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.
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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
New Canaan, Connecticut, features several of the best-known modern houses in the US. There’s Philip Johnson’s Glass House, as well as designs from the rest of the Harvard Five who made their names here in the 1940s. Of the same era, Edward Durell Stone’s Celanese House is now for sale.
This four-bedroom house has an unusual past. It was built as a display home amid a brief mid-century phase when companies would commission houses as a way of showcasing their products. Some, such as Charles M Goodman’s Care-free Homes designed for Alcoa, were intended to be replicated, with each one incorporating up to 7,500lb of Alcoa aluminium. Others were standalone showhomes, such as the Celanese House.
Originally a show home, the Celanese House has been meticulously refurbished
The company Celanese (a portmanteau of cellulose and ease) produced synthetic fabrics but also branched out into wallpaper, linoleum, carpets, paint and furniture, all of which were used liberally throughout the house. They hired Edward Durell Stone for the project, co-architect of MoMA in New York, the Kennedy Center in Washington DC and the US Embassy in New Delhi.
Stone’s approach set him apart from the Modernist architects of his day. While he embraced International Style Modernism in the 1930s, he ultimately felt that Modernism was too austere for American sensibilities. His son and fellow architect Hicks Stone explains: “My father was a progenitor of a trend in architecture called New Formalism. New Formalist buildings were typically symmetrical and monumental, and the work made references to classical architecture. It was this rejection of austere Modernism that made him commercially successful.”
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Ornamental lattice screens help preserve privacy, while allowing light in to the building
Stone’s classically-influenced projects made trademark use of ornamental screens and brise-soleil, most prominently at the embassy in New Delhi but also at the Celanese House. The lattice surrounds offer both privacy and light, while 12 pyramidal skylights provide light to the interior. Floating panels beneath (once filled with hanging plants) ensure illumination without glare.
The soft light was a selling point for Joel Disend who bought the house in 2008. “The panels diffuse the light coming from the skylights so it never gets in your eyes,” he says. Disend conducted a lengthy search for a modern home after his retirement. When he found the Celanese House he asked architect Nicholas Karytinos who had renovated his prior property if he would be willing to undertake the refurbishment without affecting the property’s original design.
Edward Durell Stone rejected austere Modernism in favour of classical references
Many of the Celanese details — which Stone did not care for — were already gone. A linoleum floor was replaced with oak. Sliding glass internal doors, no longer necessary to keep the house warm, were removed. A covered passageway, only occasionally needed in Connecticut’s climate, was subsumed into a new kitchen.
The renovation sought to respect the clean geometry of the interior. “The kitchen had no skylight and it was quite dark so we cut one into the roof,” Disend explained. They chose not to add another pyramid to avoid affecting the symmetry of the roofline. Meanwhile the existing pyramid shingles were in poor shape and were replaced.
The original exterior landscaping has now been sensitively updated as part of the refurb
The exterior was a blank canvas. “There was no landscaping and it needed something,” said Disend, who hired a historically-minded firm to work on the house. Stephen Lederach of Arnold Associates — a company that had worked with Stone previously — planted a meadow around the existing trees and created a formal entrance with eight symmetrical Linden trees.
Hicks Stone described Disend’s renovation as “immaculate”, adding that it “extends the Modernist vocabulary with skilful details, more so than the original home, which was fundamentally a speculative house meant to showcase a manufacturer’s product line”. A historic space, sensitively updated for the modern day.
The Celanese House is on sale for $4.7mn through Melissa Rwambuya of William Raveis Real Estate.
The restive Indian-controlled territory of Jammu and Kashmir is poised for the results of its first regional election since being stripped of autonomy by Narendra Modi in 2019, a contest being closely watched for signs of the future direction of one of Asia’s most intractable conflicts.
Voting closed on October 1 in the Himalayan territory, which is part of a region also claimed and partially controlled by Pakistan and a perennial flashpoint between the nuclear-armed neighbours. The votes will be counted and results announced on Tuesday.
Wrapping up a peaceful election would represent a public relations coup for India’s governing Bharatiya Janata party, which says it has brought peace to Jammu and Kashmir since downgrading what was India’s only Muslim-majority state to a union territory under direct federal rule.
“The peaceful and participative elections are historic wherein democracy is taking root . . . driven by the will of the people of Jammu and Kashmir,” said Rajiv Kumar, India’s chief election commissioner, as voting closed.
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Modi’s government five years ago revoked a constitutional article that guaranteed significant regional autonomy to Jammu and Kashmir.
Unlike past regional elections, which were subject to boycott campaigns by Kashmiri separatists, this vote was marked by vigorous campaigning and strong participation by large national parties, smaller regional rivals and independent candidates.
To ensure order during voting, which was carried out in phases beginning last month, paramilitaries in security vehicles mounted with guns patrolled towns that have previously been hotbeds of Kashmiri separatist militancy.
Opposition politicians have accused New Delhi of ruling the disputed region by fear and oppression. After downgrading the state, the government blocked the internet there for months and carried out mass arrests of separatists, activists and others.
“The BJP’s jackboot policy has created fear,” said Tariq Hameed Karra, Jammu and Kashmir president of the Indian National Congress, India’s biggest opposition party. “There’s anger in every part of the state over the legal, constitutional, cultural, religious and economic oppression of the people.”
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People are “not allowed to air their grievances”, he said.
Iltija Mufti, a candidate for the regional People’s Democratic party, which wants restoration of statehood and autonomy, said the Modi government had “disempowered and dispossessed” people in the territory.
While deadly encounters between Indian security forces and insurgents remain common, the number of people killed has fallen, according to security analysts.
They said this was in part because Pakistan, which backs Kashmiri separatism, had in the past few years been focused more on Afghanistan and on its own economic problems, according to Ajai Sahni, executive director of the Institute for Conflict Management in New Delhi.
