By Valentina Za
MILAN (Reuters) – UniCredit CEO Andrea Orcel on Wednesday named Poland, alongside Italy and Germany, as the countries where a merger or acquisition could most benefit the bank.
Since joining UniCredit in 2021 after a three-decade investment banking focused on bank M&A, Orcel has said the Milanese lender would consider deals across its 13 markets.
UniCredit’s bid for Italy’s Banco BPM fell through earlier this year, while Germany is opposed to a deal with Commerzbank, in which UniCredit holds a 26% equity stake plus 3% in derivatives.
The derivatives are set to convert by year-end, bringing UniCredit’s holding to 29%.
UniCredit also owns 26% of Greece’s Alpha Bank, partly through derivatives, with regulatory clearance to increase that up to 29.9% expected in the fourth quarter.
MARKETS OFFERING M&A BENEFITS
Orcel told investors at a BofA Securities conference that Italy, Germany and Poland were the markets where M&A “would make very material change to our equity story … a quantum difference in what we are and what is our profitability.”
Italy and Germany are UniCredit’s largest markets.
“Poland is the trickiest, because by not being there and going organic, we don’t have synergies, or we have more limited synergies than an in-market deal,” he added.
Banks can more easily cut costs when buying another lender in a country where they are already present.
Commerzbank owns Poland’s MBank. UniCredit exited the country when it sold Bank Pekao in 2016-2019.
Orcel said in August UniCredit planned a re-entry in the fourth quarter, after buying local banking technology services provider Vodeno and Belgian digital bank Aion, which operates in Poland.
UniCredit is also hiring investment bankers in Poland, including a former Santander team, the local press has reported.
INCOME BOOST FROM EQUITY STAKES
Following the collapse of the Banco BPM deal, UniCredit will expand its domestic market share without M&A.
It can sit on its Commerzbank stake, having capped any potential loss and locked in a 20% return on the investment.
“We’re just waiting … if things go well, we can’t be happier,” Orcel said.
“We can just sit there, we’re no longer hostage of the market,” he said in reference to the Commerzbank stake.
Orcel said various equity stakes UniCredit had acquired in recent months, plus the full ownership of its life insurance business, cost up to 6.75-7.5 billion euros of capital it holds above its targeted threshold.
But he said the net income boost from the stakes, and another accounting benefit related to its insurance business, increased the excess capital to 10-11.5 billion euros, meaning up to 4.5 billion could be used to improve an ordinary cash-and-share payout of 80%.
The bank will decide between 2028 and 2030 how to use the excess capital, or return it to shareholders.
($1 = 0.8445 euros)
(Reporting by Valentina Za; Editing by Cristina Carlevaro, Jane Merriman and Emelia Sithole-Matarise)
