Good morning to everyone 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 Muscar and that Jean Pierre Maioli, the Chief Executive Officer of Fredericola 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 at present an initiative that we have decided to launch this morning, which is the acquisition of Creval by Credit Agricole Italia. In a nutshell, this operation that we have announced will significantly enhance Credit Agricole Italia footprint in the retail banking activities in Italy by the adjunctive 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 Creditor Valtenesi customers that will benefit from the very wide product offer of Credit Agricole Group. It's going to be the case for Credito Valparinese staff that will benefit from enhanced career prospect in the whole Credit Agricole Group in Italy. It's going to be the case for Creditor Valtellinese shareholders that will benefit from an attractive price and it's definitely going to be the case for Credit Agricole Italia shareholders benefiting from this enhancement of the network and benefiting from return on the investment that we consider that will meet our traditional criteria of being above 10% after 3 years. And 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 Credit Agricole Italia has a proven track record in terms of successful integration of different networks, again in 2017, 2018 with the 3 small regional banks that were acquired at the same time and perfectly integrated in the meanwhile.
So let me now hand over the floor to Jean Pierre Romagnoli, who will present our activities in Italy and the strategic rationale of the operation that we are announcing today. And I will, after that present in more detail the operation that we consider launching. Jean Pierreau, if you hear me, it's now up to you.
Thank you. Thank you, Jerome. I prefer to introduce you in Italian this presentation. The sense of this offer.
So we can, in the long run, strengthen our presence in Italy, which today Is as part of a group, which is making €76,000,000,000 in terms of assets, €50,000,000,000 in customer loans, €72,000,000,000 in terms of assets under management Assets under custody, €1,900,000,000 in income, More than 2,100,000 clients, more than 9,000 employees and almost 900 branches. So our banking group, Credit Agriculture Italy, has Major presence, 70% of Credit Agricole SPA and also on some of the local Banks through Sacom, so it has we have an important Presence of shareholder foundations, Fondationes de Piacenza. So these are foundations that belonged to the regional banks that we have gradually acquired. And this plurality of these different shareholders, we have almost 20,000 private shareholders. And this just goes to show how over the years Credit Agricole in Italy has become a group, which has become a kind of benchmark group.
And it's also very much integrated into the culture of our territories and the culture of our country. Now the Banco Credit Voltellinese is an Old cooperative banker with tens of 1,000 of small shareholders and they If they join Credit Agricole, they will find again once again this spirit and the attention to people and the regions, which is what distinguishes us. And I'm sure that this is what the customers feel as well and also the employees of the bank. The bank represents almost euros 24,000,000,000 in total assets, euros 16,000,000,000 in customer loans, euros 10,000,000,000 in assets under management and assets under custody and EUR 600,000,000 €1,000,000,000 in terms of revenue, 700,000 clients, 3,539 Employees with market share in terms of branches, 1.5%. But as we'll see in a moment, we will have a regional quota, which is extremely interesting.
So it's the 7th largest commercial bank in Italy. And let me remind you That in terms of Credit Agricole, we are also a partner of bank insurance for bank insurance products for 2 years and Very satisfied customers. We have 9.8% of Creditor Valtelinae'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. Now this operation, which will give us another 3,000,000 With more than 300 branches, this has many different attractive commercial aspects to it.
And 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, and this will be due to the better ratings of Credit Agricole. And we will also have an above all benefits and gains that will come from the already good quality of the Kreval credit risk. And also the non performing loans ratio, which is very good. So this will improve and enhance our operations.
No, we believe that this is an offering which is an amicable offering because it's creating value for all for everyone, shareholders. And there's interesting premium if we reach closing on Friday. And also an interesting VWAP, also it's a cash operation. It creates value for the employees because they're part of a group that they already know and which manifest and shows all the values, gives them enhanced career prospects as well. And 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. Now this operation will provide value for CAI and its shareholders. So we want to have an ROI of 10% over 3 years, and we have the necessary conditions to be able to achieve that. Now in terms of the industrial culture, we showed over the last couple of years That we were able to integrate successfully integrate many of the regional banks. And we have we did this with full agreement of with the regulators and also with trade union representatives who on a national scale.
