Good morning to every one of you. I'm very grateful that you've been able to be available with such a short notice for this meeting this morning. I want to start by saying that I am here with Philippe Brassac and Xavier Musca, and that Giampiero Maioli, the Chief Executive Officer of Crédit Agricole Italia and the senior country officer of the group in Italy, is also on the line and will help me to make this presentation. Let me start by saying that today we want to present an initiative that we have decided to launch this morning, which is the acquisition of Creval by Crédit Agricole Italia. In a nutshell, this operation that we have announced will significantly enhance Crédit Agricole Italia footprint in the retail banking activities in Italy by the addition of a very attractive and robust retail network, well-located in Italy.
This operation, in our analysis, will provide a significant value for all the stakeholders involved. It's going to be the case definitely for Credito Valtellinese customers, that will benefit from the very wide product offer of Crédit Agricole group. It's going to be the case for Credito Valtellinese staff, that will benefit from enhanced career prospect in the whole Crédit Agricole group in Italy. It's going to be the case for Credito Valtellinese shareholders, that will benefit from an attractive price. It's definitely going to be the case for Crédit Agricole Italia shareholders, benefiting from this enhancement of the network, and benefiting from a return on the investment that we consider that will meet our traditional criteria of being above 10% after three years. Last point, it's an operation that is, again, in our analysis, an operation that will be quite securely integrated in our setup in Italy.
Definitely, Crédit Agricole Italia has a proven track record in terms of successful integration of different networks. Again, in 2017, 2018, with the three small regional banks that were acquired at the same time and perfectly integrated in the meanwhile. Let me now hand over the floor to Giampiero Maioli, who will present our activities in Italy and the strategic rationale of the operation that we are announcing today. I will, after that, present in more detail the operation that we consider launching. Giampiero, if you hear me, it's now up to you.
Thank you. Thank you, Jérôme. I prefer to introduce you in Italian this presentation. The sense of this offer.
We can, in the long run, strengthen our presence in Italy, which today is as part of a group, which is making EUR 76 billion in terms of assets, EUR 50 billion in customer loans, EUR 72 billion in terms of assets under management and assets under custody, EUR 1.9 billion in income, more than 2.1 million clients, more than 9,000 employees, and almost 900 bankers. Our banking group, Crédit Agricole Italia, has a major presence, 70% of Crédit Agricole S.A., and also own some of the local banks through SACAM. We have an important presence of shareholder foundations, Fondazione di Piacenza. These are foundations that belonged to the regional banks that we have gradually acquired. This plurality of these different shareholders, we have almost 20,000 private shareholders.
This just goes to show how over the years, Crédit Agricole in Italy has become a group, which has become a kind of benchmark group. It's also very much integrated into the culture of our territories and the culture of our country. The Banca Credito Valtellinese is an old cooperative bank with tens of thousands of small shareholders, and if they join Crédit Agricole, they will find once again this spirit and the attention to people and the regions, which is what distinguishes us. I'm sure that this is what the customers feel as well, and also the employees of the bank. The bank represents almost EUR 24 billion in total assets, EUR 16 billion in customer loans, EUR 10 billion in assets under management and assets under custody, and EUR 0.6 billion in terms of revenue. 700,000 clients, 3,539 employees with market share in terms of branches, 1.5%.
As we'll see in a moment, we will have a regional quota, which is extremely interesting. It's the seventh largest commercial bank in Italy. Let me remind you that, in terms of Crédit Agricole, we are also a partner of bank insurance for bank insurance products for two years, and very satisfied customers. We have 9.8% of Credito Valtellinese's share capital, and to that we will add 5.4%, which will come from this agreement that has been stipulated over the last days. This operation, which will give us another three million customers with more than 300 branches, this has many different attractive commercial aspects to it. Cost synergies, for example, because our objective for 2022 is to be a single bank and to be a totally integrated bank.
We will also gain, immediately, financial efficiency, this will be due to the better ratings of Crédit Agricole. We will also have, and above all, benefits and gains that will come from the already good quality of the Creval credit risk. Also the non-performing loans ratio, which is very good. This will improve and enhance our operations. Now, we believe that this is an offering which is an amicable offering, because it's creating value for everyone, shareholders, and there's an interesting premium if we reach closing on Friday. Also an interesting VWAP. Also, it's a cash operation. It creates value for the employees because they will be part of a group that they already know, and which manifests and shows all the values, gives them enhanced career prospects as well. It also creates value for the customers.
