Unwelcome in Germany, UniCredit CEO zeroes in on Italy – Yahoo Finance
Written by Tom Sims, John O'Donnell, Valentina Za
MUNICH/FRANKFURT/MILAN (Reuters) – Days before UniCredit Chief Executive Andrea Orcel sets her sights on an Italian takeover target, fierce resistance to her interest in Germany's main lender Commerzbank More evidence has come to light.
A group of German business elite customers implored Commerzbank's CEO to reject the deal, underscoring the depth of opposition, according to people familiar with the meeting at the bank's Frankfurt headquarters.
They warned that Germany's second-largest bank would face the same fate as Bavarian bank HVB, which UniCredit acquired in 2005 and subsequently overhauled and downsized.
On Monday, Orcel switched his focus to the domestic market, making a 10 billion euro ($10.5 billion) offer for Italian peer Banco BPM, saying the deal would take precedence over any move by Commerzbank.
Orcel carefully built up large stakes in German financiers, catching the German establishment by surprise.
The September announcement sparked a backlash from politicians, industry and trade unions.
They warned of potential job losses and that the takeover could have a negative impact on small businesses and lending to the Mittelstand, the backbone of Europe's largest economy, but some lobby groups are more wary. I was doing it.
Some in Germany, including Finance Minister Jörg Kukies, see his bid as all but a failure, and people familiar with the bank's thinking say Mr. Orcel's change in focus means Commerzbank It is said that he was greeted with a sense of alarmed relief.
Orcel may not be ready to throw in the towel just yet. The talented dealmaker is preparing for a fight in Germany that could take months, according to people familiar with his thinking. The small purchase in Italy could allow UniCredit to continue its operations while working on larger catches.
However, the resistance remains stiff.
Ulrich Grillo, one of the executives at Commerzbank's recent meeting who heads the eponymous chemical manufacturer Mittelstand, said he was concerned that important financing decisions would be moved to Milan. he told the board.
“Nobody there bought into it,” said Christian Miele, another attendee and venture capitalist and scion of a family famous for consumer electronics.
The meeting ended weeks of backlash against UniCredit.
After UniCredit bought HVB, a bank with roots in Munich in the 1860s, it cut its workforce by two-thirds and closed hundreds of branches, leaving the bank a shadow of its former self. HVB's job cuts have accelerated under Orcel since he took over as UniCredit's CEO in early 2021.
In a highly unusual move for a bank, Orcel also pushed for changes to HVB's legal form, abolishing the “AG” status that protects the board's independence and creating a “GmbH” with shareholders able to direct the board. supported the legal form of
Interviews with dozens of national and local politicians, CEOs, labor unions, and government officials revealed that Commerzbank has eroded financial institutions important to the Mittelstand and resisted any transactions. There are concerns that this will lead to a tragic repeat of the situation, in which the government strengthens the system.
UniCredit's raid on Commerzbank occurred amid economic and political turmoil in Germany, with the Berlin economy at a standstill and a political vacuum following the collapse of the coalition government.
This raised concerns that Orcel would take advantage of Germany's weaknesses to seal the deal, further undermining the country's importance.
Boris Rhein, chancellor of Commerzbank's home state of Hesse, recently told a room of CEOs, including Commerzbank, that the country's second-largest bank should not be allowed to be swallowed up.
“We should give wind to the sails of such flagships and not let them run aground,” said Rein, a member of the Christian Democratic Party, which is likely to lead Germany's next coalition government.
From UniCredit's perspective, the HVB revamp has been a success, resulting in fewer hierarchies and faster loan approval decisions. All the while, HVB “cut its costs”, dropping from 59 cents in 2005 to 44 cents for every euro of revenue by 2023.
UniCredit executives denied that decisions about lending to German companies were made in Italy or at group level, pointing out that local decision-making processes had been empowered over the past three years.
Since taking over the reins of UniCredit, Orcel has focused on improving profits, increasing the stock price by nearly five times.
Orsel said on Monday that the Commerzbank takeover was on the back burner for now, adding that with early elections scheduled in Germany, “there would have been no basis or ability to act in the short term. “We probably don't have that ability either,” he told analysts. Just move. ”
“By the time we close the second bid, we will have consolidated the first bank,” Orcel said.
Banco BPM, Italy's third-largest bank, has been on Orcel's wish list since he became CEO. Acquiring Banco BPM would help UniCredit close the gap with Intesa Sanpaolo, which catapulted UniCredit to Italy's biggest bank in 2020.
“He's sending a message to the Germans,” said Richard Portes, an economics professor at London Business School. “He can wait for Commerzbank.”
(Additional reporting by Stefania Spezzati in London; Editing by Elisa Martinuzzi and Tomasz Janowski)