I called them this morning, in fact, and they gave me their consent And also their support for this operation. Now over the years in Italy, we have created a management team, which is a highly qualified, Very open minded, multicultural, made up of young, talented managers who are Italian and French. And many of our Managers have Climb the ladder of the bank and so we can be sure that we can count on this talent. Now in the presentation, you have the market shares, regional market shares. We will have some very major regions in the north of Italy such as Lombardy, Mediordomana, Liguria, where we will be between 6% 16% of market share.
We also have Friuli, which is a historical region, and there we will have 12%, Sicily with 0.8%. And of course, it goes without saying that in the other regions, Pied, Monta, Roma, Rome, Lazio, We will have between 2.6% between 3% and 6%. And so we can confidently say that our group will be is a key Italian bank. We've also presented the benchmark information And the balance sheet information in our presentation, So 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. Now, Carnitore Martin, it say represents 25% of annual revenues of CAI.
But Now in terms of assets under management and assets under custody, this presents an opportunity. And one of the things which pushed us to speed up this offering is that through Credit Agricole And through Amundi, we will easily be able to develop Managed savings and deposits from customers with obvious benefits and high service margins. So we've given a presentation of the rankings at national level, And we will have EUR 100,000,000,000 in terms of assets. So 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, Credit Agricole and And the new bankers, these positions will be reviewed, and they will be reviewed upwards.
We have very profitable activity like Mundi and Bank and Insurance operations, so within the group. So we will be a key benchmark bank for the Italian market. Now in terms of we have a benchmark in terms of the balance sheet And the CET1 core CET1 is over 16%. Tradiareco Italia is at 12.8%. And Creditovaltalinesi is at a capital 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 derisking and to have many capital reserves, a very high level of capital reserves. Now 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. And I can tell you that in terms of the latest customer satisfaction surveys, We ranked 2nd best. And this is due to a very Long term work and also to a project of a clinical SPR that we have been developing. And the effects of that have been very positive.
So 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. So we were on the front line there. And we have been able to guarantee services in 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. And so and they make they carry solidarity initiatives, sponsoring and various other forms of support in the local society.
And this is something which we will continue to do even in the new areas where we will be present. Now we have for products and 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 Casa di Spezia, Bankintesa, banks in Rome and Tuscany. So we have a governance structure and a management team, which is very talented.
And we have IT systems, organizational systems, which are very robust. And 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. And So there's been institutional consensus on this, territorial consensus as well for this operation. And so that we can create we feel to create extra added value. Now Jerome, I will leave it there and I will hand back to you.
Thank you very much, Jean Pierre. I think that what Jean Pierre has just presented demonstrate very massively both the strategic interest of this operation and also the, I would say, the very good monitoring of the integration of this new bank within Credit Agricole Italia when the time will come of the integration. So 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 Credit Agricole Italia on all the ordinary shares of Creditor Valtellinese.
It's going to be an all cash offer and the price is €10.5 per share. This corresponds to total investments of €737,000,000 by Credit Agricola Italia for all the capital all the shares of Creditor Valtellinese. This price of €7.5 per share is represents a 21.4 percent premium to the fair price of Credit of Altellineze end of last week, spot price November 20. It's a 42% premium on the 3 month weighted average price volume weighted average price of the share as of again end of last week and it's given a premium of more than 50% as compared to the 6 months volume weighted average price. We have already received a commitment letter from one of the important shareholders of Creditor Valtellinese, Algebriss, who owns a little bit more than 5% of the capital and that has committed to bring its shared capital stake to the offer, subject, of course, to regulatory approval.
We have already 9.8% of the share capital through Credit Agricole Assurance, who as you know, as you remember, is already the provider of life insurance policies to Creditovalte Lineze customers. The offer will be subject to Credit Agricole Italia reaching at least 2 thirds of the voting share capital, that this condition may be waived by Credit Agricole Italia if it has succeeded to at least gather 15% plus one share of the capital of Creditor Valtellinese. Of course, we have the other traditional conditions that include amongst other elements, the antitrust and conditional authorizations and Creditor Valtellinesse 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 time line that we intend to follow. It's going to be a fast time line, of course, respecting all the threshold that we have to respect.
So to date, we have deposited the notice pursuant to Article 102 of the Italian law. In December, we are going to file with and all the other findings that we need to do with the competent authorities. We expect all the clearances to be provided by the end or in the course of Q1 2021. And we expect to be granted the authorization by the ComstoB to publish the offer document in March or possibly in April 2021, which will start the tender offer period. And then the tender offer period will end in May 21, where we will have the settlement of the offer.
