Performance, against performance: Commerzbanz and UniCredit published better than expected financial results on Wednesday while the Italian bank is in ambush to take control of its German rival, which is resisting.
Two months after the unexpected irruption of UniCrédit into the capital of Commerzbank, the two establishments continue to gauge each other, with no outcome in sight for what could be one of the most ambitious mergers in Europe since the 2008 financial crisis.
Coincidentally, the two groups published their third quarter financial results on Wednesday: both UniCredit, which saw its net profit increase by 8.2% to 2.5 billion euros (2.35 billion francs), and Commerzbank. , with a net balance of 642 million euros, down 6%, did better than expected by analysts.
The Italian confirmed its interest in the Frankfurt group: ‘during the quarter we deployed part of our excess capital and made a strategic investment in Commerzbank, which may or may not lead to a complete consolidation,’ Andrea underlined. Orcel, the enterprising boss of UniCredit.
At the end of October, however, he stressed his ‘desire not to enter into conflict with the German government’, according to representatives of European unions.
The brand new president of the board of directors of Commerzbank, Bettina Orlopp, intends on the contrary to strengthen the independence of the establishment.
Green light expected
On Wednesday, Commerzbank further raised its annual revenue targets and is aiming for a ‘record’ net profit of 2.4 billion euros.
UniCredit also raised its annual turnover forecast to 24 billion euros and confirmed its target for net profit of more than 9 billion euros, which it had revised upwards in September.
The Milanese bank, which surprised in September by announcing that it had acquired 9% of Commerzbank, is awaiting approval from the European Central Bank (ECB) to increase its stake to 21%, and is already aiming beyond that, up to 29, 9%, just below the threshold triggering a takeover offer.
Commerzbank, rescued by the German state in 2008, has accelerated its digital shift in recent years and reduced its workforce. The retail and corporate credit bank was thus able to increase its profits, also driven by the rise in rates in 2022 and 2023.
But this dynamism, on track to be confirmed in 2024 despite the start of monetary easing, may not be enough to protect it against a potential takeover by UniCredit.
‘Naivety’ of Berlin
The Italian government is rather in favor of a merger to form a European banking champion, unlike the German chancellery which sees it as a threat.
Berlin is in fact criticized for its lack of precaution when placing part of its stake in Commerzbank on the market.
It appears that UniCredit was not the only one interested, at the beginning of September, in getting its hands on this package of securities. Another unidentified ‘expression of interest’ has been received by Berlin, according to a written response from State Finance Secretary Florian Toncar to MP Matthias Hauer.
The government ultimately acted ‘naively’ without ‘taking any precautions against a hostile takeover bid’, asserts Mr. Hauer – a member of the conservative opposition CDU – to AFP.
UniCredit had already made a significant move in Germany in 2005 with the acquisition of the Bavarian bank HypoVereinsbank.
Since 2021, Andrea Orcel has favored internal growth, without excluding minor acquisitions, such as that of Alpha Bank Romania, announced on Monday.
To strengthen Commerzbank’s independence by providing investors with an attractive outlook, medium-term targets were raised in September, with net profit expected to exceed €3 billion by 2027.
The bank will also buy back its own shares on the market from Wednesday, for around 600 million euros, which will automatically cause the stock to rise.
At least 70% of profits for the year 2024 are intended to be redistributed to shareholders, which ‘aims to create sustainable value for shareholders’, according to Ms. Orlopp.
Finally, a mergers and acquisitions department, headed by an in-house executive, will be set up in December to stimulate external growth, according to an internal announcement.
/ATS
