Poland, Russia Sales May Lift Sagging UniCredit, Italian Stocks

Sept. 25 (Bloomberg) -- Italian banks and exporters are profiting from booming economies in eastern Europe. Their lagging shares won't catch up until investors notice the return from almost $10 billion of acquisitions in the past year alone.

``The growth is there,'' said Felix Schnella, who helps manage the equivalent of $600 million in European equities at Allianz Global Investors in Frankfurt. ``The question is how fast the market will realize this.''

Germany's DAX Index has risen 18 percent this year and the Dow Jones Euro Stoxx 600 Index is up 3.1 percent. Italy's benchmark S&P/MIB Index, the worst performer in Europe this year after Ireland's market, is down 3.5 percent.

Higher interest rates and contagion from the subprime- mortgage crisis in the U.S. hit the shares of Italian banks and insurers, which account for more than half of Milan's MIB Index.

At the same time, UniCredit SpA, Italy's largest bank, is merging its two Polish banks to create the No. 1 in the region. It now gets about 20 percent of its revenue from east European markets, twice the share of 1999. The three largest financial institutions in Italy have 40 million customers in the east.

Schnella bought Buzzi Unicem SpA in June. The Casale Monferrato, Italy-based cement company in January completed the acquisition of Germany's Dyckerhoff AG to tap demand for new buildings in countries including Russia and the Czech Republic.

Austrian and German companies began investing in former communist countries when the Berlin Wall came down in 1989. German businesses spent $13.3 billion in eastern Europe between 1990 and 2005 compared with $6.5 billion by their Italian peers, according to data compiled by Bloomberg.