So 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. And 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. And in Italy, as you know, these specialized business lines represent a higher proportion of the net profit that we generate in the country than few retail banking activities. This will strengthen our competitive positioning in Italy. This will create significant value for credit article shareholders, the credit article Italia shareholder and also credit article Estee shareholder.
And 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 3 as again is required by our internal standards related to M and A policies. It will also create long term value from the progressive cross selling additional cross selling with all credit record business lines on the customer base of Creditor Valtellinese. And last point, the integration risk will be minimum for an investment that will represent less than 20 bps of CET1 ratio for Credit Agricole SA. So here in a nutshell are all the elements and the features of this operation that we've been announcing this morning. But we are all here to answer your question, if you have some, of course.
Thank you. And your first question comes from Jacques Henri from Golard. 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 €73,000,000 €74,000,000 The consensus for 2022 expects already €65,000,000 of earnings.
I think you have seen a number that your cost synergies were estimated at 100 and €25,000,000 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 Tarek Elemerge from Bank of America. Please go ahead.
Hi, good morning, Jerome. Just 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 €10.5 that makes it one of the highest valuation in a while. So 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 understand because the 10% ROI Doesn't sound to me enough to justify such a higher premium. And secondly, question on the after the Creval deal. I mean, you Clearly, with Creval, you ticked all the boxes you mentioned before, something small adds footprint, clean balance sheet and so on. But 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, Tariq, thanks for your questions. I think that all the Creditor Valtellinasse shareholder will be happy to read your note about the price. We think it's a price that is a good equilibrium between the interest of Credito Valtellinese shareholders and Credit Agricole Italia shareholders. So it's coherent with our return target, and it's also attractive for Credit Or Valterneuse shareholders. What's 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. So 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 Creditovaltimese within our setup.
So the what's next question is a little bit early, if I may say so.
Thank you, Jerome.
Thank you.
Your next question comes from Giuliano Bergin 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? And if so, what will be the benefit? And 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. So 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. So if this new law is passed, of course, it's going to apply to all mergers in Italy. We contemplate a merger between 2 Italian banks.
So in my understanding, we will be eligible, but 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 credit of Altellimase and we'll see depending on the expiry dates, if it's best to wait for the expiry date and then to renew a partnership with our own product factories or if it's possible to early terminate them and under which conditions. So we'll see.
Of course, the end game is that all products sold to Creditor 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 Tradiaco Italy was going to launch capital increase to fund the deal? But if you get all the excess capital of Treval is about €400,000,000 And the DTA proposal for the Italian law could save you €200,000,000 or €300,000,000 So really, you get it for free the Cray ban. So why do you need to do a capital increase in Cray d'Arrico, Italy? Well, we haven't mentioned in our presentation this prospect of a potential capital increase from Credit Agricole Italia.
So we'll see going forward, how the transaction is going to be funded by Credit Agricole Italia, if any capital increase was to be needed to fund the deal in order to maintain a good level of CET1 at Credit 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, Credit Agricole assets will fully guarantee this capital increase in order to guarantee the success of it. But it's too early to tell. We are at Credit Agricole S. A, of course, fully ready to support this acquisition by Credit Agricole Italia.
Thanks.
Your next question comes from Azura Welty from Citigroup. Please go ahead.
Hi, good morning. Congratulations, Codelini, 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 travel 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. So I'm just wondering if it's that was the main criteria in terms of like potential synergy realization and easiness of this because the bank is like 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.
Yes. On your first question, we haven't disclosed neither the amount of synergies nor the cost of realizing those synergies. But 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. So clearly, it's integrated in the global return that we are targeting. Of course, we have had contacts with the management of Creditovaltelinese 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, but 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 and A transactions that we consider. And in this transaction, clearly, we consider that the integration risks are very remote for the many reasons that Jean Pierre Maoli as explained, I. E. The size, I.
E. The location, I. E. The DNA of Creditovaltelinese, 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 very successful partnership in life insurance.
Your next question comes from Jean Francois Neuez from Goldman Sachs. Please go ahead.
Hi, good morning. I would like to ask to I think just to I think I picked up something in Azura'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. And this would have been a tremendously more transformational deal, for example, than this one, Not better or worse, I don't know what I'm trying to judge here, but essentially, this was 6 times bigger. And 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 the 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?
