Línea Directa's IPO is delayed over time.
It is scheduled for the first quarter, but first the ECB must give its blessing.
Bankinter wants to deliver the insurer as a dividend, but the remuneration is limited until September.
Friday, January 15, is the limit for entities to present their shareholder remuneration plans to the supervisor, but the sources consulted indicate that there will be no decision on this issue.
Not that day or in the immediate future.
The pandemic is frustrating one of the operations with which the market has speculated for over a decade and which was confirmed in December 2019. The market launch of Línea Directa was not carried out last year due to the recommendation - in practice, an outright order - from the ECB since March 27 for the bank not to distribute dividends until October.
click on the photo
The objective of the Central Bank is to preserve the capital of the sector so that it focuses on spreading liquidity to companies.
The decision was extended on July 28 until January, and on December 15 it returned to the load, requesting that the entities not distribute more than 15% of the benefit of 2019 and 2020 until October.
This Friday the entities must expose the shareholder remuneration plans to the supervisor.
BANKINTER4,990.28%
"Until mid-January there is a deadline to request payment of dividends and we have not received any instructions from the ECB in any way," says a Bankinter spokesperson.
From the entity they point out that they speak regularly with the body chaired by Christine Lagarde - although the supervision mechanism is under the baton of Andrea Enria - and they assure that they remain determined to execute it.
The delivery of dividends is frowned upon by the ECB, as is the repurchase of shares, and the operation was not carried out last year for this reason.
The situation, according to the investment banking sources consulted, remains the same.
The ECB is not expected to give its approval to the deconsolidation of Línea Directa in the short term, despite the fact that the bank's CEO, María Dolores Dancausa, has indicated on several occasions that the mission is to carry it out in the first quarter of 2021. Since the ECB declined to comment on this information.
The operation would subtract about 200 million euros from the bank's own funds
In the presentation of the IPO, a year ago, Bankinter explained that the operation would reduce its own funds by around 200 million.
This is what the Central Bank does not want.
Bankinter would generate, on paper, a positive impact on profits of 1,000 million euros.
The theoretical book value of the insurer was set at 259 million at the end of 2019. But the reality is that it would get rid of 82.6% of Línea Directa.
A percentage valued at about 1,184 million, which would be subtracted from the issue premium, included in equity, according to the total appraisal of 1,434 million carried out by Citi.
The bank would retain a 17.4% stake.
And, after all the process, the transaction would mean the aforementioned impairment in its own funds.
It remains to be seen whether Bankinter has obtained the green light from the ECB at the entity's next shareholders' meeting, which is expected to be held in July.
Bankinter maintains talks with the Central Bank
As it is a distribution among the current shareholders, there would be no shares to be placed, as in an IPO.
It would be a mere listing on the Stock Exchange (
listing
) of the shares already delivered.
This was done, for example, by Dia, which was distributed as a dividend to Carrefour shareholders in July 2011. But it is necessary to carry out various tasks with the mission of giving liquidity to the value and that the partners who so wish can sell it.
For this and other parts of the process, the insurer has hired Bank of America, as published by CincoDías on October 20.
Jaime Botín, with 23.2% of Bankinter, would initially be the largest direct shareholder of Línea Directa once it is listed.
Be whenever.
Their participation would exceed 19%.
Línea Directa is, and has been, the great pillar of Bankinter's results.
Between January and September of last year, its net profit was 100 million, which represents more than 45% of the 220.1 million obtained by the group as a whole.
In fact, the bank recognizes in a presentation sent to the CNMV that the insurer has been a round business, with the contribution of dividends for 1,058 million since 2009, when Bankinter acquired 50% of the firm from Bank of Scotland, its partner since its launch in 1995. Now, it has become the fifth largest auto insurer and thirteenth in home, with a total of 3.2 million customers.
Its strategy has been based from the beginning on telephone and internet sales.
More than 90% of the profit has gone to dividends
Strong ability to generate profit.
The return on equity (ROE) of Línea Directa stood at 35% between January and September, when that of Mapfre was 6.9% and that of Catalana Occidente, 8.7%. Since 2014, its
pay out
(percentage of the profit destined to reward the shareholder) has been greater than 90%. In 2020, however, it did not deliver anything to Bankinter, due to regulatory restrictions, similar in the insurance sector to those that exist in the banking sector. Hence, its solvency ratio has shot up to 264% at the end of the third quarter, compared to 211% corresponding to 2019. The bank, however, anticipates that prior to the IPO “it will be agreed that Línea Directa Seguro pay a dividend to leave your solvency ratio at levels similar to those customary in the market for this type of insurance company ”, according to its financial report for the first half of the year. The dividend policy once it has gone public, however, is yet to be determined. If it maintained this high
pay out
, for a valuation of 1,434 million euros and profits of 110 million euros, its dividend yield would be close to 7%.