They will be able to benefit from the very high quality of the products that are produced by the group. This operation will provide value for CAI and its shareholders. We want to have an ROI of 10% over three years. We have the necessary conditions to be able to achieve that. In terms of the industrial culture, we showed over the last couple of years that we were able to successfully integrate many of the regional banks. We did this with full agreement with the regulators and also with trade union representatives, who on a national scale, I called them this morning. They gave me their consent and also their support for this operation.
Over the years in Italy, we have created a management team, which is highly qualified, very open-minded, multicultural, made up of young talented managers who are Italian and French. Many of our managers have climbed the ladder of the bank, so we can be sure that we can count on this talent. In the presentation, you have the regional market shares. We will have some very major regions in the north of Italy, such as Lombardy, Emilia-Romagna, Liguria, where we will be between 6% and 16% of market share. We also have Friuli, which is a historical region, and there we will have 12%, Sicily with 6.8%. Of course, it goes without saying that in the other regions, Piedmont, Rome, Lazio, we will have between 3% and 6%. We can confidently say that our group is a key Italian bank.
We've also presented the benchmark information, and the balance sheet information in our presentation. Between the CAI and what this operation would bring, that's on page 10 of the presentation, and there is some interesting information on that. Credito Valtellinese represents 25% of annual revenues of CAI, but in terms of assets under management and assets under custody, this presents an opportunity. One of the things which pushed us to speed up this offering is that through Crédit Agricole Assurances and through Amundi, we will easily be able to develop managed savings and deposits from customers with obvious benefits and high service margins. We've given a presentation of the rankings at national level, and we will have EUR 100 billion in terms of assets.
We will be one of the six leading banks in terms of managed savings and also in terms of the number of customers. I'd also like to remind you that in terms of this combined entity, Crédit Agricole and the new bank, these positions will be reviewed, and they will be reviewed upwards. We have very profitable activity like Amundi and bank insurance operations within the group. We will be a key benchmark bank for the Italian market. Now, we have a benchmark in terms of the balance sheet and the CET1, core CET1 is over 16%. Crédit Agricole Italia is at 12.8%. Credito Valtellinese is at a very high level of capital, 17.2%, and this is due to an increase in capital a couple of years ago, and this allowed the bank to do de-risking and to have many capital reserves, a very high level of capital reserves.
In terms of the strategy of the industrial plan, we have set objectives which will not change because we want to achieve excellence in terms of customer relations. I can tell you that in terms of the latest customer satisfaction surveys, we ranked second best, and this is due to a very long-term work and also to a project of Crédit Agricole S.A. that we have been developing, and the effects of that have been very positive. We will continue these commitments. In terms of society, we have been a leader in terms of supporting hospitals and health structures that required help during the peak of this pandemic, and that was last spring. We were on the frontline there, and we have been able to guarantee services even in the red zones where we are present.
We've always done this, working through our foundations, which are foundations that are non-profit organizations. They carry out solidarity initiatives, sponsoring, and various other forms of support in the local society. This is something which we will continue to do even in the new areas where we will be present. Now, we have products for management who can offer services of great quality for our customers. Now, finally, I would like to remind you of the path that we've taken up to now and the many different integrations that we have managed. We've done more than 14 of those. Now, I'm not going to go through all of them, but we've got the Cassa di Spezia, Intesa Sanpaolo , the banks in Rome and Tuscany.
We have a governance structure and a management team, which is very talented, and we have IT systems, organizational systems which are very robust. This means that we can carry out this operation, which is absolutely compatible with everything that we've done in the past, integrating regional banks similar to ours. There's been institutional consensus on this, territorial consensus as well for this operation, and so that we feel to create extra added value. Now, Jérôme, I will leave it there, and I will hand back to you.
Thank you very much, Giampiero. I think that what Giampiero has just presented demonstrate very massively both the strategic interest of this operation and also, I would say, the very good monitoring of the integration of this new bank within Crédit Agricole Italia when the time will come of the integration. I will not go back on these elements. I just want to highlight a few elements of the transaction structure. We intend to launch a voluntary public cash tender offer. It will be launched, of course, by Crédit Agricole Italia on all the ordinary shares of Credito Valtellinese. It's going to be an all-cash offer, and the price is EUR 10.50 per share. This corresponds to a total investment of EUR 737 million by Crédit Agricole Italia for all the shares of Credito Valtellinese.
