in all, you can see these three big blocks that make us positive for the next quarters.
Thank you. Juan Pablo, a quick follow-up on that. You mentioned about corporate deposits. We've received a few questions. How much room do you think you have there?
Okay. Thank you, Alberto. Again, first, our liquidity position is very strong, so I guess that's the starting point here. We got EUR 9 billion deposits from public sector and EUR 12 billion deposits from corporates. This is almost EUR 21 billion together. We are only charging to 14% of these deposits, and we are charging a relatively low rate, 20 basis points. The good news is that we have room to improve here. Actually we are taking measures already that we expect to be visible in the 4Q. I guess there is a significant room. You can see we got the base, EUR 21 billion euros, and we are working on that.
We cannot be more specific right now, but this is something that you will see for sure in the Q4.
Okay. Now on fees, another good quarter we've seen. What to expect?
Okay. Thank you, Alberto. The trend here, you're right, is very positive, with fees increasing almost 20% in the first nine months. This is a combination of three main pillars. First one, the mutual funds. We already commented the performance so far. Also we see opportunities going forward. We commented already some of them as the change in the funds mix to more profitable ones across the entire network. Probably let me highlight one more that we will develop more in our strategic review. If we look to other off-balance sheet products like savings insurance, where we got almost EUR 5 billion AUMs, yield here is 20 basis points. This is four times less than the yield on mutual funds.
We have almost EUR 5 billion AUMs in pension plans, where the yield is 40 basis points. Here, actually, we are seeing some change in the fiscal regulation in Spain and reducing the incentives. If we are able also to switch part of the off-balance sheet less profitable products into mutual funds, we think this is an opportunity. As said, this is something that we will comment more in detail in December. Then the other pillar are payments that are doing very well and insurance, where we can see the trend in the accumulated nine months is doubly up.
Thank you, Juan Pablo. We have a couple more on NII. First, you said the ALCO portfolio might not get to the same volumes as in the past. Can you elaborate on your thoughts there?
Let me take this. We already commented that we have started reinvesting the liquidity coming from the maturities on the fixed income portfolio and the sales that we mentioned. But we also have a plan to switch part of the structural liquidity from the ALCO book to the lending, and to reduce our liquidity through the off-balance sheet products, improvement. Regarding the contribution, as we have already mentioned, in the short term, in the fourth quarter, we still see a slightly lower contribution to NII, although the delta will be lower than the one seen in the third quarter compared to the second quarter.
From that point, starting in the first quarter of 2022, if everything evolves as we expect, we can see an increased contribution from the ALCO portfolio. Just to give you some color, the actual interest rate exposure of the portfolio remains quite low at 2.5 of modified duration, which in this environment has been proven quite positive.
Thank you, Pablo. We have two quick ones. One, is there additional impact expected on EURIBOR? And the other one would be if you are going to meet the TLTRO benchmark. First on EURIBOR.
I think on the Euribor, we still have a positive sensitivity to the Euribor. Obviously, movement the first 50 basis point increase in interest rate will have an impact, positive impact of 10%, 10.6% once the balance sheet is fully repriced. Regarding the impact on the short term, obviously, we expect a minor impact in the fourth quarter because most of the impact has been already. We look at the forwards from the next year, they're an upward trend. We don't expect a significant impact on that.
Thank you, Pablo. Yeah, just quickly on the TLTRO three benchmark, do you expect that we'll fulfill the requirement?
We are very active in corporate lending, and we're confident that we will comply with the requirement to benefit from the lower funding cost for the following period.
Thank you, Pablo. Now moving to costs, can we explain a bit more on the decrease in the quarter and what to expect?
Okay, yes, regarding costs, this quarter, we can already see the first cost synergies after some early restructuring charges. As I said, we have EUR 8 million savings on personal costs coming from Liberbank's employees on agreed leave of absence that more than offset EUR 4 million non-recurrent savings from last year. We expect to see the full savings of the employees on agreed leave, EUR 10 million, in the fourth quarter. On top of that, depreciation decreased by EUR 25 million in the quarter due to the two months lower amortization of Liberbank's intangibles. It should decrease by another EUR 1 million in the fourth quarter.
Thank you, Manuel. Now moving to cost of risk, could we give some color on this quarter and we've given some guidance for 2023. Can you give your expectations as well?
Yeah. Thank you, Alberto. As we commented, the trend is going down, that's clear. But we cannot be more specific right now, and we will be more specific in December. But you can see our landing point. You can see in 2023, we expect cost of risk to be around 20 basis points.
Here probably, let me highlight again that we booked more than EUR 400 million of COVID provisions since the beginning of last year, which together with the EUR 300 million within the transaction adjustment, increased our coverage ratio to the highest level among the listed banks. Again, this high coverage together with the conservative profile of our loan book give us comfort on our guidance. Again, we will comment more in detail in December.
Thank you, Juan Pablo. A quick follow-up on cost of risk. After the PPA and the provisioning, do you expect to see any release in provisions?
Okay. As we have long discussed, and you said, we have a very high coverage ratio and low risk business model. Having said that, for the time being, we prefer to remain prudent, and we are not counting with the release of credit provisions. It's possible that in the future, we see lower cost of risk for a long period of time, but we don't expect to release credit provisions.
Thank you, Manuel. Let's move to asset quality now. The stock of NPLs has increased slightly in the quarter. Could you explain a bit what's behind that?