And The second question that I wanted to ask is when you estimated ROI, synergies, etcetera, How did you go about estimating the synergies and execution risk? Did you discuss this? Was this part of your discussion with the management? Or were your discussion with the management of Queval purely of an informative nature, and you haven't had essentially a chance to due diligence what you're planning to execute? Thank you.
Creditovaltelinese is a listed company. So of course, you imagine that it's not possible to do due diligence in such a situation. So we've been 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. So it's our own calculation performed under our own responsibility, but 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 and we are not going to do it in the future. And second, I think it's not either 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's been analyzed.
It's been we've been taking a lot of time to prepare and to fine tune this operation. We've 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's coherent with our culture. So I think that there is nothing more to say.
Okay, great. Thanks a lot, everyone.
Thanks.
Your next question comes from Giulia Motto from Morgan Stanley. Please go ahead.
Yes. Hi, good morning. Thank you for the presentation. And two questions from me as well. So if I take a step back and I look at capability of your Credit Agricole Italian business.
So 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. So I was wondering, what sort of ROE do you plan for the Italian business? And do you think one of the reasons that you can't match the group profitability is lack of scale? So that's the first question. And then the second question is On coverage, so what sort of coverage do you plan for the combined entity, could you recall Italia pro form a?
Thank you.
Let me start with the second aspect of your question. What are you talking about in terms of coverage?
Or NPL.
NPL. Yes, I did, sorry. So as Jean Pierreau presented it, you can see that both Credito Valtellinese and Credit 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 regions around 50%. So clearly, we intend to pursue significantly the derisking 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 NPLs. 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%. So 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. But clearly, we continue to target that level of profitability in order fuel the global profitability of Credit Agricole SA.
It's clear that the addition of Credito Valzenese to Credit Agricole Italia, as Jean Piero 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.
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 Creswell will allow us Thanks to the excess capital of Coval to further derisk to reach the level of cost to income ratio of Queval Italia to the European coverage, and it will automatically increase the profitability. There are no differences in the operational management nor in the cost efficiency.
And in fact, the productivity of Credit 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 on an aspect in such a way that it's not enough to absorb costs. So we have suggested this operation to the shareholders Because it will allow us to increase synergies of scale and Become more profitable.
I think that we are now going thank you, Jean Pierre. We are now going to take the question from Autonomous.
Yes. Good morning.
Can you hear me? Yes, Stephan. We hear you. Great. Good morning, gentlemen, and thank you very much for hosting the call.
I have 3 small questions, please. The first one, just to clarify, Jerome, what you said earlier. If The Kreval 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 tent of cost synergies that you realized when you integrated the 3 savings banks, ideally as percent of their cost base, How big was it? And finally, could you maybe tell us whether you actually or I should say, clearly, how do you call Assurant Has currently any representation on Creswal'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, and I'm talking under the control of Jean Pierre Mailly. But the last restructuring of the Board of Credit Orvaltelimese. I think that we had the capacity to design to name, I think, to Board members. But of course, by definition, we haven't had any inside information coming from those 2 Board members. It's clearly not possible.
And even more, they are independent Board members. We have chosen them and we have proposed them to the shareholder meeting, but they are independent. So it's not it's absolutely not possible for them to provide any information to a dedicated shareholder. So clearly, we've been working on only public information as is always the case when it's about public offer. Cost synergies regarding the 3 small banks that we've acquired.
I don't remember exactly which 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 Credit Agricola, which is below 65%. Again, I'm talking under Jean Pierreau's control. So 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 percent -plus down to the 60% -plus where they are now. We've been integrating their IT platform and our IT platform in 7 months. We've been closing a certain number of branches that were redundant with our own branches.
And this was fully achieved in year 2 globally. So clearly, the integration process that we have is very efficient. Then your last question, I was not talking about the support of the Board of Creditor Valtellinese. I was just saying that under the Italian law, the Board of Credit World Telinese is not allowed to take any measure that would be adverse to the offer, only the shareholder meeting can. And of course, what we say is that if the shareholder meeting takes that kind of decision, then of course, we can reconsider our offer.
But 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
Regarding the synergies of the integrated Thanks. It was €80,000,000 per year. Synergies between cost and funding, both Cost and funding synergies. The cost synergies have been exceeded. And the funding synergies have also been Exceeded.
