UniCredit elbowed its way onto the negotiating table for a takeover of Commerzbank last week, buying a 4.5% stake in the German bank from the government in an accelerated bookbuild. It now owns 9% of Commerz and is applying for regulatory permission to go higher.
Senior bankers in Frankfurt thought the government would never allow UniCredit to get to this position, after years of rumours around a Commerzbank takeover. Suddenly, a UniCredit-Commerz merger could give credence to the idea that M&A can create cross-border banks in Europe capable of competing with US firms.
But if UniCredit is close to making the takeover a reality, it is not just the result of last week’s purchase. Shareholders may now be readier to support such a deal because of years of work to improve the Italian group’s capital position and reputation.
“The bank has had to build a track record and goodwill with the market and show that the turnaround in its cost efficiency and capital optimization was not by chance,” says Antonio Reale, head of European banks equity research at Bank of America. “Between its excess capital and organic capital generation, UniCredit has never been able to offer its shareholders a higher capital distribution than today.”
