Introduction#
UniCredit SpA has intensified its takeover bid for Commerzbank AG, claiming the German bank is overvalued and not prepared for future challenges. This assertion was made during a detailed presentation that critiques Commerzbank's current strategies.
Valuation Concerns#
In its presentation, UniCredit described Commerzbank's existing strategy, known as the "Momentum" plan, as offering little innovation and carrying significant risks. They noted that Commerzbank's valuation has increased by over 20% since UniCredit first disclosed its stake in September 2024, a rise they argue is not justified by the bank's actual performance.
Proposed Plans and Projections#
UniCredit introduced its own strategy called "Commerzbank Unlocked," which aims for a return on tangible equity exceeding 19% by 2028, compared to Commerzbank's expected 15%. The plan also projects a cost-to-income ratio of about 40%, lower than Commerzbank's 47%, and a net profit of approximately €5.1 billion, surpassing Commerzbank's forecast of €4.5 billion. Implementing this plan would require €1.7 billion in investments and additional provisions for loan losses.
Response to Commerzbank's Objections#
UniCredit directly addressed Commerzbank's concerns regarding job cuts, stating that 60% of cost savings would come from non-human resources and non-core activities. They also claimed that the anticipated reduction in the German workforce would be less than half of the 15,000 jobs mentioned by Commerzbank's supervisory board. Furthermore, UniCredit emphasized that Germany would become the leading country in their group by 2030, with most decisions made locally, a proposal Commerzbank has not engaged with.
Conclusion#
While UniCredit has yet to release the formal offer document, they assert that any decisions regarding Commerzbank shares should be based on this forthcoming document. The ongoing dialogue between the two banks remains tense as UniCredit pushes for a more favorable outcome.