Commerzbank is set to hold initial discussions with UniCredit on Friday, as the Italian lender pushes for a potential merger, according to Commerzbank's designated CEO, Bettina Orlopp, who made the announcement on Thursday.
Earlier this month, UniCredit disclosed its acquisition of a 9% stake in Commerzbank, with intentions to purchase more shares and initiate talks to explore a possible tie-up. This move by UniCredit marks the boldest attempt so far for a pan-European bank merger, though it faces significant political challenges in Germany, particularly ahead of national elections.
Orlopp's remarks on the potential merger are her first since being appointed as the next CEO of Commerzbank this week, a pivotal moment in the bank's 154-year history. Just moments before her comments, the bank's supervisory and management boards unanimously endorsed the current strategy of independence, along with increased profit and payout targets to strengthen investor support.
Speaking at a financial conference in London, Orlopp stated that while the bank is open to discussions, the speed of potential synergies and risks associated with any deal require careful evaluation. "Sometimes it makes sense, sometimes it doesn't make sense, and that is something we need to find out jointly," she said. However, she also cautioned against any "crazy" sell-downs, acquisitions, or "stupid things."
Her comments were a direct response to UniCredit's CEO, Andrea Orcel, who advocated for a tie-up as the best outcome during the same conference on Wednesday. UniCredit has not yet commented on Friday's planned talks.
News of the talks boosted Commerzbank's shares, which rose by 6%, reaching their highest level since 2011. UniCredit's shares also rallied by 4.5%.
Despite opposition from Commerzbank's management, employees, and Chancellor Olaf Scholz, at least one major investor and some business leaders support the idea of discussions. Commerzbank, with over 25,000 business customers, nearly a third of German foreign trade payments, and more than 42,000 staff, plays a crucial role in the German economy.
The bank's boards' unanimous support for the current strategy was confirmed in a statement released earlier on Thursday. This agreement followed a meeting of the supervisory board, which includes several members strongly opposed to a merger, with management during an annual retreat in the wooded hills outside Frankfurt.
Commerzbank also increased a key profitability metric and pledged to pay shareholders more in dividends and buybacks. The bank now expects its return on tangible equity to reach 12.3% by 2027, exceeding the previously flagged 11.5% and surpassing analyst estimates of around 10%. Additionally, the bank forecasted a profit of over 3 billion euros for 2027, roughly in line with analyst expectations.
