The logo of the German bank Commerzbank seen on a branch near the Commerzbank Tower in Frankfurt.
Daniel Roland | AFP | Getty Images
Two months after UniCredit made its first move to woo German lenders Commerzbankfinancial institutions flaunted their financial strength as one of Europe's biggest banking mergers remains in the balance.
Both banks announced third-quarter results on Wednesday, with UniCredit reporting net profit of 2.5 billion euros ($2.25 billion), up 8% year-on-year, compared to the 2.27 billion euros expected in Reuters. exceeded. The company has raised its full-year net profit forecast to more than 9 billion euros, from the previous estimate of 8.5 billion euros.
Meanwhile, Commerzbank said its net profit for the third quarter fell 6.2% to 642 million euros, due to a sharp decline in net interest income and an increase in risk provisions. . Nevertheless, the financial institution has revised upward its forecast for net interest and net fee income for 2024, saying it will achieve a net profit of 2.4 billion euros compared to 2023's 2.2 billion euros. The company stated that it had confirmed its full-year forecast.
Commerzbank CEO Bettina Orlop said in an interview with CNBC's Annette Weisbach that the bank experienced a “very good quarter,” but said lower European interest rates were clearly having an impact on business. He admitted that he was giving.
He stressed that Commerzbank is on track to drive up its share price through a combination of return on capital, high profitability and the lender's speed in achieving its targets.
“We have a very good strategy in place and it is paying off,” he said. The market will be watching to see if the bank adopts a defensive strategy to fend off takeover interests.
Commerzbank has so far avoided courting UniCredit. When the Italian financier showed his hand in using derivatives to build up a potential 21% stake in Commerzbank, the German financier announced that the new CEO and Clarified financial goals. on monday, the German bank said The company received regulatory approval for a 600 million euro ($653 million) share buyback, which was expected to begin after Wednesday's earnings report and be completed by mid-February.
But Orlop told CNBC that Commerzbank is not inherently opposed to the merger.
“There's nothing on the table, so we have nothing against them, which is very important. We also said we're always very open to talking, they If something comes to the table, we will consider it carefully. We will consider our own independent strategy and consider where we can create more value for the benefit of our stakeholders. ” she said.
The German government has not yet celebrated the possibility of consolidation, with Chancellor Olaf Scholz denouncing that “unfriendly attacks and hostile takeovers are not good for banks.” Comments from late September Reuters reported.
Commerzbank's largest shareholder, the Berlin government, has a 12% stake after bailing out the bank during the 2008 financial crisis and selling an initial 4.5% position in early September.
But potential internal divisions could prevent Scholz's ruling coalition from closely overseeing the deal, with coalition members scheduled to hold talks scheduled for later Wednesday.
“Let's put it this way: If we hadn't been invited to buy that stock, we wouldn't be here. And it all started in a way that we thought was constructive,” said UniCredit CEO ( CEO Andrea Orcel told CNBC's Charlotte Reid on Wednesday. CNBC has contacted the German Ministry of Finance for comment.
Europe's appetite for large-scale cross-border banking mergers is driven by the controversial 2007 takeover of Dutch lender ABN Amro by a consortium led by Royal Bank of Scotland and its subsequent ouster (both banks were forced out during the financial crisis). (which led to its bankruptcy) has been smoldering ever since. UniCredit CEO Andrea Orcel, who was a senior investment banker at Merrill Lynch at the time, advised on the ABN Amro deal and said that after the Italian lender exited the domestic deal to acquire Monte, the world's oldest bank, I turned my attention to business. Dei Paschi, 2021.
UniCredit already has a presence in Germany through the Hippoferreinsbank branch, which Orcel said he sees as “two mirror images” alongside Commerzbank.
Last year, UniCredit bought a nearly 9% stake in Greece's Alfa Bank from the state-run Greek Financial Stability Fund. On Tuesday, the Italian lender announced the completion of this loan. Acquired majority interest of 90.1% We have acquired Alpha Bank's Romanian operations and expect to complete the absorption of this entity in the second half of 2025.
With its Common Equity Tier 1 ratio (CET 1), a measure of a bank's strength and resilience, above 16% in the first three quarters of this year, UniCredit appears poised to weather acquisition pressure. . Last week, Fitch Ratings upgraded the rating. UniCredit long-term debt rating Up to BBB+ — just above BBB grade of Italian government bonds — cited the lender's “long-term restructuring over several years, de-risking its balance sheet and significantly increasing its loss-absorbing capacity.”
The rating agency said UniCredit's acquisition of a 21% stake in Commerzbank had no “immediate impact” on its ratings.
Orcel dismissed the risks of exposure related to its stake in the German lender and a possible takeover.
“Our CET1 is much higher than Commerzbank’s CET1, but [but] You have to look not only at liquidity, but also at all other things, such as rating agencies. At the end of the day, I don't think there's any concern there. If it existed, we would have known about it before we moved,” Orsel said, highlighting UniCredit's track record in Germany.
“UniCredit is [financial] “We have never oppressed Germany at any time, we have never repatriated capital or liquidity from Germany, and we have never asked for government assistance.” That's what Commerzbank had to do. ”
But the deal is not yet complete, and Orcel said UniCredit would only move forward if it “delivered the returns that investors expect, and in fact we need to meaningfully improve those returns.” said.
