On Friday, representatives of Commerzbank and UniCredit, which is interested in buying it, will meet for the first time. Commerzbank’s designated CEO Orlopp makes it clear: “We will not do anything stupid.”
After the Italian major bank UniCredit’s investment in Frankfurt-based Commerzbank caused a great deal of uproar in Germany, the players involved want to talk to each other directly for the first time. Representatives of Commerzbank and UniCredit will meet for the first time on Friday.
It is normal to exchange views, said the designated Commerzbank CEO Bettina Orlopp in a telephone conference. Everything that comes to the table will be evaluated. “We will not do anything stupid.” The events of the past two weeks have surprised Commerzbank.
Commerzbank raises targets
In addition, the future Commerzbank boss announced that the Frankfurt-based bank wants to become even more profitable and to do so increase earnings. “Despite conservative planning, we expect to earn our capital costs more quickly and be able to return even more capital to our shareholders,” said Orlopp.
The bank wants to increase its return on equity to more than twelve percent by 2027, which is more than previously planned. In addition, the return of capital to shareholders should be accelerated and significantly increased. The aim is to achieve payout ratios of more than 90 percent for the years 2025 to 2027.
By 2027, Commerzbank expects its net profit to rise to well over three billion euros. In 2023, group profit amounted to 2.2 billion euros.
Commerzbank shares are booming on the stock market
The new goals and the announced meeting were well received on the stock market. Commerzbank shares shot up by as much as 6.1 percent. At 16.20 euros, they reached their highest level since 2012. Over the past twelve months, they are the fifth-biggest winner in the DAX, with a price increase of almost 59 percent.
Since September 11 alone, the share price has risen by almost 29 percent – on that day, UniCredit, under the leadership of Andrea Orcel, announced that it would hold nine percent of Commerzbank.
UniCredit wants even more Commerzbank shares
In a surprise coup, the Italians used a share sale by the federal government to gain a stake in the Frankfurt-based company and also bought additional shares on the market. Most recently, they secured access to a total of around 21 percent of the shares through financial instruments.
At the same time, UniCredit applied for official permission to increase its share to up to 29.9 percent. The federal government still holds 12 percent of Commerzbank and has warned against a hostile takeover. The ver.di union and the Commerzbank works council also strictly reject a merger with the Milan-based bank.
Union Investment demands Willingness to engage in dialogue
This negative attitude is not necessarily shared by the market; many even see UniCredit’s interest in Commerzbank as positive. For example, the fund company Union Investment has demanded that Commerzbank be willing to engage in dialogue.
“A collaboration with UniCredit – in whatever form – does not have to be to the detriment of Commerzbank,” wrote fund manager Alexandra Annecke. Union Investment acts as a fund provider for the Volksbanken and Raiffeisenbanken in Germany and holds around 1.5 percent of the shares in Commerzbank.
Economists criticize the commitment of Federal Government
Meanwhile, economists are demanding that the German government should exercise restraint in the event of a possible takeover of Commerzbank by the Italian UniCredit. Anyone who calls for political intervention in the event of a bank in one EU country being taken over by a bank from another EU country is revealing “a lack of basic understanding of what constitutes a capital markets union and what constitutes a single market,” said Stefan Kooths of the Kiel Institute for the World Economy (IfW Kiel). “Companies do not have a passport.”
Commerzbank is working on Defensive strategy
The Frankfurt-based bank itself is not particularly pleased with UniCredit’s interest. According to a press report, the institute wants to defend itself against a possible takeover with the help of external banks. In addition to Goldman Sachs, the institute has now also commissioned the Swiss major bank UBS to draw up proposals, reported the “Börsen-Zeitung” yesterday evening, citing supervisory board circles.
In order to convince the company’s shareholders of the company’s independence, the designated new boss Orlopp needs a more aggressive strategy. Commerzbank could therefore act as a buyer in the consolidation market and thus go on the offensive, it was said. Commerzbank is expecting the first proposals as early as October.