Unicredit revises upwards the profit forecasts for the current year and takes a step aside on the possibility of acquiring the German Commerzbankwhich Berlin has strenuously defended, branding the Italian bank’s move as a “hostile” and “incorrect” operation. A development that does not seem to intimidate Andrea OrcelCEO of Unicredit, who is pushing ahead, cradling the hope of finding a good expansion opportunity, now or later.
Orcel Announces 2024 Earnings Estimates Increase
Speaking at Bank of America’s Financials CEO Conference, CEO Andrea Orcel announced that the net profit by Unicredit will exceed 9 billion of euros at the end of 2024, above the 8.5 billion of the previous guidance and the 8.6 billion at the end of 2023.
The manager said “confident” that, net of investmentsthe bank reaches a profit of 10 billiona figure “clean”excluding of course DTAs (deferred tax assets). “We said we will make investments and we are closer to the end of the year,” he added, “so we have more visibility on what these investments can be.”
Commerzbank is just an opportunity for now, and then what?
For Orcel“Commerzbank is currently an investment and nothing else” and, as a simple investor, does not intend to ask for representatives on the Board of the German Institute. “The public should conceive it as an investment: there is no offerUnicredit is an investor,” the manager clarified, explaining that it will be possible to do “something” “bigger” only if both banks agree.
The CEO of Unicredit sees three possibilities for the future: the first is “stay as we arehoping that the unexpressed value that we believe exists will be realized”; the second hypothesis is that “in this path we find a way to do something bigger togetherbut both parties must agree”; the third option is “sell” once the investment is profitable.
“We took some capital that was waiting to be distributed and we tried to make something bigger,” the manager stressed. “If it can’t be done, it will go back to our capital. It’s very important that people understand that there is no predominant scenario here“.
“Whatever path we have ahead requires continuing the dialogue and having a dialogue,” concluded the CEO, specifying that the priority is to maintain a “constructive dialogue with all stakeholders”.
Scope Ratings: Without Berlin’s support, everything falls apart
According to a study by Scope Ratingsthe European rating agency, Unicredit will not succeed to take over Commerzbank without the approval of the German governmentThe analyst who conducted the study, Alessandro Boratti, said he was “skeptical” that the increase in the shareholding to within a whisker of the 30% takeover threshold “signals an immediate acquisition attempt”.
But what does the agency think of the future? Scope Ratings believes that Unicredit’s “cautious” approach appears “sensible” and that the operation does not take the form of a cross-border acquisition, but rather as aDomestic merger between Commerzbank and HypoVereinsbank (HVB) controlled by UniCredit, which “has many advantages”. “We continue to believe that the logic of internal consolidation outweighs the logic of large international agreements,” Boratti says. “Without a full European banking union, limited capital and financing synergies will continue to limit the benefits of cross-border agreements, which also offer lower revenue and cost benefits.”
However, according to Scope Ratings, UniCredit to exercise “substantial influence” over Commerzbank and could act as a blocking shareholder, influencing its strategy. And it could also adopt a wait-and-see approach, perhaps seeking the support of European institutions, which have already expressed themselves in favor of cross-border consolidation.
