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Commerzbank is open to talks about a potential tie-up with UniCredit, according to people familiar with the discussions, after the Italian bank built a 9 per cent stake in its German rival and announced it was taking regulatory steps to increase its stake further.
UniCredit forked out up to €1.4bn to become the second-largest Commerzbank shareholder after the German government, acquiring a 4.5 per cent stake from the Finance Agency on Tuesday night and a similar amount of shares on the open market.
The move by UniCredit’s chief executive Andrea Orcel, the highest profile dealmaker in European banking, could open the door to long-awaited banking consolidation on the continent.
Berlin last week said it was planning to sell down its 16.5 per cent stake in Commerzbank, which it has held since rescuing the lender during the financial crisis in 2009.
UniCredit said on Wednesday it would submit regulatory filings for authorisation to potentially increase its stake in Commerzbank to more than 9.9 per cent “if and when necessary”. The German government, whose stake has now fallen to 12 per cent, has committed to a lock-up period of 90 days before selling any more Commerzbank shares.
Future decisions would “depend on the investment meeting UniCredit’s strict financial parameters which have been clearly and consistently communicated to the market”, UniCredit said.
People familiar with Commerzbank’s internal discussions told the Financial Times that the German lender had not previously been contacted by UniCredit and learnt about the transaction on Wednesday morning via regulatory statements.
But the people added that Commerzbank would assess UniCredit’s plans with an open mind.
In a brief statement at midday on Wednesday, the German lender said it had “taken note of UniCredit’s announcement this morning”, and the move was “testament to the progress made and the position of Commerzbank”.
The bank said its boards would “continue to act in the best interest of all our shareholders and our key stakeholders such as employees and clients” but declined to comment further.
UniCredit said on Wednesday morning that it would “engage with Commerzbank AG to explore value-creating opportunities for all stakeholders in both banks”.
Shares in the German lender shot up 16 per cent in early trading in Frankfurt on Wednesday, trading at the highest level since July with a market capitalisation of €17.3bn. UniCredit shares rose by as much as 1.95 per cent in Milan, giving it a market value of close to €60bn.
UniCredit’s move on Commerzbank underlines the growing appetite for consolidation in Europe, which has previously stalled in part because of political and regulatory hurdles.
Speaking to the FT in May, Orcel said “most rumours” about the bank looking at potential targets were “true” as it was constantly looking for M&A opportunities. UniCredit has been one of the Eurozone’s strongest performers this year, rising 46 per cent in Milan.
The Italian bank already owns Munich-based lender HypoVereinsbank and has long been considered the frontrunner for an acquisition of Commerzbank, as a combination of both operations has the potential to generate a German finance powerhouse.
“At first glance, a complete takeover of Commerzbank can make financial and strategic sense for UniCredit,” analysts at Keefe, Bruyette & Woods wrote in a note to clients.
UniCredit struck a similar deal last year when it bought a 9 per cent stake in Alpha Bank from the Greek government. The purchase was seen by M&A advisers as a way for UniCredit to gain more information on the lender while it considered taking more control.
The finance ministry said the government had sold the 4.49 per cent stake in Commerzbank to UniCredit because its bid was “by far” the highest. According to documents seen by the FT, the stake changed hands for €13.20 per share, a premium of close to 5 per cent above Tuesday’s closing price.
“The government is bound by the principle of economic efficiency,” the finance ministry said on Wednesday.
A merger of HypoVereinsbank and Commerzbank would create a German banking juggernaut able to challenge the country’s largest lender Deutsche Bank.
HypoVereinsbank for now has a regional focus on Bavaria in Germany’s south as well as the Hamburg area while Commerzbank has a footprint across the country, so the overlap of both lenders would be limited.
Deutsche walked away from merger talks with Commerzbank in 2019 because of an overlapping client base among German companies. However, insiders expected that Deutsche would likely reconsider a potential merger in case of a foreign bid for Commerzbank to avoid the creation of a bigger domestic rival.
Deutsche said it did not “comment on our competitors”, adding that it was “focused on its growth strategy and [its] return on tangible equity target of above 10 per cent for 2025”.
Asked about a potential takeover of Commerzbank by UniCredit last week, Deutsche’s chief executive Christian Sewing told Handelsblatt that the lender would not “see [such a transaction] critically per se”, adding that “competition is good for business”.
UniCredit’s stake purchase comes hours after Commerzbank said its chief executive Manfred Knof would not seek another term and depart by the end of next year. While Knof said he was willing to stay until December 2025 the bank said it would start the search for a successor “immediately”.
With additional reporting by Guy Chazan in Berlin
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