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Commerzbank may lose customers in case of merger with UniCredit

The credit rating of the German bank may be downgraded

Oct 7, 2024 11:25 256

Commerzbank may lose customers in case of merger with UniCredit  - 1

The potential merger of Commerzbank with the financial group UniCredit may lead to the loss of customers due to possible credit rating downgrade. This was stated by the executive director of the bank, Bettina Orlop.

„We will lose customers who have certain requirements for the bank's rating and who only work with banks with very good ratings,” she said in an interview with the newspaper Handelsblatt, answering the question what consequences the merger with UniCredit may lead to in terms of the bank's credit indicators. Orlop recalled that, compared to 2020, Commerzbank's rating improved “thanks to successful restructuring and a significant increase in profitability”. Against this background, the newspaper notes that with this indicator, according to the S&P agency, the German bank is already at level A-, which significantly exceeds UniCredit's rating, rated at BBB.

The head of Commerzbank also compared the possible merger with UniCredit to the situation in 2008, when Commerzbank concluded a similar deal with Dresdner Bank. According to her, this experience has shown that the merger of two banks significantly complicates and slows down their operations, and the integration process can take several years. In this regard, Orlop emphasized that Commerzbank cannot afford this now due to the rapid development of technology and strong competition.

On September 23, the agency DPA announced that Unicredit has acquired additional shares of Commerzbank. The financial group gained access to another 11.5% of the shares through financial instruments, bringing its expected share to around 21%. Unicredit said it has applied for formal permission to increase its stake to 29.9%. Thus, the official takeover offer of Commerzbank becomes more likely, the agency points out.

The German government opposes the acquisition of Commerzbank by the Italian financial group. German Chancellor Olaf Scholz sharply criticized Unicredit's actions towards Commerzbank. The German bank stressed that if the deal with UniCredit goes through, two-thirds of jobs could be lost.

On September 20, the German Financial Agency announced that the German government no longer plans to sell state shares in Commerzbank. The German government became the owner of part of the shares of Commerzbank as a result of the financial crisis of 2008-2009, when it lent more than EUR 18 billion to stabilize the business. On September 4, the authorities announced their intention to gradually sell the bank's shares. On September 11, the Financial Agency reported that the German government had sold a 4.49% stake in Commerzbank to the Italian group Unicredit. As a result of the transaction, the share of state participation in the bank decreased from 16.49% to 12%.

The German authorities did not expect the Italians to acquire shares in the institute so quickly and in such quantities. On September 12, Unicredit chief Andrea Orsel said the banking group was considering a full acquisition of Commerzbank. The DPA links the German government's decision to no longer sell shares specifically to Unicredit's actions. At the end of June, Commerzbank employed 38,700 people worldwide, of which more than 25,000 in Germany, according to the financial institute's own data.