We're working on aligning productive production and commercial performance of the 3 banks bringing to the level of CAI. But in terms of in cost and funding strategies, the results were exceeded, overachieved. We haven't appointed any director at Creval. We have 2 directors who we know, but with whom we don't have any informational relationship. They were also informed this morning, just like the other board members.
And so the standards and laws of concept, the authority in Italy, Which are very strict and been fully respected.
Thank you for this compliment. Maybe we can take the next question.
Thank you. This question comes from Kiri Vijay Raja from I see.
Yes. Hello. Good morning, everyone. Thanks for taking my questions. Firstly, just a quick follow-up on the NPE, NPL question.
So 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, for the combined group as a quid pro quo for getting approval for deal? Or is that sort of plan for derisking that fleet has been driven by you? So really just the background there. And then in terms of taking a step back in terms of improving the product penetration at the Cravao customer base. What are the kind of big gaps that you see?
Because as far as I can tell, Creval already has the full product suite available today. So really, my question is what are you going to be doing differently that's suddenly going ramp up the product penetration and revenue per customer at the Treval network? Thank you.
Okay. Clearly, there's absolutely, at this stage, no request on the ECB to target special level of NPE or a specific level of coverage ratio. We are, as I said, already both at the level of Credit Agricole Italia and at the level of Credit Ovalt Helinese south of the market. So it means that if we intend to continue the derisking and to continue the improvement, it's only with the goal of being really at 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.
But again, I will maybe ask Jean Pierre O to provide more details. But You see, for example, that in terms of assets under management and assets under custody, where typically Credito Valtellineze globally represents 1 third of Credit 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 the capacity to significantly improve the penetration of our own product factories on this item specifically. But maybe Jean Pierre, you want to complete?
Yes, Jerome. Let me reaffirm that in our strategic plan, once we secure the authorizations And We will improve our cost income ratio. As to the different products, we've already assessed The different business lines. And right now, the productivity gap at the Creval is about 30%, below Credit Agricole Italy. And with the objective of the 10% ROI by 2023, we will align The performance of Cobalt to the best level to be in line with Credit Agricole Italy.
Great. Thank you. Maybe we can take the next question, if any.
This question comes from Matt Clarke from Mediobanca.
Good morning, everyone. A couple of questions. So firstly, just going back to the CET1 impact of 20 basis points. So 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. And secondly, similar question, what step up or step down to fair value assumptions are embedded in that 20 basis points DT1 reduction?
And then finally, Could you just let me know when the credit card recall assurance stake increased from 5% to 9 point 8%. I hadn't realized that had happened. Thank you.
Well, I would say that the 20 bps impact on the CET1 of Casa is ceiling. So it means that it would be the impact if no benefit from any element, for example, from the DTA law was possible. So it's clearly a ceiling that is here only to illustrate the fact that this operation is very significant for Credit Agricole Italia, but at the level of Credit Agricole S. A. Is more a bolt on acquisition, which is perfectly, I would say, absorbable by our the course of our normal, I would say, capital trajectory.
So it's again, it's a ceiling. It's not very precisely calculated. And when the operation will progress, we'll provide more details on this aspect as well as on some other aspects of the transaction and of the business plan, but it's way too early to do so. 2nd point, well, we've been increasing our stake across time. There's no it's not been done in one shot, and it's been spread in a rather long on a rather long period of time.
So no nothing more to say on that.
Okay. Thank
you. Your next question comes from Pierre Chadwell from CIC.
Yes. Good morning, Jerome.
Good morning.
Two quick questions. First question, I'm not sure, but It seems to me that this operation will have a bad will around maybe €1,000,000,000 And I wanted to know what will be the use of this bad wheel? And did you have any conversation with the ECB In terms of capacity for you to use this bad will in your CET1 or distribution, facilities, etcetera. And I ask my second question now.
Yes, sure, sure. Go ahead, excuse me.
No, no. And my second question regards The network of Creval, we can see that 25% of the branches are located in Sicilia, now that I love very much, but which is obviously Not the part of Italy. You were, if I call it, it was called Italia, was targeting initially. So 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?