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“There is a very sustained downward trend in fatalities because of improvements in Indian security force capabilities and a weakening of the economy and security force capacity in Pakistan,” Sahni said.
According to the institute’s South Asian Terrorism Portal, 134 fatalities among Indian security forces, insurgents and civilians were reported in the region in 2023, down from an average of well over 1,000 per year at the height of the conflict from 1990-2006.
In Sopore, a town in lush northern Kashmir, farm workers took time off from the harvest season to queue early at a polling station surrounded by willow trees used to make cricket bats.
Mohammad Ramzan Ganai, 78, a supporter of Kashmir’s oldest party, the National Conference, said people wanted elected representatives who would defend their basic interests, including seeking the restoration of the territory’s statehood and autonomy. “This vote is different because we want our basic rights back,” Ganai said.
While the election will allow some transfer of power to a 90-seat regional assembly, Jammu and Kashmir’s status as a union territory means New Delhi will have much more direct control than it does in Indian states.
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Bringing Kashmir under the same regime as India’s other states has long been a pet project for the BJP. But while Modi has voiced support for restoring statehood, the party has dismissed any suggestion it could give Jammu and Kashmir back substantial autonomy and the special rights previously granted to people defined as permanent residents.
Analysts said New Delhi’s direct rule by handpicked bureaucrats had left a gap in public representation. “People feel a disconnect with governance,” said Nisar Ali, an economist on a central government data committee. “Their motivation is to elect local representatives so that they can access government services through them.”
Intense development of roads and other infrastructure over the past five years has converted swaths of the picturesque mountainous territory into construction sites. But residents complain of high electricity tariffs, drinking water shortages and high unemployment under the current administration, which has had only limited results from its efforts to promote business and inward investment.
A parliamentary committee said in a report last year that about 1.35mn people in the territory — about 8 per cent of the population — were addicted to drugs.
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The Jammu and Kashmir election, along with several state ballots across India in coming months, will test popular support for the Hindu nationalist BJP after it lost its majority in the national parliament in June.
The BJP won two seats in Jammu and Kashmir in June, with National Conference also taking two and an independent winning one.
Exit polls — while not always accurate, as June’s parliamentary elections proved — suggested no party or grouping was expected to win a majority in the regional vote. Abhijeet Jasrotia, a local BJP spokesperson, said the party would win “30-plus” of the 43 seats in Hindu-dominated Jammu, and two or three of 47 in Muslim-majority Kashmir.
“We will definitely emerge as the largest grouping, and I hope we are not too far from the halfway mark,” said Omar Abdullah, vice-president of National Conference, which ran a joint campaign with Congress.
Analysts said lasting peace and stability for Jammu and Kashmir would require more than democratic elections. India also needed to improve relations with Pakistan, according to Ali. “We cannot think of the future of Jammu and Kashmir in isolation,” he said.
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Seven & i Holdings is hunting for ways to boost its share price and bolster its defences ahead of what the owner of the 7-Eleven brand believes is a looming second takeover bid from Alimentation Couche-Tard.
The Japanese group received and rejected an almost $39bn opening offer from Canada’s Couche-Tard last month. It has been exploring the possibility of selling non-core assets to private equity and other investors, according to people familiar with the situation, and accelerating plans to focus on its convenience store business.
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The hunt for alternatives comes as Seven & i tries to find ways to demonstrate to shareholders that it can deliver more value as an independent business, according to the same people.
Alongside other plans, the company is considering accelerating the sale of its stake in its financial services arm, Seven Bank, as well as selling its supermarket business, which could kick off by the end of the year. In April, the group had already signalled that its Ito-Yokado supermarkets, the forerunners to Seven & i, could be listed by 2027.
UBS analysts said that gains from share sales of listed Seven Bank would mean investors “could expect additional shareholder returns or investment for growth using the proceeds”.
In a note to clients in August, JPMorgan analysts suggested that Seven & i’s supermarket business could have an enterprise value of ¥232.4bn, or more than $1.5bn. However, they also said there might only be a “minimal improvement in [Seven & i’s] valuation, even if the company sells Ito-Yokado and the bank, assuming inadequate reforms of the main business”.
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Ever since Couche-Tard’s takeover bid was made public in August, international and Japanese private equity groups have been circling Seven & i, in the hope that they could take part in a break-up of the retail conglomerate or assume a “white knight” role in a battle for control.
Executives at four separate Tokyo-based PE firms have told the Financial Times they had sent letters to Seven & i to try to open talks.
Couche-Tard’s all-cash offer of $14.86 a share was promptly rejected by Seven & i as “grossly” undervaluing the business, but the Canadian group is widely expected to come back with an improved bid.
The Japanese group’s share price is currently trading slightly above that offer price and well above where it was before the bid became public.
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One person familiar with the matter suggested Couche-Tard was waiting until after Seven & i’s second-quarter results are published on Thursday before launching a renewed bid.
Seven & i declined to comment on the disposal plans, but people familiar with the group’s thinking said that measures to allow the business to focus on its convenience store empire could be unveiled along with its results.
They also noted that Seven & i had been working to streamline the business and improve returns since before Couche-Tard’s interest was made public.
Seven & i has long faced calls to concentrate more on its convenience store business, including from activist investors such as ValueAct. The company has 22,800 convenience stores in Japan as well as 13,000 in the US.
In its letter to Couche-Tard rejecting the opening bid, Seven & i said it was confident it could unlock shareholder value “through a number of strategic actions, including but not limited to our US business, that we are actively pursuing”.
The Japanese group added that even if Couche-Tard were to improve the value of its proposal “very significantly”, it would not “adequately acknowledge the multiple and significant challenges such a transaction would face from US competition law enforcement”.
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