UniCredit's promises support Commerzbank's share price

(Il Sole 24 Ore Radiocor) -The "Commerzbank Unlocked" plan presented by Unicredit to transform the bank and potentially steer it towards a merger supports the German institution's stock, which is gaining ground on the Frankfurt Stock Exchange against the list. UniCredit lifted the veil on its plans for the German bank, presenting its strategy and possible financial targets for an integration to the market.

UniCredit is convinced that Commerz "is not adequately prepared to face future challenges and is overly focused on achieving short-term results". In particular, explained CEO Andrea Orcel in a conference call, the German bank is 'weak', today prioritises growth 'outside its "core" markets' of Germany and Poland, is too dependent on 'risky bets' and overvalued on the basis of fundamentals. It therefore needs to be repositioned to make it 'future-ready by accelerating revenue growth and placing greater emphasis on investment and transformation'.

With Commerzbank Unlocked, the German bank's 2028 profit, now forecast at EUR 4.5 billion, could rise to EUR 5.1 billion, i.e. EUR 600 million more. For 2030, profits are also expected to grow further to EUR 6 billion, and in the event of a merger with UniCredit, the 'combined entity' would thus reach a profit of around EUR 21 billion. In Germany alone, which would become the first country of the UniCredit group, a bank with a profit of 8.5 billion would be created. Orcel also responded to some of the concerns circulating among German stakeholders in recent months. In the event of a merger, Commerzbank would remain stand-alone until 2028, thus leaving time for the necessary work to 'align it industrially and culturally' with UniCredit.

With regard to the rumours of '15,000 job cuts in Germany', Orcel went on to note that '60 per cent of the savings would come from international network activities not related to personnel or 'core' activities'. Overall, therefore, 'the reduction' in personnel 'over a five-year period would be less than half the number suggested for Germany'. Orcel, in any case, noted that at the end of the takeover bid launched on Commerzbank, there will be two possible scenarios: either UniCredit will not gain control, in which case it will confirm its current position, with high returns and total downside protection, or it will gain it, resulting in a strategic combination. "Both scenarios are a victory for UniCredit and in our opinion Commerzbak's shareholders will adhere" to the offer, Orcel concluded, finally noting that a relaunch of the terms "can only be considered after a serious and detailed discussion with Commerzbank, which did not take place" due to the unwillingness of the German interlocutor.