What seemed unthinkable days ago is happening: a major Eurozone bank plans to acquire another in a different member state. UniCredit, Italy’s second lender, says it holds contingent derivative instruments which would give it effective control of Commerzbank, the second-biggest bank in Germany by market capitalisation (“The trouble with UniCredit’s interest in Commerzbank”, Opinion, September 30).
The two banks are a good match. After years of draconian clean-up and restructuring, UniCredit recently outperformed most European peers by net returns and market valuation. Now worth twice what Commerzbank is worth, it is an internationally diversified group, experienced in restructuring itself and other banks. It already owns an important mortgage unit in Germany, which would generate synergies. Commerzbank, by contrast, with a cost ratio well above UniCredit’s and profits about a tenth of the size, may benefit from some internal cure. Both banks have sound capital and liquidity positions.
In its recent report on European competitiveness, Mario Draghi called for banking integration in the Eurozone, even suggesting special legislation is needed to bring it about. This deal would mark a remarkable step in the right direction.
But within Germany, it is fiercely opposed by the political establishment and trade unions, fearing loss of control and job cuts.
At the time of writing, the only obstacle seems to be authorisation by the European Central Bank, on prudential grounds. Its supervisory board, chaired by former Bundesbank vice-president Claudia Buch, includes top officials from the Bundesbank and BaFin, Germany’s financial watchdog. All of them are bound by statute to act independently in the sole interest of the EU bloc and not take instructions from governments or any other bodies.
The UniCredit-Commerzbank deal is a test case for the ECB, which will reverberate into the future, and be a golden opportunity for its supervisory board to uphold its independence.
Ignazio Angeloni
Senior Policy Fellow, SAFE, Goethe University Frankfurt; Non-resident Fellow, Institute for European Policymaking, Bocconi University, Milan, Italy
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