This price of EUR 10.50 per share represents a 21.4% premium to the share price of Credito Valtellinese end of last week, spot price on November 20th. It's a 42% premium on the three-month Volume-Weighted Average Price of the share as of, again, end of last week, and it's even a premium of more than 50% as compared to the six months Volume-Weighted Average Price. We have already received a commitment letter from one of the important shareholders of Credito Valtellinese, Algebris, who owns a little bit more than 5% of the capital, and that has committed to bring its share capital stake to the offer, subject, of course, to regulatory approval. We have already 9.8% of the share capital through Crédit Agricole Assurances, who, as you remember, is already the provider of life insurance policies to Credito Valtellinese customers.
The offer will be subject to Crédit Agricole Italia reaching at least 2/3 of the voting share capital, but this condition may be waived by Crédit Agricole Italia if it has succeeded to at least gather 15% plus one share of the capital of Credito Valtellinese. Of course, we have the other traditional conditions that include, amongst other elements, the antitrust unconditional authorizations, and Credito Valtellinese not adopting any defensive measure even if authorized by its shareholder meeting. If I go on the next page, you will see the main milestone of the timeline that we intend to follow. It's going to be a fast timeline, of course, respecting all the thresholds that we have to respect. Today, we have deposited the notice pursuant to Article 102 of the Italian law.
In December, we are going to file with CONSOB the tender offer document and all the other filings that we need to do with the competent authority. We expect all the clearances to be provided by the end or in the course of Q1 2021. We expect to be granted the authorization by the CONSOB to publish the offer document in March or possibly in April 2021, which will start the tender offer period. The tender offer period will end in May 2021, where we will have the settlement of the offer. To summarize what we have said, this operation is perfectly in line with what we have done in the past in Italy in terms of developing our retail banking activities.
Let me remind you once again that in Italy, we have a complete and comprehensive set of activities that cover not only retail banking, but also all the other specialized business lines in which we operate: asset management, insurance, life and non-life, consumer credit, car financing, CIB, and so on and so forth. In Italy, as you know, these specialized business lines represent a higher proportion of the net profit that we generate in the country than through retail banking activities. This will strengthen our competitive positioning in Italy. This will create significant value for Crédit Agricole shareholders, the Crédit Agricole Italia shareholder, and also Crédit Agricole S.A. shareholders.
This value creation is going to come first from economies of scale and funding synergies, generating an improvement of the earnings per share, which will be positive as soon as 2022, and generating a return on investment that will be above 10% in year three, as again, is required by our internal standards related to M&A policies. It will also create long-term value from the progressive additional cross-selling with all Crédit Agricole business lines on the customer base of Credito Valtellinese. Last point, the integration risk will be minimum for an investment that will represent less than 20 basis points of CET1 ratio for Crédit Agricole S.A. Here, in a nutshell, are all the elements and the features of this operation that we've been announcing this morning. We are all here to answer your question if you have some, of course.
Thank you, ladies and gentlemen. As a reminder, if you'd like to ask a question over the phone, you can press star and one on your telephone keypad. You can also press the hash key to cancel. That's star and one to ask a question. Your first question comes from Jacques-Henri Gaulard from Kepler. Please go ahead.
Yes. Good morning, gentlemen. Congratulations for this deal. Just one question. Just curious about the ROI superior to 10%, which correspond to at least EUR 73 million, EUR 74 million. The consensus for 2022 expects already EUR 65 million of earnings. I think to have seen a number that your cost synergies were estimated at EUR 125 million. Wouldn't it have been more accurate to say ROI vastly superior to 10%? Thank you very much.
Well, Jacques-Henri, thanks for the appreciation of this operation. I leave you with this comment, but clearly, this return on investment is completely secured, and is secured with the most secured synergies, which are the cost synergies and funding synergies. That's for sure.
Thank you.
Thank you.
Your next question comes from Tarik El Mejjad from Bank of America. Please go ahead.
Hi. Good morning, Jérôme. Just two questions, please. First, on the structure of the deal. I was a bit surprised by the premium, more about the share price than actually the percentage, because EUR 10.5, that makes it one of the highest valuation in a while. Just understand the rationale. Do you just want to basically pay the premium, do the deal quickly without negotiations and then move on, and that will be it for you? Or just really to understand, because the 10% ROI doesn't sound to me enough to justify such a higher premium. Secondly, question on after the Creval deal. Clearly with Creval, you ticked all the boxes you mentioned before. Something small as footprint, clean balance sheet, and so on. What's next?
Should we consider this is it for you in Italy, and you have now the adequate market share, or you think you still have to add more footprint? Thank you.
