UniCredit Wants to Shape Commerzbank Strategy But No Board Seat
(Bloomberg) -- UniCredit SpA Chief Executive Officer Andrea Orcel said he won’t seek a supervisory board seat at Commerzbank AG even though he wants to make sure the German lender becomes more profitable.
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“I usually do not believe in investors having board seats,” Orcel said at a conference hosted by Bank of America Corp on Wednesday, referring to UniCredit’s stake in Commerzbank. “I think it’s inappropriate for us to have a board seat because we’re also a competitor.”
UniCredit has built a stake of more than 20% in Commerzbank, partly through derivatives, with Orcel keeping the option of a full takeover on the table. Yet he’s facing stiff resistance from the German government, unions and Commerzbank itself.
Orcel reiterated his view on Wednesday that Commerzbank’s performance can be enhanced. He pointed to UniCredit’s higher profitability as evidence that his proposals for the German lender would help achieve better results.
“I think as an investor, we expect to get the same information as all of the other investors,” Orcel said. “In the same way investors debate, challenge and tell you ‘what about this, what are you doing about that, have you tried this, have you tried that?’ We can do the same.”
Commerzbank Chief Financial Officer Bettina Orlopp has shot back, calling the lender’s strategy “effective” in a press release on Tuesday that announced she’ll replace CEO Manfred Knof. She has previously signaled she too opposes a takeover.
At the conference on Wednesday, Orcel also updated the bank’s plans to return capital to shareholders, confirming payouts of €8.6 billion this year and increasing the share of cash dividends from next year to 50% from 40%. He called UniCredit the “most efficient bank in Europe” and said he would deploy Commerzbank’s capital more efficiently than it does itself.
UniCredit has invested €3.5 billion “so we are keen that Commerzbank does well,” Orcel said. He added that he’s taken out “downside protection” against losses on the investment, likely referring to the derivatives he’s bought to build up the stake.
The German government, which partially owns Commerzbank, has expressed displeasure with the way UniCredit has acquired the holding. On Wednesday, the chief financial officer of Deutsche Bank AG, James von Moltke, ruled out that the country’s biggest lender would step in to help keep its rival independent.
“I think that we still have work to do before we’re really positioned to participate in consolidation,” von Moltke said when asked at a financial conference about the lender’s potential interest in Commerzbank.
Orcel said that he’s consulted all relevant stakeholders ahead of building the stake, and is keen to re-open dialog on the way ahead, but didn’t give specifics on how or when talks to resume.
The prospective takeover would break a years-long drought of large, cross-border deals in European banking and reawaken the continent’s moribund ambitions to more closely integrate its financial sector. Orcel said that his Commerzbank move was a “test case” in that regard.
Yet German resistance to Orcel’s approach has brought criticism for the stance of Chancellor Olaf Scholz and Finance Minister Christian Lindner, and tension between Berlin and Rome.
Lindner will take questions from lawmakers in parliament in Berlin later on Wednesday as part of regular government questions, followed by a special debate on the government’s sale of Commerzbank shares.
On Tuesday, Lindner said that the “style” of Orcel’s approach for Commerzbank shares — using derivatives to build a stake without needing to announce it publicly — had “unsettled” investors in the bank. Commerzbank shares are up about 20% since Orcel’s move became public.
“Germany now stands accused of favoring European banking integration only on its own terms,” David Marsh, chairman of OMFIF, wrote in an commentary. “Europe’s premier economy appears to be seeking to hide behind protectionist barriers when one of its own institutions becomes a target.”
--With assistance from Arno Schütze.
(Adds Commerzbank CFO comment in sixth paragraph and details about UniCredit’s investment in eighth paragraph.)
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