UniCredit's Move on Commerzbank Fuels Prospects for Further Banking Consolidation in Europe

On September 11, 2024, UniCredit (or the Group) announced that it has acquired an equity stake of around 9% in the share capital of Commerzbank AG, of which 4.49% was purchased in an accelerated book building offering on behalf of the Federal Republic of Germany in line with its intention to reduce its stake in Commerzbank AG, while the remaining stake was acquired through the open market. UniCredit also said to be open to potentially exceed 9.9% of Commerzbank's share capital upon obtaining regulatory approvals.

After a long and drastic restructuring process, which included capital increases, asset disposals and de-risking, UniCredit has returned to the European stage as one of the most active players for the potential consolidation of the European banking market. In October last year, UniCredit and Alpha Bank announced the merger of their subsidiaries in Romania and a strategic partnership in Greece, while in July this year, the Group announced the acquisition of Belgium's digital bank Aion and Vodeno, a provider of cloud-based banking services. In recent interviews, UniCredit's CEO, Mr. Orcel, said that the Group is looking at potential deals, as a potential way of deploying part of its excess capital.

Currently, Germany is the second largest market for UniCredit after Italy. The Group's presence in the country dates back to 2005 when UniCredit combined with HypoVereinsbank (HVB).

A deal with Commerzbank could create the potential for economies of scale and synergies in the corporate, SMEs and retail segments in Germany. Commerzbank is a leading bank for the German Mittelstand, the backbone of Europe's largest economy. Germany is also Italy's main economic partner both in terms of exports and imports. A deal could also support further expansion in Central Europe, through mBank, one of the largest banks in Poland, currently controlled by Commerzbank.

UniCredit said it will engage with Commerzbank AG to explore value creation opportunities for all stakeholders in both banks. Morningstar DBRS will continue to monitor this transaction and its implications across the European banking market.