Well, Tarik, thanks for your questions. I think that all the Credito Valtellinese shareholder will be happy to read your notes about the price. We think it's a price that is a good equilibrium between the interest of Credito Valtellinese shareholders and Crédit Agricole Italia shareholders. It's coherent with our return target, and it's also attractive for Credito Valtellinese shareholders. What next? Well, we are only at the beginning of this operation, and as I've just explained, only the market transaction will already take up to the middle of next year. Please don't ask us what is going to happen after that. We have to complete this transaction that we are announcing today, then we have to manage the integration of Credito Valtellinese within our setup. The what next question is a little bit early, if I may say so.
Thank you, Jérôme.
Thank you.
Your next question comes from Guillaume Tiberghien from Exane. Please go ahead.
Yes, good morning. I have two questions. The first question relates to whether or not you'll be able to take advantage of the new law in Italy allowing for the conversion of DTA into tax credit in the event of a merger. If so, what will be the benefit? The second question is whether you'll have to pay a penalty should you wish to transfer the asset management and consumer credit flows to your own product factory.
Two good questions, Guillaume, of course. The first question about the new law. Well, there's no new law as of now because there is a project, and I think that this project in itself has triggered a significant increase in all the share prices of Italian banks in the last 10 days. I think that our offer includes all the elements that were known from the market, and this is clearly an element that was known from the market. If this new law is passed, of course, it's going to apply to all mergers in Italy. We contemplate a merger between two Italian banks, so in my understanding, we will be eligible. Up to now, no law has been passed, indeed.
As far as the additional cross-selling operation can take place across time, I think that it's too early to tell if the operation goes up to its end as we expect. We will, of course, analyze all of the partnership that exists within Credito Valtellinese, and we'll see, depending on the expiry date, if it's best to wait for the expiry date and then to renew a partnership with our own product factories, quote unquote, or if it's possible to early terminate them and under which conditions. We'll see. Of course, the end game is that all products sold to Credito Valtellinese customer are going to be provided by our own specialized business lines.
Sorry, can I ask a follow-up on, there was a headline on Bloomberg suggesting that Crédit Agricole Italia was going to launch a capital increase to fund the deal. If you get all the excess capital of Creval is about EUR 400 million, and the DTA proposal for the Italian law could save you EUR 200 million or EUR 300 million. Really you get it for free, the Creval. Why do you need to do a capital increase in Crédit Agricole, Italia?
Well, we haven't mentioned in our presentation this prospect of a potential capital increase from Crédit Agricole Italia. We'll see going forward how the transaction is going to be funded by Crédit Agricole Italia. If any capital increase was to be needed to fund the deal in order to maintain a good level of CET1 at Crédit Agricole Italia, which has been the case in the past and which is going to continue to be the case in the future. Of course, Crédit Agricole S.A. will fully guarantee this capital increase in order to guarantee the success of it. It's too early to tell. We are, at Crédit Agricole S.A., of course, fully ready to support this acquisition by Crédit Agricole Italia.
Thank you.
Your next question comes from Azzurra Guelfi from Citigroup. Please go ahead.
Hi, good morning. Congratulations on the deal from myself as well. I have a couple of questions. One is on the integration cost. I don't know if you have made any potential analysis on this. The second one, if you had any feedback from Creval management on your tender offer, and if you can share it with us. The other one is on the deal itself. Probably this is the lowest integration, execution and integration risk deal that you could have done. I'm just wondering if that was the main criteria in terms of potential synergy realization and easiness of this, because the bank is with a strong balance sheet and maybe with the opportunity for cost and revenue synergies. If you can share with us the rationale for this. Thank you.
Yeah. On your first question, we haven't disclosed neither the amount of synergies nor the cost of realizing those synergies. Clearly the return on investment above 10% fully integrates and takes into account the fact that to generate the cost synergies, we will have to engage a certain level of investment. Clearly it's integrated in the global return that we are targeting. Of course, we have had contacts with the management of Credito Valtellinese before announcing the offer this morning. I will not comment on these contacts, which have been perfectly professional. Last point, integration risk. Well, I don't know exactly what was your question. The capacity of managing the integration risks are part of the set of criteria that we have put in place in order to check the relevance of all the M&A transactions that we consider.
In this transaction, clearly, we consider that the integration risks are very remote for the main reasons that Giampiero Maioli has explained, i.e., the size, i.e., the location, i.e., the DNA of Credito Valtellinese, which is coherent with ours, and i.e., also, the fact that we know this bank since a long time, and we have with it a very successful partnership in life insurance.
