UniCommerz: Russian threat could catalyse merger war has interrupted

Andrea Orsel accidentally risks again for Jean-Pierre Mostier. The latest parallel between the UniCredit boss and his predecessor is the enthusiasm for a merger with Commerzbank. His capital repayment plan also contained Mustair’s trace elements, as did his opposition to a link with the evil Monte dei Pashi.

The Italian Bank and its German counterpart Cancel plans for calls After the outbreak of the war in Ukraine. A deal still makes sense in the long run. Orzl may just get the diplomatic ribs to do so, given the momentum for European integration amid Russian aggression.

Currently, EU banking demonstrates the victory of nationalism over financial logic. The market remains divided in brand awareness, regulation and ownership. There is a great need for unification. National politicians are philosophically oriented towards integration but are pragmatically resistant to taking over “their” financial institutions.

The de-Balkanization of European banking will lag far behind military cooperation and greater energy as a goal of EU leaders. UniCredit’s immediate priority is to resolve its exposure to Russia. Its shares collapsed in parallel with rival shares amid fears of a European recession.

Commerzbank is set to become a potential for UniCredit again when the fog of war subsides. Even with the recent optimism about interest rate hikes, the consensus yields for 2024 of 6.3% are almost half of the estimated bank capital of the German bank.

German politicians recognize the need for formation. UniCredit receives local camouflage from its ownership of HypoVereinsbank, the fifth largest lender in Germany. Tying seems like the least bad option in terms of job losses from possible mergers. A double listing of UniCommerz in Milan and Frankfurt will leave German investors with skin in the game.

Financial indices have changed slightly since Mostair offered a deal in early 2019. Cost savings are estimated at 12% of the combination, but are expected to be lower today. A deal could add 11% to UniCredit’s earnings per share, Andrea Filteri of Mediobanca wrote at the time.

A deal will have to be capital neutral to sculpt Orzel’s strategy. The merged capital ratio to be controlled by UniCredit investors at current prices looks like another stumbling block. It has dropped back to the problematic levels of 2019. Orsell will want a better deal for its shareholders than what Mustair could have achieved. Nationalism is growing. Managerial ability is eternal.

The Lex team is interested in hearing more from readers. Should UniCredit and Commerzbank merge? Please tell us what you think in the comments section below.

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