Commerzbank, from timing to rating, the reasons for the no to Unicredit

Another “nein” comes to Unicredit on the part of Commerzbank. The newly elected CEO of the German group Bettina Orloppin an interview with the German financial newspaper Handelsblatt, listed all the reasons why the operation should not be carried out, first of all the deterioration of the rating of the new aggregate reality, but also due to the risk of losing customers.

Orlopp’s considerations

The manager explained first of all that the integration of two large banks is “extremely difficult” and, even if “it looks good on paper”, this “it doesn’t mean that will be done well” and “can be successful and create value” for shareholders.

The words of the CEO of Commerzbank arrive a few days after the meeting with the number one of UniCredit, Andrea Orcelin which the two did not discuss the possible merger. A meeting which evidently was not decisive for the purposes of a possible integration between the two banks. The meeting was described by Orlopp as a “normal investor meeting”. The manager also indicated what the obstacles to integration could be.

The delays of an aggregation

Orlopp recalled that the operation it could prove very complex. After taking over Dresdner Bank in 2008, Commerzbank spent several years to merge the systems of both banks. For this reason, the manager stated “we cannot afford such a stalemate in today’s world, characterized by so many technological upheavals and very intense competition”.

Fewer loans to German companies

Furthermore, the banker stated that “the integration with the Italian bank would lead to loss of customers” and to “reduction in loans to German companies“. On the corporate customer front – he explained – “there is a large overlap” with HVB, the German subsidiary of Unicredit, therefore “in the event of a merger, the credit exposures of some companies should be reduced to avoid cluster risks”.

The impact on the rating

For Orlopp the operation could also induce a worsening of Commerzbank’s rating. Commerzbank has a rating “TO-“ by S&P, while UniCredit is three levels lower at “BBB”.
“We would lose customers who have certain rating requirements – he commented – and we would only do business with banks with an excellent rating”. Furthermore, refinancing costs would increase.