"We will have the first meeting with Unicredit tomorrow". The announcement, which caused the shares of the two banks to soar on the stock exchange, comes directly from the CEO-in-waiting of Commerzbank, Bettina Orlopp, who, speaking at the 29th Financials CEO Conference of Bank of America, said that the Bank will maintain an open approach and that any synergies must be analysed jointly.
In the meantime, the German institute has updated the strategy to 2027 in the name of "independence", promising higher profits and greater remuneration for shareholders. What the future holds, however, remains unknown also because the final word on the operation with Unicredit does not belong to the German government, strongly opposed, but to ECB, whose members on Wednesday unofficially expressed their support for a combination of the two institutions, saying they considered Berlin's opposition to be contrary to the principle of European integration.
Commerzbank CEO Orlopp: “First meeting on Friday, open approach”
Tomorrow's meeting will be “a good starting point. UniCredit is now a shareholder, an investor and it is normal to have exchanges of ideas,” Orlopp said in her first speech since being appointed CEO.
“The events of the last few weeks – he explained from London – have been a surprise for us, but we have to manage them and we are able to do it. I think it is very clear what we have to do, namely three things: we have our base case, our strategy to 2027 that we have just updated”; secondly “given the events we will maintain an open attitude and We will evaluate all the options we have on the table, any potential for improvement, to see if we can create value for our shareholders.
The third thing to do will be to finally "start looking at what we can do beyond 2027 to free up even more value", added the manager, underlining that obviously for the moment the focus remains on the first two points. "We are committed to all the options that create value for all our shareholders", she added, highlighting however the need to have “stability” and to limit uncertainties for all stakeholders. In any case, he assured, Commerzbank won't do "anything stupid" to protect themselves from Unicredit. “Our goal is to protect the value, business model and franchise of Commerzbank.” “We will not do any weird acquisitions or anything like that” to protect ourselves.
“Since what happened” with Unicredit “was a surprise, it is better to evaluate everything before someone takes the next step”. For this reason, he explained, the German government has blocked the sale of further shares of the institute", He concluded.
Commerzbank wants to remain “independent” and updates strategy to 2027
This morning, Commerzbank's supervisory and management boards confirmed the current independence strategy. "Commerzbank is continuously expanding its independent position as a strong pillar of the German banking market and a reliable partner of the national economy. As a 'Bank for Germany', we firmly believe that we have considerable growth and appreciation potential," the bank said.
The institute "is fundamental for the German economy", said the bank's president Jens Weidmann to employees. “As a leading bank in the Mittelstand and with almost 11 million private and corporate customers, Commerzbank is of central importance to the German economy. It has been at the side of its customers for more than 150 years and we want it to continue to be so,” Weidmann added in a message posted on the bank’s intranet.
From a financial perspective, Germany's second largest bank has updated strategy to 2027, promising higher profits and greater remuneration to shareholders. In detail, Commerz expects "a Accelerated earnings growth with a Rote of over 12% in 2027” (from an estimated 8,1% in 2024), a increase in revenues to 13,3 billion in 2027, 2,4 billion more than the 10,9 estimated for 2024 “which will bring the cost/income ratio to 54% in 2027” (from 60%) and “a significantly higher payout potential driven by lower risk-weighted assets”. Prospects that, according to the bank, have “low execution risk”.
Profit before coupon payment on At1 securities will grow to 3,6 billion in 2027 from the 2,4 estimated for 2024 with a payout that will rise to over 90% already next year from the current level above 70%. Cet 1 will settle at 13,5% from the current 14,8%.
Commerzbank: Six ECB Governing Board Members Favor Integration with Unicredit
In the meantime the ECB's first openings to merger. According to some rumors published by Reuters, six governors, members of the central bank's governing council, reportedly said they were largely in favor of a combination between Unicredit Commerzbank and would consider Berlin's opposition to the operation as contrary to the principle of European integration. The US agency reports that the six policymakers would have expressed frustration with Germany's attitude, which according to some would be hypocritical, especially since a combination between the two institutions would allow the creation of the largest banking group active in several European countries, an objective that the ECB has long pursued within the banking union.
The former Prime Minister is of the same opinion Enrico Letta, author of a recent report on the European single market, according to which national governments should abstain from intervening in the operation, if Europe wants to move towards greater integration. “Politics must let the market determine the choices in this case. The market is European, not national,” Letta said. “The Unicredit-Commerzbank agreement seems to be an immediate test to understand if we want to move forward in Europe or go back", he added, echoing the words spoken yesterday by Andrea Orcel.
We recall that the 26 members of the ECB's governing council will have to give the final green light to the operation, granting the so-called 'non-objection' procedure to an integration agreement. In the meantime, Unicredit is waiting for Supervisory Board of the central bank led by German Claudia Buch give the necessary green light to allow the Italian bank to increase its stake in Commerzbank to 29,9% after having announced on 23 September that it had acquired a potential 21% stakeThe decision could come by the end of October.
So everything is still up in the air, but the first analyses are already arriving: "We recognise that the Commerzbank issuer rating is stronger than that of UniCredit and its main subsidiaries. Therefore, if the acquisition were to go through, Commerzbank's ratings could come under pressure,” the rating agency wrote in a note S&P Global.
Unicredit and Commerzbank soar on the stock market
The announcement of the first meeting between the top management of the two banks scheduled for Friday and the "open" attitude promised by CEO Orlopp make both stocks fly on the stock exchange. In Milan, the actions Unicredit gain almost 4% of their value, while in Frankfurt the Commerzbank share rises by 5,19%, also driven by the update of the strategy to 2027.
