To transform itself into a truly European bank Unicredit needs Italy. It supports it Mediobanca Research which on Tuesday confirmed its “outperform” rating on the stock, with a target price of 100 euros From the current 83,5 euros. According to analysts at the bank, now part of the MPS group, two years after the start of its triumphant takeover of Commerzbank and after the withdrawal of its takeover bid for Banco BPM in July last year due to government interference, Unicredit needs one final leap forward.
Mediobanca: "A move by UniCredit in Italy is now necessary."
"For the moment we are only observers of the banking risk"in Italy, "and for once we enjoy being observers and not actors. It's a lot of fun," he said smiling last June. Andrew Orcel, while the market was full of rumours about possible moves involving Generali or Banco Bpm.
But now the time may be ripe, also because after the success of the operation on Commerzbank, Germany accounts for about half of the jobs of the group, while Italy weighs much less. Entering the Italian game of risk to conquer a potential prey would therefore mean rebalance the structure. “With a market share of less than 10%, we believe that a move by Unicredit is now necessary to consolidate the bank's positioning in its domestic market", states a passage from the Mediobanca report cited by The newspaper.
The Danish Compromise Knot
According to the experts at Piazzetta Cuccia, there could also be a possible "incentive" that could push the CEO of Unicredit to turn his attentions towards Italy again, namely the imminent green light for the Danish Compromise, the rule that allows banks that hold shares in insurance companies to benefit from a capital discount. This step would free up capital for potential extraordinary transactions.
Mediobanca research also underlines that a possible move by Piazza Gae Aulenti in Italy would not only not be incompatible with the plans for Commerzbank, but some combinations would be “non-penalizing” for the Cet1 or even “augmentative”In other words, a possible operation in our country could strengthen the bank's ability to generate profits and capital.
Mediobanca research: "Time is running out"
At this point two factors could become decisive: time and space. The Italian game of risk is already at its peak with the offer of Intesa Sanpaolo su Ps and the defensive countermove announced by Siena last August 20th which took the form of a double ops on Banco Bpm and Banca Generali. The risk for Unicredit, therefore, is not only that of "missing the consolidation train" in Italy, but also that of not finding sufficient room once it enters the game.
In Germany, a reverse merger between HVB and Commerz is preferable.
Mediobanca Research analysts also analyse Unicredit's prospects in Germany. Following its successful bid for Commerz, UniCredit holds a 47,6% stake in Germany's second-largest bank and is awaiting approval from the European Central Bank to officially exceed 30% of the capital.
In the meantime, the first openings have arrived from the institute's management and the German government. Berlin still holds 12,7% of Commerzbank, a stake that government officials say the executive would willing to sell to Unicredit provided that the two institutions manage to bury the hatchet and establish a shared strategy. However, this would be "an inconvenient solution in the immediate future as a cash purchase would have an impact on the CET1 capital of approximately one percentage point and, if completed within twelve months of the offer, could also trigger a cash compensation for the Commerzbank shareholders who have joined the operation", underlined Mediobanca which instead suggests an alternative path, that is a HVB reverse fusion, German subsidiary of Unicredit, in Commerzbank.
Following this path, UniCredit would end up with a stake of approximately 70% of the new combined entity and would be able to leverage greater synergies, combined with an impact on CET1 of only 20-40 basis points. The option could also appeal to both the bank's management and the government because it would preserve both Commerz's brand and listing on the Frankfurt Stock Exchange. The government would also retain a stake in the new entity and therefore any benefits deriving from the creation of Germany's largest bank.
Orlopp: "Discussions are underway with UniCredit, so don't ruin everything."
Meanwhile, from Germany the CEO Bettina Orlopp confirms the openness of Commerz management: “I am discussions are underway” between the two banks, “which is in the interest of both parties. We absolutely must not ruin everything Now, it is crucial to choose the right strategy for the future and ensure that no value is destroyed,” said the manager, speaking at the Handelsblatt banking summit in Frankfurt.
“We are in contact, our task now is to collaborate constructively to find a strategy that maximizes the value of both institutions,” he added. “We must be careful not to create destruction of value.”
Orlopp then hinted that don't rule out a farewell In the event of a failure to reach an agreement with shareholder UniCredit: "I have a contract until 2029," he specified, noting that serving on the management board "only makes sense if, first, there is a relationship of trust with the supervisory board and, second, there is agreement on the strategy. If that's not the case, we must draw the appropriate conclusions."
