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(Bloomberg) -- UniCredit SpA Chief Executive Officer Andrea Orcel touted the benefits of a combination with Commerzbank AG to the Italian bank’s staff in Germany, indicating that a deal wouldn’t result in deep immediate changes for UniCredit’s existing operations in the country.
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The acquisition “would only potentially affect HVB in the medium term, with a combination that would be much ‘softer’ than many expect,” Orcel said in an internal memo sent last week, referring to UniCredit’s German unit. The integration of Commerzbank and HVB “would occur only after a period in which Commerzbank would be independently improved, applying our blue print while HVB continued on its own trajectory.”
The CEO also blasted Commerzbank for “underperforming for many years in spite of successive deep and painful restructurings,” adding that the company is still operating at efficiency and profitability levels well below UniCredit and its peers in the European Union.
Commerzbank has ramped up its rhetoric against the approach from UniCredit, which became the bank’s largest investor last year after taking control of about 28%, mainly through derivatives. Commerzbank called the move “hostile,” while the German government has also expressed its misgivings about a potential combination.
Applying UniCredit’s strategy to Commerzbank “will mean huge value creation, well before considering the synergies from ultimately bringing the two banks together,” Orcel said in the memo to HVB staff.
“Our positive conviction and commitment are underscored by our readiness to make an investment of about €20 billion euros ($20.8 billion) in Germany at this juncture,” he said.
Representatives for UniCredit and Commerzbank declined to comment.
UniCredit has also made an offer for domestic rival Banco BPM SpA, which has been rejected as too low.
Any potential combinations would come at a time of political instability for Europe’s largest economy, which is holding snap elections later this month with a highly uncertain outcome. On the economic front, Germany has passed through two consecutive recessions.
Orcel also tried to dispel concerns he may take away power from Commerzbank, saying decision-making would be kept in Germany.
“This would be a bank made in Germany, for Germany,” he said in the memo.