In This Article:
This story was originally published on Banking Dive. To receive daily news and insights, subscribe to our free daily Banking Dive newsletter.
Italy’s UniCredit has agreed to buy domestic rival Banco BPM in a €10.1 billion ($10.6 billion) all-stock deal, the bank said Monday.
The offer at once signals that UniCredit’s September buy-up of a stake in Germany’s Commerzbank is less of a short-term strategy. It also foils a possible attempt by the Italian government to see BPM, the country’s third-largest lender, grow to a size that would pose a challenge for its two larger financial institutions, Intesa Sanpaolo and UniCredit.
BPM on Nov. 6 offered to buy out asset manager Anima Holding in a €1.6 billion deal, then a week later bought a 5% stake in Monte dei Paschi di Siena from the Italian government. (Anima, for its part, bought a separate 3% stake in Monte dei Paschi di Siena.)
UniCredit’s €6.66-per-share offer represents a 0.5% premium to BPM’s closing stock price Friday. But it’s a 14.6% jump over BPM’s share price from Nov. 6, the day it bid for Anima.
“The Italian banking sector, which is one of our two biggest markets, is potentially consolidating,” UniCredit CEO Andrea Orcel said on a conference call Monday, according to the Financial Times. “We cannot remain absent from that move.”
But Orcel, on the call, also addressed UniCredit’s standing with Commerzbank. The Italian lender quietly amassed a 4.5% stake in the German bank in September, doubled it in a surprise bid, then sought to extend that to 21% through derivatives contracts. The sudden moves sparked backlash from the German government and prompted Commerzbank to dig in, naming a new CEO and issuing more ambitious goals on profit, revenue and return on tangible equity.
At the time, Orcel dismissed the buy-up as merely “an investment” but also made clear that a full takeover was a future possibility.
Orcel on Monday reiterated that Commerzbank is “an investment for now.”
“We can sit on it for a while. It will remain there. It’s not diverting management, it’s not requiring from us anything,” Orcel said Monday. “We are hoping that our presence will prompt Commerzbank to unlock a lot of the value that we know they have, faster.”
Political tensions in Germany, however, may have made a play for Commerzbank less likely in the short term. The nation is set to hold a snap election in February.
“Given the reception we have had in certain places, we need to be patient,” Orcel said of Germany on Monday’s conference call.