Commerzbank will hold talks with UniCredit, after the German lender strengthened its defences against an alleged takeover. The German lender had promised to increase profits and payouts for shareholders. Bettina orlopp, Commerzbank’s finance chief, who was appointed as the bank’s next chief executive Wednesday, revealed that on Friday, Commerzbank would be holding its first round of discussions with UniCredit – a Milan-based company – to “exchange ideas”.
This month, the Italian bank announced that it had purchased a 9.1% stake in one of Germany’s largest lenders. It also said that it was considering making a bid to acquire the Frankfurt-based company. UniCredit led by Andrea Orcel increased its interest in Commerzbank significantly on Monday, when it announced that it would use derivatives to increase its stake in Commerzbank to around 21 per cent. Olaf Scholz described UniCredit’s actions as “unfriendly” and “hostile”. Berlin warned that it opposed a takeover. The German government does not have the power to stop a deal, as it owns 12 percent of Commerzbank. This is a legacy from the bank’s 2007-09 rescue.
Commerzbank, in an apparent attempt to prove its independence, has set new performance goals. These include a net profit of more than €3bn by 2027, and a return on tangible equity (a key measure for profitability) that is above 12 percent at the same time. Commerzbank also expects to increase capital returns to shareholders with a goal of reaching a payout rate of over 90% in 2025, and the following two years. The UniCredit takeover of Deutsche Bank would be the largest cross-border banking transaction in Europe since 2008 and would mark a major step towards a banking union within the European Union. The fear of losing “national champion” EU banks has long been a barrier to deal-making.
UniCredit was tipped in the past as a potential bidder for Commerzbank and has a strong presence in Germany via its HypoVereinsbank division. The Italian group has seen a turnaround since Orcel took over as chief executive in 2020, which fuelled speculation about a possible bid. Orcel is considered a dealmaker who knows how to make a good deal. He spent most of his career working as an investment banking, and became a well-known person in London.
Orlopp is 54 years old and will replace Manfred Knof at Commerzbank at the end this month. She joined the bank in 2000 and was promoted to finance chief by 2020. Commerzbank, Germany’s largest lender is seen as a key institution because it lends a lot to the Mittelstand – the small and medium businesses of the country. Deutsche Bank, Germany’s largest lender, has also looked at purchasing Commerzbank in the past. This could make UniCredit a competitor.
Commerzbank shares closed at €16.34, up €1.05, or 69%. Stocks of UniCredit rose €1.83, or 4.8%, to €39.70 at Milan.
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