Your next question comes from Jean-François Neuez from Goldman Sachs. Please go ahead.
Hi, good morning. I would like to ask to, I think I picked up something in Azzurra's question, which I also wanted to ask, but maybe ask another way, which is, in the press recently, you've been linked with Banco BPM quite a few times. This would have been a tremendously more transformational deal, for example, than this one. Not better or worse, I'm not trying to judge here, but essentially, this was six times bigger. The question that I wanted to ask to understand your thought process and also to read better the news flow in the future, is what was your thought process, if there was ever a choice, between looking for something more transformational at a time when share prices are very low everywhere, or to do something more incremental, which was in line with your past strategy?
Essentially, what made you make that particular choice at this particular juncture? The second question that I wanted to ask is, when you estimated ROI, synergies, et cetera, how did you go about estimating the synergies and execution risks? Was this part of your discussion with the management, or were your discussion with the management of Creval purely of an informative nature, and you haven't had, essentially, a chance to do diligence what you're planning to execute? Thank you.
Credito Valtellinese is a listed company. Of course, you imagine that it's not possible to do due diligence in such a situation. We've established our calculation on the cost synergies and the cost of realizing those synergies on the basis of our past experience, which is wide, which is significant, and which is, I think, relevant. It's our own calculation performed under our own responsibility. We clearly think that they are relevant and they are perfectly securing, I would say, the financial parameters of the operation. On your first question, I think first, we don't want to comment market rumors. We never do that. We are not going to do it in the future. Second, I think it's not also relevant, and we are not going to share with you all the elements of analysis that we take into account before taking a decision.
We are presenting today a project. We are presenting today an operation. It has been analyzed. We have been taking a lot of time to prepare and to fine-tune this operation. We have taken into account many, many elements, and this is the project that we are presenting to you today, which is, again, we think coherent with our strategy, which is coherent with our financial, I would say, prudence, and it is coherent with our culture. I think that there is nothing more to say.
Okay, great. Thanks a lot, Jérôme.
Thanks.
Your next question comes from Giulia Miotto from Morgan Stanley. Please go ahead.
Yes. Hi, good morning. Thank you for the presentation. Two questions from me as well. If I take a step back and I look at the profitability of your Crédit Agricole Italia business, indeed, you've been successful in integrating different banks through time, but that remains below the profitability of the group on average through the years. I was wondering, what sort of ROE do you plan for the Italian business? Do you think one of the reasons that you can't match the group profitability is lack of scale? That's the first question. The second question is on coverage. What sort of coverage do you plan for the combined entity, Crédit Agricole Italia pro forma? Thank you.
Let me start with the second aspect of your question. What are you talking about in terms of coverage?
Oh, NPL.
Oh, NPL. Excuse me.
Yes, that is. Sorry.
As Giampiero presented it, you can see that both Credito Valtellinese and Crédit Agricole Italia have indeed quite a low level of non-performing loans as compared to the average of the Italian market, and they have coverage ratios which are roughly in the same region, around 50%. Clearly, we intend to pursue significantly the de-risking of the portfolio, and when the operation is going to be completed, we will have room to probably further increase the coverage ratios and/or further decrease the level of NPL. In terms of profitability of our Italian retail banking activities, we have said in the medium-term plan that we were targeting a return on normalized equity, which is not the return on equity on the level of equity that we have really in Italy, but the return on normalized equity of 13% and a cost-to-income ratio below 60%.
We are not there yet, and clearly, the level of the cost of risk triggered by the pandemic is probably going to delay a little bit our capacity to reach this level of profitability. Clearly, we continue to target that level of profitability in order to fuel the global profitability of Crédit Agricole S.A. The addition of Credito Valtellinese to Crédit Agricole Italia, as Giampiero explained it very well, is going to provide scale, is going to provide a booster in order to accelerate the convergence towards the cost-to-income ratio that we are targeting.
Thank you.
Thank you.
Your next question comes from Stefan Stalmann from Autonomous Research.
Just a moment. I'd like to comment. [Non-English content]
The reason why right now the profitability level is slightly lower than the bank in France is because of the cost of risk. The average cost of risk in Italy, as you know, is higher than in France. France is where the cost of risk is lowest in Europe. This operation with Creval will allow us, thanks to the excess capital of Creval, to further de-risk to reach the level of cost-to-income ratio of Crédit Agricole Italia to the European average, and it will automatically increase the profitability. There are no differences in the operational management nor in the cost efficiency. In fact, the productivity of Crédit Agricole Italia is already competitive in terms of cost-to-income ratio. It's at the levels of the best European banks.
