July 31, 2019 / 12:55 PM / 4 months ago

UPDATE 1-Mediobanca could use own shares to help fund Kairos deal

(Recasts with CEO quotes from press briefing)

MILAN, July 31 (Reuters) - Italy's Mediobanca could use its treasury shares in a potential acquisition of Julius Baer's asset manager Kairos after it raised the target for its buyback programme, Chief Executive Albert Nagel said on Wednesday.

The new target for the buyback programme is set at 4.3% of share capital, up from 3% targeted in November when the plan was announced, the company said in a statement.

The bank used about 11.6 million treasury shares to buy a 66% stake in French merchant bank Messier Maris & Associes in April.

"We are continuing talks with the owners and managers of Kairos," Nagel said on Wednesday during a news briefing after earnings were released, adding that the bank will know in September whether a deal can be done.

"Mediobanca could partially pay for a Kairos acquisition with treasury shares," Nagel added.

Nagel had said in May that the bank was looking at Kairos as part of plans to expand its wealth management business.

Julius Baer said last week that the bank was considering options for Italian subsidiary Kairos - including divesting it, forming a partnership or keeping it and trying to improve profitability - and intends to make a decision soon.

After years at the heart of Italian business with a cross-shareholdings in a number of leading companies, Mediobanca has shifted its core business to traditional banking, stepping up its commitment to wealth management and consumer finance.

Mediobanca beat analyst estimates in the fiscal year ended in June "despite a very tough environment but our business model shows that we are able to perform well also in a unfavourable scenario", the chief executive told the briefing.

Net profit fell 4.7% to 823 million euros ($917 million)after extraordinary items had boosted the figure in the previous 12 months.

The latest number was above an analyst consensus compiled by the bank of 805 million euros. The bank will pay a dividend of 0.47 euros, raising the payout to 50% of net profit from 48% in the previous year.

The CET1 core capital ratio, a measure of financial strength, stood at 14.1%, down from 14.24% at the end of March.

The bank achieved all targets in its industrial plan that ran until June. A new plan will be announced in November. ($1 = 0.8972 euros) (Reporting by Gianluca Semeraro Editing by Keith Weir)

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