UniCredit's acquisition of a 9% stake in Commerzbank has sparked speculation about a potential merger, a scenario that has long been viewed as a natural progression for the Italian lender. UniCredit entered the German market in 2005 through the acquisition of Bavarian peer HypoVereinsbank. The Milan-based bank previously attempted to acquire Commerzbank in 2001, but withdrew its offer just before the September 11 attacks. In 2019, UniCredit explored the possibility of making an offer again, but faced political opposition. A renewed effort under current CEO Andrea Orcel in 2022 was thwarted by the Ukraine conflict. Germany currently contributes approximately 20% of UniCredit's net profit.

Here are some analyst perspectives on the recent developments:

UBS: If a full takeover were to occur, the proportion of UniCredit's net profit attributable to Germany could increase to around 40% from the current 20%-25%. UniCredit could potentially fund part of such a deal using cash without jeopardizing its core capital, which it aims to maintain above 13%. The bank's initial assessment of the deal is positive, as it could enable UniCredit to deploy excess capital in a market where it already operates, under financially attractive terms.

BANK OF AMERICA: A merger would allow UniCredit to double its market share among German SMEs, reduce costs, and re-enter the Polish market. While such a development could be mutually beneficial, it would also entail execution risks and potential political or financial hurdles.

CITI: A simulation conducted over the summer suggested that a deal could boost earnings per share (EPS) by more than 8% by 2027, assuming a 20% premium bid. The recent decline in Commerzbank's share price could enhance this EPS boost. However, Citi questions why UniCredit has not pursued a full takeover at this stage and what the potential timetable might be, given that this could reduce financial benefits.

EQUITA SIM: Assuming UniCredit offers a 20-25% premium, half in cash and half in shares, a merger that enables Commerzbank to cut costs by 10% could increase earnings per share by more than 15%. The combined entity would achieve a return on tangible equity (ROTE) of over 16.5%, compared to Commerzbank's current ROTE of around 8% and UniCredit's current ROTE above 17%.

MEDIOBANCA SECURITIES: With a 20% premium, Commerzbank represents the most accretive option for UniCredit, with a 25% increase in earnings per share, a 3.1 percentage point reduction in core capital, and a 1.7 percentage point increase in ROTE.