Today, Bettina Orlopp, CEO of Germany’s second-largest bank, spoke about the risks the deal would pose for Germany. But what about UniCredit?
The warnings that market experts, economists, and, today, even the CEO of Commerzbank Bettina Orlopp are launching are almost insistent about the end that German Commerzbank will face if it ends up being swallowed up by the Italian UniCredit.
Comments are pouring in on the interview given to the German newspaper Handelsblatt by Orlopp, the new CEO of the second German bank who, officially at the helm for a handful of days, has made no secret of the risks that the banking group made in Germany would suffer if the Italian bank was to succeed in conquering it. Orlopp spoke of the risk that the group could end up losing its customers, while also witnessing the downgrade of the rating on its debt.
According to the complaints coming from Germany, Berlin would therefore certainly come out defeated by a hypothetical takeover operation by UniCredit, while the Italian group would be the great and undisputed winner.
At least, this is the narrative that has taken hold on Piazza Affari, and also in the world of Italian politics and among the citizens themselves, who seem to cheer on the moves that Orcel has made in the capital of Commerzbank.
But if Berlin’s nein has sounded almost pathetic for a good few days, the triumphalistic, if not stadium-like, tones, which are framing Orcel’s maneuvers to further increase in the capital of Commerzbank, do they really have solid foundations? In short, if it were to succeed in grabbing the German prey, would UniCredit have everything to gain, without risking losing anything?
UniCredit-Commerzbank: no cross-border operation. It would be domestic
Meanwhile, some clarifications have arrived from the world of Italian finance itself: if UCG were to actually get its hands on German rival Commerzbank, the operation would not be cross-border, but domestic.
Both Carlo Messina and Alberto Nagel, respectively CEO of Intesa Sanpaolo and CEO of Mediobanca, said this clearly at the recent Bloomberg event held in Milan last week.
Messina, in particular, stressed that if the two banks joined forces, they would not give rise to a “cross-border operation”.
The same goes for Nagel, number one at Piazzetta Cuccia, who stressed that a potential merger “would not be a cross-border operation, but a domestic concentration ”.
In short, a marriage between UniCredit and Commerzbank would not automatically transform the former into a pan-European bank or a true bank for Europe, as its CEO Andrea Orcel wishes.
With Commerzbank, UniCredit risks nothing? The view of UBS, Citi, and Bank of America
Other risks could also emerge in the future, as noted by some analysts interviewed by Reuters. UBS, in particular, recognized the positive impact on UniCredit of a potential takeover by Commerzbank but also highlighted some concerns. In light of the recent macroeconomic data from Germany, these warnings give rise to significant considerations.
UBS, for example, has clearly spoken of the risk, on the part of UniCredit, of “ deploying additional capital in Germany in this difficult moment ”, especially for the Germans of Commerzbank.
Of course, UBS clarified, “our initial view on the deal is positive so far, considering that UniCredit would use its capital in a geographic area where it already operates, and on the basis of attractive financial terms, at first glance ”.
However, the fact remains that, expanding into Germany, where what many are already calling a deep crisis is underway, UniCredit would further expose itself to the problems of a country that, as the engine of the eurozone economy, is increasingly proving to be the weak link in the block.
Citi analysts also noted that a potential integration between the two banks would take time to materialize (the ECB has yet to issue official authorization for Orcel’s takeover of up to 21% of the institute), pointing out that the time factor itself could “ result in lower financial advantages ”.
Not only that. Citi also recalled that Germany is a less profitable market for Italy.
UBS has indeed calculated that, with Commerzbank, UniCredit’s presence in Germany would rise from the current 20-25% to 40%: expanding in an economy in full-blown crisis, would not however expose the Italian bank to the higher risk of running into the thorny problem of NPL-Non Performing Loans, or impaired loans, to the detriment of its profitability, which is experiencing a golden moment? This golden moment for UniCredit, as in general for other banks in the Eurozone, is destined to come to an end, given that Lagarde’s ECB seems to have buried the hatchet against inflation in the Eurozone, and has already cut interest rates twice, thus depriving the European financial system of that crucial assist represented by the positive effect that the continuous monetary tightening had guaranteed to their profitability.
Bank of America is also cautious, having admitted that an agreement between the two institutions would allow UniCredit to double its market share in lending to SMEs. The research division of the Swiss giant also added that UniCredit would be able to start cutting costs, re-entering the Polish market. And yet, as stated in the note from Bank of America, "although we believe in the principle that such a development (the merger) would see all parties involved win, the conditions, size, and nature of the agreement could present some execution risks, leading to possible obstacles of a political and financial nature". CEO Andrea Orcel knows this well, and it is no coincidence that he has already hinted that a possible merger will only happen with an agreement, and who has evidently thought it best not to launch a hostile takeover bid on Commerzbank.
Original article published on Money.it Italy 2024-10-07 18:09:22. Original title: UniCredit: fusione con Commerzbank sarebbe davvero un affare? La view degli analisti
