Italians plot merger with Commerzbank: Unicredit poised to swoop if Deutsche deal falls apart
Target: Milan-based Unicredit is said to be pondering its own multi-billion pound bid for German’s Commerzbank
Italy’s biggest lender is planning to swoop if the merger of Germany’s two largest banks falls apart.
Milan-based Unicredit is said to be pondering its own multi-billion-pound bid for Commerzbank to create a pan-European financial giant.
But the Italian banking business is unlikely to make its move unless the plans for a tie-up between Commerzbank and Deutsche Bank turn sour, insiders told the Financial Times.
Industry experts are sceptical of the merits of either deal, however. It is feared that merging Deutsche with Commerzbank, or Unicredit with Commerzbank, will simply create a huge, unwieldy lender without boosting profits.
Referring to the proposed Commerzbank-Deutsche deal, the chief executive of one major global bank said: ‘They think they’re going to get a national champion, but what they’ll actually get is just a larger bank which is even more focused on middle Germany.’
Sources said Unicredit would take a majority stake in Commerzbank and merge it with Hypovereinsbank, another German player which it already owns.
A Unicredit insider said: ‘The way for us might be open.’
The proposal could cause alarm as Unicredit itself is only just moving on from a huge restructuring and doubts about its finances.
In 2017 it raised £11.2billion from the markets, unveiling a plan to axe 14,000 jobs and shut 944 branches.
German government officials are pushing for a tie-up between Commerzbank and Deutsche in the hope it would create a major player that could take on the huge Wall Street and City of London lenders.
But the plans for a merger could collapse because they would be hugely complicated.
And German finance minister Olaf Scholz – initially a major supporter of the scheme – is said to have become increasingly concerned it could damage him politically by leading to tens of thousands of job cuts.
Deutsche Bank has been struggling to make money because of ultra-low interest rates in the stagnant eurozone.
Shares in the lender are down 32 per cent in the past year and it has faced persistent questions over its financial strength.
Last year the board sacked British-born chief executive John Cryan and replaced him with Christian Sewing, whose whole career has been spent at Deutsche. Sewing has talked tough on cuts, even banning a free fruit staff perk in an effort to save money.
But the lender faced an outcry from investors and trade unions last month over major increases to the pay of senior executives.
Garth Ritchie, head of its troubled investment bank, saw his pay surge to £7.4million in 2018, up from £2.8million for the previous 12 months.
It came despite profits at the investment banking arm dropping by more than half to £454million last year, and included an extra £214,000 a month for overseeing the lender’s Brexit plans.
Sewing, 48, was paid £6million, up from £2.4million.
Meanwhile the pay of chief risk officer Stuart Lewis more than doubled to £5.2million, including £128,000 a month because he is spending extra time on improving Deutsche’s relationship with US regulators.
And chief regulatory officer Sylvie Matherat saw her pay more than double to £3.9million in a year when the firm was rebuked by German regulators over its money-laundering controls.