And don't you think that it Somehow, 94 branches only in Cecilia. 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 Jean Pierreoul to provide I'll give you some details on the Sicilian part of the network of FetalitovaltelliMEA. It's true that with shareholder equity of €1,700,000,000 and a price that we have published of around €700,000,000 there will be a bad will of around €1,000,000,000
as So I'm calculating well.
Yes, exactly, exactly. We haven't had discussions with the ECB, precise discussions with the ECB on the usage that we can do with this pad wheel. But clearly, we are going to apply the rules and the rules are very simple. You start by allocating part of the bad will to the risks that are not sufficiently covered by in the balance sheet of the bank that you acquired. And then the remaining part is helping you to cover the risk weighted assets, to capitalize the risk weighted assets of the entity that you purchased.
So we are going to fully, strictly and I would say prudently apply the traditional rules, which means that we are going to use a part of this by the way to cover even more some risks that are in the balance sheet of Creditor Valpolice. We are going to use also part of the bad will 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 Jean Francois? Yes, sure.
Can I follow-up on your answer? Because if we consider that Cremal is doing well its job in terms of provisioning, and I cannot imagine that they don't, Most of these bad will will be allocated to restructuring costs, we can imagine. But at the end of the day, We will have, I would say, a net bad will improving your CAR Tier 1. Do you or have you made any Apotheosis of this waste, I would say, not used in the bad will. When you indicate to a market that this operation will have only 20 basis points of impact in Core Tier 1 because for me in my view at the end of the day with this bad wheel and if Creval is well provisioned.
The impact on Cartier 1 will be nil more or less or even maybe positive, it could be positive.
We've taken prudent assumptions in the usage of the bad wheel, which we are not going to disclose, but we've been prudent. And as Jean Pierre said already, we may use part of this bad will to further increase to further decrease the NPL ratios of Creditor Valtellimase in order to, again, make our global retail banking operation in Italy best in class in terms of NPL ratio. So we have taken prudent assumptions when we've calculated this 20 bps hit, 20 bps impact. It may be less than that and will provide more clarity and more details later on when the operation will progress. Maybe on Sicily, Jean Pierreau, if you can give some indication on what we see in this part of the network of Credit
Yes, Jerome. Just a point to on the cost of risk and NPA ratios. Our ambition is to arrive under 5% of NPA. So we are convinced to make a point. About Sicily, it's true, but I remind you that Creval as the 75% of branches in North and Center of Italy.
The 80% of the branches in Sicily are concentrated in the major town as the Palermo, Catania, I remind you in any case that Sicily is So beautiful region, but above all, represented today the 40 percent of Italian agricultural production. So we are convinced to take advantage about with the historical Agricole expertise of Critical. Just a point about the potential risk in CCA. First, we remind that We managed since 15 years in the south branches in the south of Italy, in particular in Campania, the Naples region, without particular problem to serve the other regions. And in any case, at the moment, The Crigall branches in Sicily represented only the 70% of the loan portfolio versus the 25% in a number of clients and branches.
The reason is that in Sicily, credit management above all, Wealth Management and Assurance products and also particularly house credit. No more corporate risk are present in the branches in Actually.
Thank you very much.
Thank you, Jean Pierre. I think we have one last question that we are going to take.
This is
from John Peace from Credit Suisse.
Yes. Thank you. Hi, Jerome. I just wanted to ask a question about Credit Agricole's strategy. So the Credit Agricole of 10 to 20 years ago Like to acquire banks and distribution networks around Europe with mixed success.
But the Credit 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. So 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? So in a kind of digital world, Do you see owning of many more branches in Italy as an asset or a liability?
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 are and they have started to create their critical size, critical mice, critical mass by distributing their products on the basis of our own summers in our own networks, but they've been able to grow beyond and sometimes far beyond our pure retail footprint. And this is why we have developed those activities even in countries where we don't have we don't even have retail network like Spain or Germany, for example.
So 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 to and 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, many criteria and one of the latest one is the fact that in terms of customer recommendation, we are ranking number 2 in Italy. So 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. But 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. So we are not going to change strategy, and it's exactly the same when it's exactly the same answer than the one we could have presented when we've acquired the 3 regional banks that we bought 2 or 3 years ago, it didn't change our strategy.
It didn't preclude us from concluding additional keeping in several activities in Italy or elsewhere. And this is going to continue.
Very clear. Thank you.
Thank you. I think it's over now. So again, thanks very much for having made you available with such a short notice. And 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.