UniCredit CEO Andrea Orcel throughout an interview on the World Financial Discussion board (WEF) in Davos, Switzerland, on Jan. 18, 2024.
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UniCredit‘s CEO Andrea Orcel revealed his hand this week because the Italian lender constructed a 9% stake in Commerzbank — and a takeover bid for the German rival may nonetheless be within the playing cards.
UniCredit faces a lot of hurdles earlier than rising its stake after submitting a request to “doubtlessly exceed 9.9% of Commerzbank if and when needed.” Commerzbank shares soared on Wednesday when information of UniCredit’s place was introduced, and compounded beneficial properties on Thursday following hypothesis of an imminent takeover.
“All of the choices are on the desk,” Orcel mentioned Thursday in a Bloomberg TV interview, stressing that “it’s quite simple to have interaction with all of the stakeholders and see if the premise for a mix is there. And if it’s not, and it’s the foundation for sponsoring or propelling additional Commerzbank in delivering a … transformation, then we could have delivered a number of worth for our shareholders as nicely.”
Roughly half of UniCredit’s freshly acquired stake was bought from Commerzbank’s largest shareholder, the German authorities, which is searching for to step by step exit its place after injecting 18.2 billion euros ($20.05 billion) to prop up the financial institution through the 2008 monetary disaster. The authorities, which retain a 12% shareholding, final week mentioned that round 13.15 billion euros of the rescue sum had been repaid up to now.
All eyes at the moment are on whether or not UniCredit will make the leap when the German authorities returns to dump its shares into the market.
“There may be the chance that the federal government sells down additional. We’d have an interest, on the proper phrases,” Orcel mentioned Thursday. “There may be the chance that we purchase within the open market. Or there’s the chance that we do nothing. However until we ask for the authorization first, we don’t have that flexibility.”
The Italian financial institution already has a presence in Germany via its Munich-based lender HypoVereinsbank. In a Thursday notice, Berenberg analysts pressured {that a} Commerzbank takeover would match with Orcel’s broader enlargement technique and create Germany’s second-largest financial institution, with a market share of roughly 8% of buyer loans.
“UniCredit has at all times seen itself as a pan-European financial institution and its CEO desires this to stay the case,” they mentioned. “Increasing its presence in nations the place it already has an operation is subsequently appropriate with this aim.”
UniCredit took the same cross-border step final 12 months, when it bought a virtually 9% stake of Alpha Financial institution from the state-owned Hellenic Monetary Stability Fund, though it has but to make any extra strikes focusing on the Greek financial institution.
Till not too long ago, Germany’s largest lender Deutsche Financial institution had been seen because the prime contender to take over Commerzbank, following an abrupt collapse of preliminary talks in 2019. Whispers cooled in January, nevertheless, when Deutsche Financial institution CEO Christian Stitching mentioned that merger and acquisition exercise was not a precedence for the group on the time.
A UniCredit takeover of Commerzbank would emerge as a uncommon, if long-awaited, occasion of consolidation amongst Europe’s banking titans. The resource-intensive and time-consuming course of is commonly stymied by regulatory hurdles and limits on massive exposures.
Orcel, nevertheless, is angling in on Commerzbank at “in all probability top-of-the-line moments he may have,” in response to David Benamou of Axiom Different Investments.
“It’s a unbelievable transfer, financially,” Benamou instructed CNBC’s Steve Sedgwick on Thursday.
He famous that the inventory constructing comes when Commerzbank has but to validate its August share buyback plan involving a primary tranche of 600 million euros, or roughly 3.3% of its market capitalization as of Thursday, with the European Central Financial institution — which means the scheme is just not but totally priced into the German financial institution’s “very low” valuation.
Analysts from Berenberg added {that a} potential acquisition of Commerzbank would “materially” scale back the chances of UniCredit pursuing home consolidation in Italy — the place the lender backed out of talks with the world’s oldest financial institution, Monte dei Paschi, in 2021.
Moreover, “UniCredit must navigate via potential political and commerce union objections concerning the deal, which may restrict the worth extraction from this acquisition. Lastly, because the mixed entity can be an even bigger and extra complicated financial institution, it might be confronted with elevated capital necessities,” Berenberg mentioned.
Already, Commerzbank is searching for to fend off a possible acquisition, Reuters has reported, whereas Frank Werneke, the pinnacle of one in every of Germany’s largest commerce unions Verdi, known as on the German authorities to retain its share in Commerzbank “till additional discover as a way to avert a takeover,” in response to a Google-translated assertion.
— CNBC’s Ganesh Rao contributed to this report.