Commerzbank to begin talks with UniCredit as it woos investors with profit goals By Reuters

By Tom Sims

FRANKFURT (Reuters) – Commerzbank (ETR:) will hold a first round of talks with UniCredit on Friday, the German bank’s designated CEO Bettina Orlopp said, as the Italian lender presses for a possible tie-up and its rival hones its defence.

Orlopp told a financial conference in London that the two banks would meet to “exchange views” now that UniCredit was a shareholder. It was not immediately clear which executives from the banks would meet on Friday although insiders said UniCredit’s chief Andrea Orcel would not be there.

Shares in Commerzbank, which unveiled higher profit goals on Thursday in a bid to bolster support from investors as it tries to fend off a UniCredit advance, extended their gains on news of the talks to hit their highest since 2011. They were last up 7.4%. UniCredit shares rallied 4.6%.

UniCredit earlier this month revealed it had bought a 9% stake in Commerzbank, plans to buy more shares and has pressed for discussions to explore a tie-up.

UniCredit’s swoop is the most ambitious attempt yet at a pan-European bank merger but it faces considerable political hurdles in Germany ahead of national elections.

Orlopp, speaking in London, said the bank was open minded but that the speed of synergies and risks to executing any deal needed evaluation.

“Sometimes it makes sense, sometimes it doesn’t make sense, and that is something we need to find out jointly,” she said.

But the bank also wasn’t going to engage in any “crazy” sell-downs, acquisitions or “stupid things”, she warned.

Orlopp’s comments on UniCredit’s move are her first since she was named this week as the German bank’s next chief executive officer at a critical juncture in its 154-year history.

Her comments effectively serve as a response to Orcel, who said on Wednesday at the same conference that a tie-up would be the best outcome.

As an investor, UniCredit can only have access to publicly disclosed information, Orcel told the conference on Wednesday, adding UniCredit would not seek a board seat because of its position as a direct competitor.

Just minutes before Orlopp spoke, Commerzbank put out a statement saying its supervisory and management boards unanimously agreed to support the bank’s current strategy of independence, and increased profit and payout targets to woo investors.

UniCredit didn’t immediately respond to a request to comment on Friday’s talks.

Commerzbank’s management, employees and the nation’s chancellor, Olaf Scholz, have all voiced opposition to a potential takeover, but at least one big investor and some business leaders favour talks.

Italian Deputy Prime Minister Matteo Salvini on Thursday said he would not want to see UniCredit shift its legal base to Germany as part of a potential deal and that the Italian government was still considering its position.

Commerzbank, with more than 25,000 business customers, almost a third of German foreign trade payments and more than 42,000 staff, is a linchpin of the German economy.

The unanimous support for its current strategy came after its supervisory board, which includes a number of members vehemently against a tie-up, met with management on Wednesday at an annual retreat in the woody hills outside Frankfurt.

The bank also increased a key profitability metric and promised to pay shareholders more in dividends and buybacks in its statement on Thursday.

It is now expecting its return on tangible equity to be 12.3% in 2027, more than the 11.5% previously flagged and better than analyst estimates of around 10%.

The bank set a profit forecast for 2027 of more than 3 billion euros, roughly in line with analyst expectations.

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