It's true that we have a problem in Italy, because until now, all investments we have made to be competitive in terms of technology and digitization have weighed in such a way that it's not enough to absorb costs. We have suggested this operation to the shareholders because it will allow us to increase synergies of scale and become more profitable.
Thank you, Giampiero. We are now going to take the question from Autonomous.
Yes, good morning. Can you hear me?
Yes, Stefan, we hear you.
Great. Good morning, gentlemen, and thank you very much for hosting the call. I have three small questions, please. The first one, just to clarify, Jérôme, what you said earlier, if the Creval board does not support the deal, does it mean that you will abort the bid? The second question is, could you maybe remind us of the extent of cost synergies that you realized when you integrated the three savings banks, ideally as percent of their cost base? How big was it? Finally, could you maybe tell us whether you actually, or I should say, Crédit Agricole Assurances, has currently any representation on Creval's board of directors? And if so, whether that has given you any insight into their numbers that you could use in preparing this bid.
Let me start with the last question. I'm talking under the control of Giampiero Maioli. In the last restructuration of the Board of Credito Valtellinese, I think that we had the capacity to name, I think, two B oard members. Of course, by definition, we haven't had any inside information coming from those two board members. It's clearly not possible. Even more, they are independent Board members. We have chosen them and we have proposed them to the shareholder meeting. They are independent. It's absolutely not possible for them to provide any information to a dedicated shareholder. Clearly, we've been working on only public information, as is always the case when it's about a public offer. Cost synergies regarding the three small banks that we acquired.
I don't remember exactly the amount of the cost synergies, but let me remind you that their average cost-to-income ratio when we acquired them was in the region of 120%, and they now contribute to the average cost-to-income ratio of Crédit Agricole Italia, which is below 65%. Again, I'm talking under Giampiero's control. Clearly it means that we've been able, both by reducing their cost base and by increasing their top line, to reduce their cost-to-income ratio from 120% + down to the 60% + where they are now. We've been integrating their IT platform on our IT platform in seven months. We've been closing a certain number of branches that were redundant with our own branches, and this was fully achieved in year two globally. Clearly, the integration process that we have is very efficient.
Your last question, I was not talking about the support of the Board of Credito Valtellinese. I was just saying that, under the Italian law, the Board of Credito Valtellinese is not allowed to take any measure that would be adverse to the offer. Only the shareholder meeting can. Of course, what we say is that if the shareholder meeting takes that kind of decision, of course, we can reconsider our offer. As far as the Board is concerned, there is absolutely no possibility for, I would say, interfering with the offer.
Great. That's very helpful. Thank you very much.
Your next question comes from.
Jérôme? [Non-English content] .
Giampiero, go ahead. Okay.
Regarding the synergies of the integrated banks, it was EUR 80 million per year. Synergies between cost and funding, both cost and funding synergies. The cost synergies have been exceeded, the funding synergies have also been exceeded. We're working on aligning productive production and commercial performance of the three banks bringing to the level of CAI. In terms of cost and funding synergies, the results were exceeded, overachieved. We haven't appointed any director at Creval. We have two directors we know, with whom we don't have any information or relationship. They were also informed this morning, just like the other board members. The standards and laws of CONSOB, the authority here in Italy, which are very strict, have been fully respected.
Thank you for this compliment. Maybe we can take the next question.
Thank you. This question comes from Kiri Vijayarajah from HSBC.
Yes, hello. Good morning, everyone. Thanks for taking my questions. Firstly, just a quick follow-up on the NPE, NPL question. I'm wondering, has the local regulator or the ECB provided or set you a guidance in terms of the target level of NPE and coverage ratios you should be aiming for the combined group, as a quid pro quo for getting approval for this deal, or is that sort of plan for de-risking that's completely been driven by you? Really just the background there. In terms of taking a step back in terms of improving the product penetration at the Creval customer base, what are the kind of big gaps that you see? As far as I can tell, Creval already has the full product suite available today.
Really my question is, what are you going to be doing differently that's suddenly going to ramp up the product penetration and revenue per customer, at the Creval network? Thank you.
