Any UniCredit/Commerzbank merger must create competitive lender, Bundesbank chief says
FRANKFURT, Sept 18 (Reuters) -Any merger of Commerzbank CBKG.DE and UniCredit CRDI.MI must create a competitive institution robust enough to support German economic growth, Bundesbank chief Joachim Nagel said on Wednesday.
Italy's second-largest bank took a 9% stake in Commerzbank last week, catching German authorities off guard and getting a hostile reception from local management, who want to fend off any takeover attempt.
It will now be up to the European Central Bank whether to allow UniCredit to increase its stake, so any comment from the Bundesbank - whose representative sits on the ECB's Supervisory Board - is likely to be closely scrutinized.
"We need strong and robust banks so that companies can tackle and finance their future tasks," Nagel told a Commerzbank event in Frankfurt.
"In case of possible mergers, it is important that a competitive institution is created which fulfils this task as best as possible," Nagel said, without any specific reference to either of the lenders.
UniCredit is among the best capitalised banks in Europe, with a common equity tier 1 or CET1 capital ratio of 16.2% at the end of the first half, despite a generous dividend and share buy-back programme.
This would suggest that UniCredit has the financial capacity to engineer a viable takeover.
However, any deal is likely to be politically charged since Germany's banking sector is dominated by two large institutions: Deutsche Bank and Commerzbank.
The sale of Commerzbank to UniCredit would increase competition for Deutsche Bank and leave Commerzbank under foreign control, a potentially sensitive issue for a government facing elections next year.
However, the ECB has repeatedly voiced support for cross-border mergers to improve European banking competitiveness, so the supervisor is unlikely to block the deal if UniCredit can present a plan that creates a financially sound mega-bank.
Reporting by Balazs Koranyi
Editing by Mark Potter
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
