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 might nonetheless be within the playing cards.
UniCredit faces plenty of hurdles earlier than growing its stake after submitting a request to “potentially exceed 9.9% of Commerzbank if and when necessary.” Commerzbank shares soared on Wednesday when information of UniCredit’s place was introduced, and compounded features on Thursday following hypothesis of an imminent takeover.
“All the options are on the table,” Orcel stated Thursday in a Bloomberg TV interview, stressing that “it’s very simple to engage with all the stakeholders and see if the basis for a combination is there. And if it’s not, and it is the basis for sponsoring or propelling further Commerzbank in delivering a … transformation, then we will have delivered a lot of value for our shareholders as well.”
Roughly half of UniCredit’s freshly acquired stake was bought from Commerzbank’s largest shareholder, the German authorities, which is looking for to progressively exit its place after injecting 18.2 billion euros ($20.05 billion) to prop up the financial institution in the course of the 2008 monetary disaster. The authorities, which retain a 12% shareholding, final week stated that round 13.15 billion euros of the rescue sum had been repaid thus far.
All eyes are actually on whether or not UniCredit will make the leap when the German authorities returns to dump its shares into the market.
“There is the possibility that the government sells down further. We would be interested, at the right terms,” Orcel stated Thursday. “There is the possibility that we buy in the open market. Or there is the possibility that we do nothing. But unless we ask for the authorization first, we don’t have that flexibility.”
The Italian financial institution already has a presence in Germany by its Munich-based lender HypoVereinsbank. In a Thursday word, Berenberg analysts burdened {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 always seen itself as a pan-European bank and its CEO wants this to remain the case,” they stated. “Expanding its presence in countries where it already has an operation is therefore compatible with this goal.”
UniCredit took the same cross-border step final 12 months, when it bought an almost 9% stake of Alpha Financial institution from the state-owned Hellenic Monetary Stability Fund, though it has but to make any extra strikes concentrating on the Greek financial institution.
Till lately, 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 stated 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 usually stymied by regulatory hurdles and limits on giant exposures.
Orcel, nevertheless, is angling in on Commerzbank at “probably one of the best moments he could have,” in line with David Benamou of Axiom Various Investments.
“It’s a fantastic move, financially,” Benamou advised 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 will not be but absolutely 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 percentages 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 would have to navigate through potential political and trade union objections about the deal, which could limit the value extraction from this acquisition. Lastly, as the combined entity would be a bigger and more complex bank, it could be faced with increased capital requirements,” Berenberg stated.
Already, Commerzbank is looking for to fend off a possible acquisition, Reuters has reported, whereas Frank Werneke, the top of one in all Germany’s largest commerce unions Verdi, known as on the German authorities to retain its share in Commerzbank “until further notice in order to avert a takeover,” in line with a Google-translated assertion.
— CNBC’s Ganesh Rao contributed to this report.