Okay. Clearly, there's absolutely, at this stage, no request from the ECB to target a special level of NPE or a specific level of coverage ratio. We are, as I said, already both at the level of Crédit Agricole Italia and at the level of Credito Valtellinese, south of the market. It means that if we intend to continue the de-risking and to continue the improvement, it's only with the goal of being really a top of the class in terms of the quality of our loan book, and it's not triggered by any request from the ECB. In terms of product penetration, maybe we can go on page 10 of the document where you see certain metrics that indicate clearly that there is some room for improvement.
Again, I will maybe ask Giampiero to provide more details, but you see, for example, that in terms of assets under management and assets under custody, where typically Credito Valtellinese globally represents one-third of Crédit Agricole Italia. In this respect, on this aspect, so it means the management of the savings of the customers, they clearly lag behind, and we think that we have a capacity to significantly improve the penetration of our own product factories on these items specifically. Maybe Giampiero, you want to complete?
Yes, Jérôme,
Yes Jérôme l et me reaffirm that in our strategic plan, once we secure the authorizations and the public tender is completed, one of the guidelines will be de-risking of both entities, and will improve our cost-income ratio. As to the different products, we've already assessed all the different business lines, right now the productivity gap at the Creval is about 30% below Crédit Agricole Italia. With the objective of the 10% ROI by 2023, we will align the performance of Creval to the best level to be in line with Crédit Agricole Italia.
Great, thank you.
Maybe we can take the next question, if any.
This question comes from Matt Clark from Mediobanca.
Good morning, everyone. A couple of questions. Firstly, just going back to the CET1 impact of 20 basis points. If I answered your or extrapolate your answer earlier, am I right to understand that this is formulated under the existing tax laws, so it doesn't include any DTA to tax credit benefit? Secondly, similar question, what step up or step down to fair value assumptions are embedded in that 20 basis points CET1 reduction? Finally, could you just let me know when the Crédit Agricole Assurances stake increased from 5% to 9.8%? I hadn't realized that had happened. Thank you.
Well, I would say that the 20 basis points impact on the CET1 of CASA is a ceiling, it means that it would be the impact if no benefit from any element, for example, from the DTA law, was possible. It's clearly a ceiling that is here only to illustrate the fact that this operation is very significant for Crédit Agricole Italia, but at the level of Crédit Agricole S.A. is more a bolt-on acquisition, which is perfectly, I would say, absorbable by the course of our normal, I would say, capital trajectory. Again, it's a ceiling. It's not very precisely calculated, when the operation will progress, we'll provide more details on this aspect as well as on some other aspect of the transaction and of the business plan, it's way too early to do so. Second point, well, we've been increasing our stake across time.
It's not been done in one shot, and it's been spread on a rather long period of time, so nothing more to say on that.
Okay. Thank you.
Sure.
Your next question comes from Pierre Chédeville from CIC.
Mm-hmm. Yes, good morning, Jérôme.
Good morning.
Two quick questions. First question, I'm not sure, but it seems to me that this operation will have a badwill around maybe EUR 1 billion. I wanted to know what will be the use of this badwill, and did you have any conversation with the ECB in terms of capacity for you to use this badwill in your CET1 or distribution possibilities, et cetera? I ask my second question now or after?
Yeah, sure. Go ahead. Excuse me.
No. My second question regards the network of Creval. We can see that 25% of the branches are located in Sicily, that I love very much, but which is obviously not the part of Italy Crédit Agricole Italia was targeting initially. My question is very clear. What is the quality of this part of the business of Creval in Italy, for instance, in terms of profitability compared to other branches in the north, in terms of NPE? Don't you think that somehow the 94 branches only in Sicily, once again, I would say now clearly 8% of the total network, is not too much?
Okay. Maybe I'm going to answer your first question, then I'm going to leave Giampiero Maioli to provide you some details on the Sicilian part of the network of Credito Valtellinese. It's true that with a shareholder equity of EUR 1.7 billion and a price that we have published of around EUR 700 million, there will be a badwill of around EUR 1 billion. As you know.
I am calculating well.
Exactly. We haven't had precise discussions with the ECB on the usage that we can do with this badwill. Clearly, we are going to apply the rules, and the rules are very simple. You start by allocating part of the badwill to the risks that are not sufficiently covered in the balance sheet of the bank that you acquire, and then the remaining part is helping you to cover the risk-weighted asset, to capitalize the risk-weighted asset of the entity that you purchase. We are going to fully, strictly, and I would say prudently apply the traditional rules, which means that we are going to use part of this badwill to cover even more some risks that are in the balance sheet of Credito Valtellinese.
We are going to use also part of the badwill to finance the cost of integration, of course, as is normally the case, and the remaining part can be used in terms of solvency. Maybe, Giampiero.
