'We see potential' in Commerzbank merger: UniCredit boss

FRANKFURT, Germany — UniCredit CEO Andrea Orcel openly acknowledged Monday that he was in favour of a merger with Commerzbank, days after the Italian lender unexpectedly acquired a nine - per cent stake in Germany's second-biggest bank.

"It has been no secret for many years that we see potential in a merger," Orcel said in an interview with financial daily Handelsblatt.

"For the moment, we are only a shareholder. But a merger of the two banks could lead to considerable added value for all stakeholders," Orcel said.

UniCredit caught markets by surprise last week when it disclosed it had built up a nine – per cent stake in Commerzbank, half of which it acquired from the German state.

UniCredit paid around 1.4 billion euros ($1.5 billion) for the acquisition.

The announcement renewed speculation that the Milan-based bank was mulling a takeover of Commerzbank. UniCredit already owns German lender HypoVereinsbank.

"Europe, and Germany too, needs stronger banks. Banks are needed to finance growth and the enormous transformation that lies ahead," Orcel told Handelsblatt.

A tie-up between UniCredit and Commerzbank would "create a much stronger competitor in the German banking market", he said.

"Retail banking customers could be better supported, and the German Mittelstand (small- and medium-sized companies) could be strengthened with financing and more comprehensively supported internationally."

The German government is still Commerzbank's largest shareholder, with a remaining 12 - per cent stake. It recently said it aimed to sell down its stake, citing the bank's improved economic situation.

Berlin had bailed out Commerzbank with billions of euros in 2009 after the global financial crisis pushed it to the brink of collapse.

Commerzbank has bounced back strongly since then, posting its best annual net profit for 15 years in 2023. It is aiming for even better results in 2024 despite expectations of lower interest rates.

German opposition politicians and the Verdi labour union have in recent days voiced strong objections to a potential takeover by UniCredit.

Asked about the next steps, Orcel said: "When the time is right, we will engage in a constructive dialogue."

If both sides "come to the conclusion that a merger is the best thing for both of us, that would be great".

There was no immediate comment from Commerzbank.