The head of Unicredit commends the advantages of acquiring Commerzbank.
Unicredit shockingly moved into Commerzbank's sphere. Now, Unicredit's CEO, from Italy, is pushing for a complete acquisition of Germany's second-largest private bank. Simultaneously, he's putting forth conditions. Orcel aims to counteract the merger, as per Verdi.
The Italian titan, Unicredit, is pressing for a buyout of Germany's second-largest private bank following its infiltration of Commerzbank. Simultaneously, Orcel, Unicredit's CEO, has set conditions. He wants Commerzbank to boost profitability and pointed out potential savings if a merger occurs. Commerzbank confirmed contact with Unicredit but remained silent otherwise. The German government, criticized for abandoning Commerzbank, now aims to evaluate the situation. A merger of both banks, Orcel suggested to "Handelsblatt," could benefit all stakeholders and create a robust competitor in the German banking market. "Private customers could receive enhanced support and the German SME sector could be bolstered with financing and comprehensive international assistance," Orcel stated. The two institutions have minimal overlaps, Orcel claimed. Therefore, a bank that complements each other geographically and has a well-balanced mix of private and corporate businesses could be created. Savings are particularly high in central functions. Unicredit has had a strong presence in Germany since its acquisition of HypoVereinsbank in 2005. "It's crucial that Commerzbank strengthens its balance sheet, grows, and becomes more profitable," Orcel further demanded.
Verdi Fears Job Cuts from Takeover
"The present management has made significant progress in this regard, but in my opinion, potentially more can be achieved." The HVB subsidiary of Unicredit has a doubled equity capital return compared to Commerzbank. Its cost-to-income ratio is 20 percentage points lower than that of the Frankfurt-based firm, Orcel stated. Unicredit seized the opportunity presented by the federal government's gradual withdrawal from its Commerzbank stake and entered the DAX company on a large scale. The Italians acquired a 4.5 percent stake from the federal government and also bought shares on the market, thus holding a 9 percent share.
The federal government saved Commerzbank from bankruptcy with billions during the financial crisis. It still holds 12 percent of the shares, which it intends to sell gradually. A merger with Unicredit would develop a European banking colossus with a market capitalization of approximately 79 billion euros. The Verdi union dreads job cuts and wishes to halt the bank's takeover. It demands that the federal government cease selling any more Commerzbank shares. Commerzbank CEO Manfred Knof did not comment explicitly on a potential takeover. "There has been contact," he stated on the sidelines of an event in Berlin. "We are convinced of our plan." If someone presents an alternative plan, we'll examine it in the interest of investors, customers, and employees, Knof underlined. It's now crucial to implement our plan, he emphasized.
In the aftermath of Unicredit's intrusion, criticism of the German government's strategy emerged. It seemed to have been surprised by the Italians' move.
A spokesperson for Finance Minister Christian Lindner stated that the federal government would now evaluate the situation. It's primarily the responsibility of Commerzbank's leadership to consider potential shareholders, the spokesperson highlighted. In transactions such as the sale of federal shares in Commerzbank, it's usual to connect with investors during the sales process. An investment bank assigned by the financial agency approached investors, including Unicredit, as part of this procedure. This serves to gauge the market environment on the day of the transaction.
The proposed acquisition by Unicredit could potentially lead to boosted profitability and significant savings for both banks, according to Orcel. Consequently, the Verdi union voices concerns about potential job cuts as a result of the merger.
