UniCredit, with Commerzbank 21 billion profit to 2030

UniCredit outlines what could be the path of value creation with Commerzbank. And three key aspects emerge from the plan: the willingness to revise the terms of the takeover bid depending on the adhesions, the growing weight of Germany in the geography of the institution, and a profit close to EUR 21 billion.

The key pillar for the plan to take effect is the exchange offer, in respect of which Chief Executive Officer Andrea Orcel explained that the outcome 'depends on the level of adherence, which in turn influences, together with greater transparency on the part of Commerzbank, a possible revision of the offer'. Orcel in this regard recalls two possible post-offer scenarios. In the first one UniCredit remains below the control threshold, 'which we can manage if we reach a percentage that does not ensure returns above our cost of capital'. In the second we reach 'a percentage that ensures returns in excess of our cost of capital' and allows 'a strategically and industrially viable transaction'. "Both scenarios," the top manager emphasises, "are a win-win for Unicredit and in our opinion Commerzbank's shareholders will adhere" to the offer.

With a combination with Commerzbank, Orcel added, 'Germany would become the number one country in the group, with around 95 per cent of decisions taken locally and key influence in the group's general management'.

Significant impact then on the numbers front. Unicredit expects a net profit of about EUR 21 billion in 2030 following the merger with Commerzbank. It also estimates net revenues of around EUR 45 billion in 2030 and costs of less than EUR 14.5 billion in 2030. The details are contained in the presentation of the Piazza Gae Aulenti group, which points out that the Frankfurt-based institution 'is not adequately prepared for the future'.

Commerzbank has, for UniCredit, 'a history of disappointing operating results' and is 'currently overvalued relative to fundamentals'. According to Gae Aulenti the German institution has 'structural weaknesses' that are only 'masked by favourable financial factors, combined with aggressive and riskier international growth, unrelated to its activities in Germany and Poland'. Unicredit, with its approach that it calls Commerzbank Unlocked, sees for the German institution profit rising to 5.1 billion in 2028 and for 2030 to 6 billion with a combination. Unicredit's estimates then indicate a cost/income ratio of 7 percentage points lower in 2028 than the bank's targets. As for Germany alone, the combination with Hvb would lead to an 8.5 billion profit institution.