May 9, 2019 / 3:45 PM / 2 months ago

UPDATE 1-Mediobanca eyes Julius Baer's Kairos in asset management drive

(Recasts lead, adds CEO, analyst comments)

By Gianluca Semeraro and Stephen Jewkes

MILAN, May 9 (Reuters) - Mediobanca is looking at Julius Baer's Italian asset manager Kairos as part of plans to expand its wealth management business, the bank's CEO said on Thursday.

The investment bank is interested in doing mid-sized deals in wealth management and has the financial muscle to fund them.

"Kairos can fit well in our strategy to expand wealth management," Chief Executive Alberto Nagel said in a conference call on the bank's third-quarter results.

But the CEO said any deal would have to be based on a strong industrial plan agreed with management at Kairos. Italian media reports have said Julius Baer plans to sell Kairos, which they said was worth more than 400 million euros.

Julius Baer declined to comment.

Mediobanca was for years at the heart of Italian finance, with cross-shareholdings in a number of leading companies.

But the bank has sold most of those stakes to focus on traditional banking, stepping up its commitment to wealth management and consumer finance.

Nagel has previously said the bank has 2 billion euros ($2.3 billion) available for acquisitions in those areas this year.

He said on Thursday the bank remained solid and there were no potential headwinds to hinder capital generation.

"We will continue to use capital generation for dividends, buybacks and selected mid-size acquisitions," the CEO said.

The bank reported a CET1 core capital ratio - a measure of financial strength - of 14.3 percent in the third quarter, up 40 basis points from the end of December.

In a comment on Mediobanca's third-quarter, Citi said the bank's capital had improved slightly and remained strong.

"Mediobanca confirmed solid profitability and capital, low sensitivity to sovereign and no asset quality issues," Citi said.

The bank said earlier on Thursday net profits in its fiscal third quarter fell almost 15 percent to 175.5 million euros on lower revenues as economic uncertainty weighed on consumers.

This was above an analyst consensus forecast of 165 million euros.

At 1433 GMT, Mediobanca shares were down 2.8 percent, while the European banking index was down 2.3 percent. ($1 = 0.8895 euros) (Reporting by Gianluca Semeraro and Stephen Jewkes; Editing by Mark Potter and Jane Merriman)

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