After the failed experience at Banco Bpm Unicredit is withdrawing from the Italian banking game, at least for now, and decides to focus on one organic growth which is still worth half of the turnover. The CEO of Unicredit said it clearly, Andrew Orcel, speaking at Bofa Securities' 30th annual Financials CEO conference.
Orcel: "In Italy, we must accelerate without M&A."
In Italy, Unicredit “tried to do something” in terms of M&A “which didn't work for external reasons, due to government interference. We learned our lesson”, Orcel said. The reference is to the Banco Bpm's takeover bid flop, withdrawn last July 22nd After months of tug-of-war with the Meloni government, which intervened forcefully in the operation with a golden power on which Brussels' opinion is still awaited.
Italy, added the CEO of Piazza Gae Aulenti, "is an anchor for us. We had an internal growth plan that we put on hold when we launched the Banco BPM offering. We've now revised it and will provide more details in the coming quarters," he explained.
"Italy accounts for 50% of turnover and 45% of net profit. Time we need to speed up without an M&A" , Orcel continued, closing (it's unknown how definitively) the door to new extraordinary transactions. "Italy is in a growth phase, we won't be pulled in one direction or another." "We need to accelerate, and I'm confident we can do it," he concluded.
Orcel then recalled that for UniCredit, there are three markets in which an M&A transaction would entail "a significant transformation of our equity story": Italy, Germany, but also Poland, where the bank acquired Aion Bank and Vodeno. But in any case, "UniCredit's management team will fail if it depends on M&A to justify its existence." The group is therefore focusing on its stand-alone growth plan, while being ready to "seize the opportunities if there are any".
Orcel on Commerzbank: "We respect the German government, and we hope it sees the light of day."
But while the Italian game can be considered over—at least for now—in Germany it's still ongoing, albeit very difficult. On the Commerzbank affair “we respect the German government,” “is a crucial stakeholder. Let's hope they see the light over time and that Commerzbank also sees it,” Orcel said at Bofa Securities’ annual CEO conference.
“We don't need to do an operation in Germany, but that doesn't mean we can't create a lot of value by doing so,” Orcel continued. “Today we are in a situation where we are comfortableWe have full control of our 29% physical stake in Commerzbank and this 29% will be consolidated.”We have no pressure and we have time to see how it develops", the manager underlined again, explaining that the bank has secured a 20% return on investment".
"We are not hostages of the mark to market, we can stay like this and wait,” he reiterated. Orcel reiterated once again that everyone European governments have “a vision on banks which leads them to be much more involved in decisions and to interfere much more." 'It is a key sector, it is justified - he concluded -. The problem is that giving incorrect representations of the situation gives the impression that transactions depend on what governments like or dislike and not on what shareholders decide."
Commerz CEO Bettina Orlopp's response
A few minutes later, from the same stage, she arrived Bettina Orlopp's response, number one at Commerzbank, according to whom “the current situation is not satisfactory" because "having a competitor with 30% of the capital will require much more attention and the constant comments on what could happen to the share do not help because they add noise", said the manager referring to Unicredit.
Orlopp noted that “There are some things we can agree with them on.", for example, the fact that Commerzbank "has shown very good performance in recent quarters and wants to continue" or even that "at these valuations a combination would not make sense." "There are other things on which we disagree," he continued, citing, in addition to the different views on the current shareholder situation, the fact that a combination between the two banks "would be based on cost synergies, given that the business is very similar." "To discuss an alternative to our very attractive stand-alone plan, a very specific proposal is needed," he reiterated once again. "Given that there is no proposal on the table that Unicredit wants to share with us then we will do what is most important, that is, create value for our shareholders."
