Italian UniCredit on Wednesday, September 11, announced the acquisition of a 9% stake in German Commerzbank.
The Italian financial institution also stated its intention to seek approval for the potential acquisition of more Commerzbank shares. It is worth noting that against the background of relevant statements, the likelihood is growing that UniCredit chief executive officer Andrea Orcel is preparing to head the German bank.
The Italian financial institution paid 700 million euros ($773.2 million) for almost half of the securities by bidding for shares offered by the German government to reduce its holding in Commerzbank. The relevant information is contained in a statement that was published by UniCredit.
Against the background of the news about the purchase of shares by the Italian lender, the value of Commerzbank securities increased by 18.5% during trading in Frankfurt am Main, reaching 14.98 euros per equity. At the same time, UniCredit shares in the context of the mentioned information rose by 0.4% at the Milan trading.
The Italian financial institution becomes one of the largest shareholders of Commerzbank. It is worth noting that UniCredit has in recent years taken measures aimed at strengthening its presence in Germany through the acquisition of the mentioned rival.
UniCredit’s position in the German banking sector is already characterized by strength. The relevant state of affairs is largely because an Italian financial institution owns HVB. It is also worth noting that UniCredit currently has excess capital. Moreover, the Italian lender has announced its intention to explore value-creating opportunities for all stakeholders in both banks.
UniCredit’s official statement notes that the financial institution is ready to submit regulatory filings for authorization to potentially exceed 9.9% of Commerzbank if and when necessary.
The Italian lender made a significant outbid of all other offers, paying 13.20 euros per share and above the daily closing price of 12.6 euros. The relevant information is contained in a statement that was published by the German government.
It is worth noting that the actions of the Italian lender came as a surprise to officials of the German ministry of finance. These officials initially planned to sell Commerzbank shares to several buyers.
Commerzbank released a statement describing the acquisition of securities by the Italian lender as a testament to the progress made by the financial institution.
The media, citing an insider, reports that the German bank is ready to consider a merger proposal. The financial institution, according to the informant of the journalists, will be ready for such a deal if the appropriate need arises.
One Commerzbank Supervisory board member Stefan Wittmann, during a conversation with media representatives, announced his intention to fight any possible takeover. He noted the intention to do everything possible to prevent such actions. Also in this context, Stefan Wittmann underlined that after UniCredit acquired HVB, there was a loss of a large number of jobs, and the decision-making process was moved to Milan.
Commerzbank chief executive officer Manfred Knof, who downplayed the likelihood of big tie-ups, last Tuesday, September 10, announced his intention to resign when his current term ends next year.
It is worth noting that among the heads of European banks and regulators in this region for a long period, there has been a desire to consolidate the local banking market, which is characterized by a high degree of fragmentation. In the context of relevant intentions, cross-border mergers are considered as a tool to achieve the goal. At the same time, complaints about serious obstacles to the implementation of such deals have been repeatedly recorded. Very often discussed takeover plans remained in the past in the status of ideas, the materialization of which did not occur, without going beyond the intentions that exist only in the form of intentions.
KBW analysts say that, in their opinion, a full takeover of Commerzbank may make financial and strategic sense for UniCredit. It is worth noting that since Andrea Orcel’s arrival in April 2021, the shares of the Italian lender have risen in price four times. UniCredit was valued at 59 billion euros. A similar indicator of the German bank is at 15 billion euros.
Andrea Orcel is one of Europe’s most experienced dealmakers. He has repeatedly spoken about his intention to consider mergers and acquisitions deals for the Italian lender. At the same time, Andrea Orcel noted that these business agreements must comply with strict financial conditions. The media, citing an insider, claim that the head of the Italian bank intends to receive at least a 15-20% return on any investment.
One of UniCredit’s UK shareholders described the acquisition of Commerzbank shares as a clever and opportunistic move. In the relevant context, it was also noted that in this case, the disciplines were demonstrated when buying a stake with the optionality of what to do next.
UniCredit has increased its excess capital as profits rise. The corresponding figure reached 6.5 billion euros. In this case, the bank complied with the requirements of Basel IV regulations.
Last November, UniCredit became the owner of a 9% stake in the Greek Alpha Bank.
The German state has held a 16.5% Commerzbank stake through its bank rescue fund. The authorities of this country assisted the lender 16 years ago during the global financial crisis. Last week, Berlin announced its intention to pare down its holding. The implementation of the relevant intention began on Tuesday. As part of the first move, Berlin sold about 53 million shares, after which its stake dropped to 12%.
It is worth noting that in the framework of private conversations in the past, German officials have repeatedly talked about their intention not to allow a foreign buyer to purchase Commerzbank. In the relevant context, they noted that the implementation of such a deal will create a stronger domestic competitor for Deutsche Bank.
Andrea Orcel studied a deal with Commerzbank soon after taking the helm and approached Manfred Knof in early 2022. The relevant information was published by the media, referring to insiders.
Orcel’s predecessor, Jean Pierre Mustier, had also been working on a Commerzbank acquisition. The corresponding intention was not implemented due to counteraction from the political opposition. This was reported by the media, referring to insiders.
UniCredit has recently been active in mergers and acquisitions. In July, this lender announced the acquisition of the Belgian digital bank Aion and its cloud platform Vodeno. The cost of this deal was 370 million euros.
As we have reported earlier, Italy Privacy Watchdog Fines Unicredit.
