Andrea Orcel, CEO of the Italian bank UniCredit, outlined aspirations to acquire more of its German rival or potentially take it over. As a result, Commerzbank and UniCredit shares increased in value on Thursday, fueling speculation about potential dealmaking in the sector.
As of 08:45 GMT, Commerzbank’s shares had increased by 2.6%. Orcel stated on Bloomberg TV that he would be open to purchasing the remaining 12% of Commerzbank Germany’s government ownership under the right conditions. He also expressed interest in a potential merger. UniCredit saw a 2% increase.
In a note to clients on Thursday, analysts at JPMorgan, including Kian Abouhossein, stated, “We would expect more newsflow on European bank M&A going forward, which could be a positive for valuations for banks that have historically been seen as targets.”
“Banking sector M&A historically has been triggered by momentum from deals being announced.”
Analysts predict that a purchase expanding UniCredit’s German business from a regional to a national level would boost the company’s earnings. They emphasize that this move will particularly benefit the nation’s small- and medium-sized businesses.
But there could be political obstacles as well as dangers associated with Orcel’s strategy.
“We note that any M&A talks could still fail on price, lack of government support, prospects of execution risks in particular on cost savings,” JPMorgan analysts said in a report.
“Also, we do not think that Italy M&A is completely off the table and depending on share price moves, could still represent a potential alternative to Commerzbank acquisition,” they added.
During the interview on Thursday, Orcel stated that his bank would want to merge with Commerzbank or might reduce or grow its stake in the latter.
In early trade, the STOXX 600 banks index for Europe was up 1.5%.
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