In December 2022, BPER Banca successfully placed €500 million of fixed-to-floating Senior Non-Preferred bonds, a particular type of subordinated bonds aimed at institutional investors.
We asked Marco Biale, Head of Structured Finance at BPER Banca, how it went.
Confirmed advantages - for BPER Banca it will be the new benchmark.
"The operation was a great success, by far the most performing placement operation in the history of our bank. The book building process received a demand of over €2 billion, against an offer of half a billion, from over 200 global investors.
We were also surprised by a component of the demand from the Far East (Japan, Singapore, etc.): an area that we did not think we could reach and that joined the more consolidated markets such as the UK. We can safely say that we now think globally when we design a debt issuance on the market.
The operation had its challenges. Then BPER group has completed a series of important acquisitions in recent years, which have radically expanded its perimeter. The latest, the acquisition of Banca Carige, saw the registration of the merger deed on November 28, so the new issuance of senior non-preferred had to take into account several very recent changes.
In 2022 alone, we completed five issuances. It was an extraordinary year also from this point of view and it ended with this latest success, which was certainly encouraged by a positive market sentiment. An opportunity that we were able to seize".
- BPER was the first bank in Italy to issue debt under its EMTN (Euro Medium Term Notes) program centralized in full dematerialized form at Euronext Securities Milan. The practice so far has been to issue physical bonds - generally New Global Notes - under Anglo-Saxon jurisdiction. What were the differences with this new management? What are the advantages?
Simple and efficient processes
This new digital and dematerialized form presents great advantages that we had the courage to test first.
We have thus challenged market practices that, in our opinion, no longer have any reason to exist.
With the old system, one still has to issue securities that are at least partly subject to British jurisdiction: this means, in the Post-Brexit era, binding oneself to a corpus of extra-community rules, with the risks that this entails, also in relation to regulators such as Banca D'Italia and the ECB.
As Italian issuers, we can now issue totally dematerialized securities that only respond to Italian law, as is the case for covered bond issuances for years. Non-financial Institutions such as the Ministry of Economy and CDP (Cassa Depositi e Prestiti) have been doing this for decades. This system greatly simplifies bond management and procedures.
It translate in lower costs, lower time-to-market, and above all, greater simplicity and efficiency of processes. But there are very concrete advantages
The previous structure, that of the new global notes, practically requires a physical signature on several documents every year in the UK. If one does not have a presence in the country, one must resort to a process agent who essentially allows for indirect domiciliation, but entails the assumption of an ad hoc external figure and its annual renewal.
We can all imagine in the Covid era what enormous difficulties and unnecessary costs the need to physically sign paper documents in London at least once a year for each issuance may have entailed
Euronext Securities Milan, which has been managing dematerialized issuances for over 25 years, has always provided us with an excellent service and we have also found this in this new issuance. With the new method, they become our sole point of contact for a complete range of services, including payment agent services, which translates in simplicity and efficiency.
With the practice of new global notes, on the other hand, we had to interface - also legally - not only with European clearing systems, but also with other required third and intermediary figures, which inevitably complicated the management of the entire issuance. Now everything is more direct and transparent.
- BPER presented its 2025 industrial plan last June. In this context, what are the next initiatives you have planned?
We intend and need to return to the market, between this year and the first few months of 2024, with at least two new senior non-preferred issuances.
We will probably have to do more, but I can already say that for us, centralized dematerialization in digital form at Euronext Securities Milan will be the standard.
It is a practice that we have successfully tested, and our goal is to consolidate it.
I also think that it has the potential to become the market standard and win over the previous practices that now have too many disadvantages."