Merger report stirs UniCredit and Commerzbank shares

The headquarters of UniCredit bank in Milan, Italy, February 8, 2016. — Reuters pic
The headquarters of UniCredit bank in Milan, Italy, February 8, 2016. — Reuters pic

FRANKFURT AM MAIN, April 4 — Shares in UniCredit fell in Milan while Frankfurt investors lifted Commerzbank today, after the Financial Times reported the Italian banking giant was mulling a takeover of Germany’s second-largest lender.

UniCredit lost 1.9 per cent by 10:20am (0820 GMT) while Commerzbank gained 3.1 per cent.

The FT had earlier reported that Milan-based lender UniCredit could step in as a suitor if Commerzbank’s merger talks with crosstown rival Deutsche Bank fall through.

“UniCredit is preparing a rival multibillion-euro bid to take control” amid signs the all-German talks are stalling, the business newspaper wrote, citing “several people familiar with the matter”.

The Italian bank declined to comment on the report when contacted by AFP.

In December chief executive Jean-Pierre Mustier said that the Italian lender did not plan any new mergers in the coming three to four years.

The Italians could combine Commerzbank with existing German subsidiary HypoVereinsbank, the FT reported, forming a merged entity that “could be presented as a national champion,” a person advising UniCredit told the paper.

In Berlin, Finance Minister Olaf Scholz is widely seen as backing a tie-up between Deutsche and Commerzbank to create a single German private banking giant that would be more competitive on the international stage.

The state has a key role to play as it still holds a 15-per cent stake in Commerzbank, after stepping in to save it during the financial crisis.

Critics of a potential all-German tie-up have underlined years of weakness at both lenders, which are each only at the beginning of a long, hard road of restructuring.

“The negative side effects of such a merger could be substantial, creating a bank that is too systemic to fail and too complex to manage,” Isabel Schnabel of the government’s Council of Economic Experts wrote in the FT last week.

It is unclear when Deutsche and Commerzbank will announce the results of their talks.

Deutsche supervisory board chief Paul Achleitner recently said he favoured a delay until at least the Easter weekend beginning on April 19, while a Commerzbank source told AFP the financial firm would prefer to offer clarity swiftly. — AFP

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