Let me take this. As I said, we have done some reclassification in the loan book, and that explains the NPLs growth in the quarter. They are basically subjective NPLs. During the year, the stock of NPL has decreased. Let me also highlight that around 25 of our total NPLs are subjective NPLs up to date on their installments, and another 15% are less than 90 days past due. Lastly, in terms of recoveries, in this quarter, we have good news, and close to 50% of the outflows were cash recoveries.
Thank you, Pablo. A quick follow-up on that one. Can you give us any color on when to expect the peak of NPLs?
Well, this is not an easy question, but as commented, the NPL entries remain low. Past due loans below 90 days remain at historical low levels, and our loan mix, mainly residential mortgages and public sector loans, allows us to be comfortable. We are comfortable, and we don't expect any change in the short term. To be more specific, let me wait for our strategic plan presentation in December.
Final one on asset quality again. Foreclosed assets, can you give us a bit of color on what to expect?
Well, the disposals in the quarter were EUR 66 million, which is 11% on annual basis of the stock. What we think is not bad for a third quarter with the summer holidays, but clearly, we are more ambitious in this potential disposals in the future. As you know, the third quarter is usually the weaker in terms of foreclosed assets disposals. We have been working on the combined portfolio for some time now, and at current coverage levels, we expect to accelerate the foreclosed assets disposals in the coming quarters.
Thank you, Pablo. Let's move to capital now. Could we just give a brief update on our capital stance and dividends for the future?
Regarding capital, as you know, we have a very comfortable situation. I think we expect not to have to achieve our target. In this sense, no news so far. Regarding dividends, I would like to emphasize two facts. The first one is that we are accruing a 50% payout on capital ratios during the first nine months. The second one is that in our merger presentation, we communicated that a 50% payout target was something we felt comfortable with. That continues to be our target. We have not decided yet the mix of the dividend payment, cash or share buybacks. As you know, in the recent past, both Liberbank and Cajamar paid cash and also did share buyback programs.
Thank you, Manuel. Another one on capital. This is regarding regulatory impacts. Do we expect any headwinds?
I think, as you all know, there has been some recent information on potential measures these past days from the European implementation of Basel III. It is still quite early to have a clear view on this, but we do not expect significant impact from Basel III. The main impact for Spain was expected to be operational risk, and initial readings point towards a quite benign implementation. We have just received, as you all know, the approval of our IRB models for the retail portfolio on the Unicaja side. As you all know, we still have some tailwinds here when we manage to migrate Liberbank's portfolios onto IRB.
Thank you, Pablo. Now just moving to some questions on the merger. Could you update us with how much restructuring costs are left?
Okay. As you already know, Liberbank booked EUR 143 million provision in Q2 corresponding to the full cost until retirement age of 726 employees that will generate savings for around EUR 40 million per year. Apart from that, in Q3, we have written down circa EUR 137 million of intangible assets coming from Liberbank. This will imply lower yearly depreciation costs in our P&L of around EUR 50 million. On top of that, in Q3, we also booked EUR 22 million of restructuring costs related to IT migration and the closure of branches. Now in Q4, we will book additional restructuring costs. As you can understand, we are right now in the middle of the negotiation with the trade unions, and we cannot provide more details.
The final amount and timing will be announced in due course.
Thank you, Manuel. Another one on the transaction. The PPA adjustments are a bit higher than initially announced. Can you explain a bit?
Yes. As I said during the presentation, there are several changes within the PPA. To summarize, I would point out three main changes. The first one is the valuation adjustments on the wholesale assets and liabilities that implied a EUR 156 million adjustment. This is EUR 90 million higher than initially expected, and we will recover them through higher NII in the future. The second one, we carried out an in-depth review taking the most conservative criteria of each of the banks, and also taking advantage of the strong capital position. We have provisioned around EUR 100 million more in credit and real estate assets, which will help us accelerate the normalization of cost of risk even faster.
The third block is about the impacts that have no impact in capital. The write-off, sorry, of EUR 23 million goodwill and EUR 17 million coming from the cancellation of our macro hedge that was offset with the cancellation of another macro hedge outside the PPA. The impact of this block will not have impact on capital nor in NII.
After the remaining cost, what do you expect? Do you have a target in terms of capital or any guidance you can give?
We maintain our target of CET1 fully loaded ratio of above 12.5%. As of right now and pending confirmation on final restructuring charges, we expect capital to be above that level. As I said, we are comfortable with that level. As you know, we are a bank with a retail model with around 70% of the loan book still under the standard model.
Manuel, in the presentation you gave some color on revenue synergies. Could you elaborate a bit more on that?
Yes. We are working on a deep strategic review that we will share with you in December with much more detail. So far we have some quick wins identified that some of them I mentioned in the presentation. For example, asset management business, and the impact of these quick wins. On top of that, we expect to generate additional revenue synergies, mainly from sharing best practice in mortgage business, insurance, and payments business. We have the know-how, we have the teams, and the most important thing, we have 4.5 million clients.
One final question on the transaction. Manuel, we have received many questions on our alliances. If you could please.
Yes. Regarding alliances on the insurance side, we are in open negotiations with our three partners. We expect to close it during the first half of 2022, and our main goal here is to maximize recurring revenues going forward. Regarding mutual funds, we have no exclusivity agreements, so we have flexibility to restructure in order to maximize the return from the asset management business. In this sense, we plan to continue improving with the support of our partners, increasing penetration, and getting closer to the benchmark in the sector.
Thank you, Manuel. That was the final question. The investor relations team is available to discuss any other questions. Thank you very much, and we hope to see you at our strategic review on December 10th.
Thank you.
Thank you.
Thank you.