If I may follow up on your answer, because if we consider that Creval is doing a great job in terms of provisioning, and I cannot imagine that they don't, most of this badwill will be allocated to restructuring costs, we can imagine. At the end of the day, we will have, I would say, a net badwill, improving your CET1. Do you or have you made any hypothesis of this rest, I would say, not using the badwill when you indicate to a market that this operation will have only 20 basis point of impact in CET1? For me, in my view, at the end of the day, with this badwill, and if Creval is well provisioned, the impact on CET1 will be nil, more or less, or even maybe positive. It could be positive.
We've taken prudent assumptions in the usage of the badwill, which we are not going to disclose, but we've been prudent, and as Giampiero said already, we may use part of this badwill to further decrease the NPL ratios of Credito Valtellinese in order to, again, make our global retail banking operation in Italy best in class in terms of NPL ratio. We have taken prudent assumptions when we've calculated this 20 basis points hit, 20 basis points impact. It may be less than that, and we'll provide more clarity and more details later on when the operation will progress. Maybe on Sicily, Giampiero, if you can give some indication on what we see in this part of the network of Credito Valtellinese.
Yes, Jérôme. Just a point, too, on the cost of risk and the NPL ratios. Our ambition is to arrive under 5% of NPA. We are convinced to make a point. About Sicily, it's true, but I remind you that Creval has the 75% of branches in north and center of Italy. The 80% of the branches in Sicily are concentrated in the major town as Palermo, Catania, Messina, and Siracusa. I remind you, in any case, that Sicily is a so beautiful region, but above all represented today the 40% of Italian agricultural production. We are convinced to take advantage with the historical agricultural expertise of Crédit Agricole. Just a point about the potential risk in Sicily. First, we remind that we managed since 15 years branches in the south of Italy, particularly in Campania, the Naples region, without particular problem versus the other regions.
In any case, at the moment, the Creval branches in Sicily represented only the 70% of the loan portfolio versus the 25% in number of clients and branches. The reason is that in Sicily, Creval manages above all, wealth management and assurance products, and also particularly house credit. No more corporate risks are present in the branches in Sicily, actually.
Okay. Thank you very much.
Thank you, Giampiero. I think we have one last question that we are going to take.
The question comes from Jon Peace from Credit Suisse.
Yeah. Thank you. Hi, Jérôme.
Hi, Jon.
I just wanted to ask a question about Crédit Agricole's strategy. The Crédit Agricole of 10 - 20 years ago liked to acquire banks and distribution networks around Europe with mixed success. The Crédit Agricole of the last 10 years rationalized those stakes, and it created product factories, which could be distributed through partnerships in quite a balance sheet efficient way. How should we see the proposed deal today in that context? Would you say it was more an opportunistic bolt-on deal in a core market with low financial cost, or does it represent a shift in CASA's thinking of how it should grow? In a kind of digital world, do you see owning of many more branches in Italy as an asset or a liability? Thanks.
Well, thanks for your question, because this is the occasion to again clarify our strategy if needed. Clearly, we are not changing our strategy. This strategy is based on the fact that we have developed very powerful entities on several product lines that are operating across Europe. They have started to create their critical size, critical mass by distributing their products on the basis of our own customers in our own networks. They've been able to grow beyond, and sometimes far beyond our pure retail footprint. This is why we have developed those activities, even in countries where we don't even have a retail network, like Spain or Germany, for example. This strategy is going to be kept and will continue to be developed.
What is taking place in Italy with the operation that we are presenting today, is that we have had this opportunity, that we want to seize to give some additional scale to our own retail network operation, which is very efficient, which is clearly best in class in Italy regarding many criteria. One of the latest one is the fact that in terms of customer recommendation, we are ranking number two in Italy. We have a very good network, which is covering a number of customer, which is much smaller than the number of customers to whom we access in asset management or in consumer credit, for example. Nevertheless, it's a very good and efficient network, and we have had the opportunity to nicely complement this network and to give it scale in order to improve its efficiency.
We are not going to change strategy, and it's exactly the same answer than the one we could have presented when we've acquired the three regional banks that we bought two or three years ago. It didn't change our strategy. It didn't preclude us from concluding additional partnership in several activities in Italy or elsewhere. This is going to continue.
Very clear. Thank you.
Thank you. I think it's over now. Again, thanks very much for having made you available with such a short notice. Of course, Clotilde and the team is happy to continue to answer your questions on this operation, if needed. Have a good day to every one of you.