Commerzbank at the meeting: no to UniCredit, more value alone

(Il Sole 24 Ore Radiocor) - No to UniCredit, yes to an independent Commerzbank. In Wiesbaden the assembly of Commerzbank pride is being staged, marked by the members lined up already an hour before the start of the proceedings and dressed in the customary yellow, also present in the official slogan 'We own yellow'. And there is no shortage of 'UniCredit go away' signs trying to exorcise the fear of the Italia invader. Attendance is substantial: at the RheinMain Congress Center there are 1,030 members and 41.84 per cent of the capital, i.e. about 70 per cent of the shares not attributable to UniCredit, whose total potential exposure exceeds 40 per cent.

The bank's position is clear, as reiterated by Chairman Jens Weidmann and CEO Bettina Orlopp, in speeches often interrupted by applause from the audience: shareholders must not subscribe to the public exchange offer of the institution led by Andrea Orcel because it does not reflect the value of Commerzbank, is based on a vague and risky plan and has lower value creation prospects than those of the stand-alone strategy 'Momentum 2030'. Orlopp, however, does not close the door completely and reiterates his willingness to sit at the negotiating table, but only if UniCredit offers a premium to shareholders and develops a plan that recognises the strengths and respects the German bank's strategy.

"Our recommendation is clear: do not accept UniCredit's offer," Weidmann punctuated, explaining to the partners that, "as UniCredit shareholders," they would be in "a significantly worse economic position than" they would be in "on the basis of a direct participation in an independent Commerzbank." "It is clear that UniCredit's consistently uncoordinated actions and its repeated misleading communication have significantly undermined the basis for constructive cooperation based on trust," Weidmann attacked. "Commerzbank's fundamental relationships, based on trust and reliability, and the motivation of its employees are also seriously threatened. According to Weidmann, those joining the ops thus expose themselves to 'considerable risks', including 'high exposure to Italian government bonds, a significantly higher share of non-performing assets and still significant business in Russia'. Weidmann therefore reiterated his belief that the bank's current strategy, which 'works', will offer 'considerable and more sustainable value creation potential with a lower implementation risk than' the UniCredit ops.

For his part, Orlopp estimated that 'the negative impact' of UniCredit's plans 'on the earnings' of Commerzbank 'would clearly exceed EUR 1 billion'. And even in the event of a merger, on the part of the Italian bank 'the losses in profitability have been significantly underestimated, the potential for cost reductions has been estimated too optimistically, and the restructuring costs would actually be much higher'.

'From the outset', UniCredit's approach 'has been characterised by public pressure and an increasingly aggressive way of proceeding', further accused Orlopp, who nevertheless said she was 'open to dialogue, provided there is a real willingness to discuss the points we have raised'. If there is 'a clear intention to offer our shareholders an attractive premium and a plan that takes into account the success factors of our business model and our innovation strategy', she concluded, 'then we are ready to sit down at the negotiating table at any time'.