WOOD Flash – MONETA Money Bank: end of the dream, at least for now

MONETA Money Bank announced yesterday (30 May) that it has agreed to terminate the planned acquisition and merger of the AirBank group assets controlled by PPF. In our most recent update on MONETA, we saw its equity story as being locked into the merger and its trading on the market very much dependent on developments on that front. Unfortunately, the cancellation of the plan still keeps MONETA a hostage of the recent corporate developments related to the merger and it may take a while before the market starts looking at MONETA on a stand-alone basis. We expect an initial negative market reaction to the news, but we believe that this may not be related to the fundamental potential that we forecast currently for MONETA on a stand-alone basis. We believe that this could be due to: i) MONETA’s relative outperformance vs. its CEE banking peers ytd, and its premium and top valuation within the CEE banking space; ii) some worrying statements on the dividend potential and capital requirements mentioned by PPF as a key angle for the merger plan cancellations, and those being a read-across for MONETA’s stand-alone outlook potentially; iii) medium-term share overhang risks, but mitigated by the signed lock up with PPF in the short term. In our view, the key for its further share price performance is MONETA’s management’s discussion with the market that should, at least, address the issue of the dividend potential on a stand-alone basis, as we note that PPF commented on the dividend potential in the post-merger plan, and those are two different things. We see MONETA as a solid mid-cap bank in the CEE region, which should offer above-average dividend yields to its shareholders over the medium term, and still offers a M&A angle, as both an acquisition target and a merging entity.