Renters could still face demands for large upfront payments, charities are warning, despite a Labour election promise to cap the amount landlords can ask for in advance.
The Renters’ Rights Bill, which bans Section 21 or “no fault” evictions, will be debated by MPs for the first time on Wednesday.
But the bill does not mention Labour’s election promise to “end massive upfront payments” that landlords can demand.
Some landlords ask for several months’ rent in advance at the start of a contract.
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A housing department spokesperson said the government was confident the new law would protect tenants from such practices.
The government is understood to believe that overhauling rental contracts so they are on a rolling one-month basis – rather than fixed term – will stop landlords from asking for more than three months’ rent in advance.
But legal advice received by Shelter and other housing groups disputes this.
Polly Neate, chief executive of Shelter, said there nothing in the bill “to prevent landlords from demanding tenants either cough up huge sums of rent up front or hit the road”.
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“These renters need bold action, no ifs, no buts.
“The Renters’ Rights Bill must crack down on these unreasonable demands like huge upfront sums of rent and high-earning guarantors that drive homelessness.”
Ministers are understood to be aware of the concerns and are considering if changes are needed.
Labour promised to cap the amount of rent a landlord could demand upfront during the election campaign, but did not define the level of advance payment they considered appropriate. The housing minister, Matthew Pennycook, who was then shadow housing minister, said landlords shouldn’t be allowed to demand more than five weeks’ rent for most tenancies.
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Analysis by Shelter, shared with BBC News, suggests more than 800,000 private renters have not been able to rent a home in the last five years because they could not afford the rent in advance.
A spokesperson from the Ministry of Housing, Communities and Local Government (MHCLG) said: “Landlords should not price people out of homes by requesting large amounts of rent in advance.
“We’re confident that the Bill provides adequate protection against such practices and we will continue to ensure action is taken where necessary”.
Deputy Prime Minister Angela Rayner will address the Commons on Wednesday before a debate on the bill.
WHEN Isabella Day’s partner Ford unexpectedly died in August, she was forced to navigate running a small business and a household budget alone while grieving.
The 51-year-old goldsmith, from Devon, had worked with Ford Hallam selling hand-made gold jewellery at a store in Dartmouth and through website isabelladay.co.uk for years.
Ford was also a skilled craftsman and could restore items such as swords, and he was the only non-native artist to have been adopted into Japan’s ancient decorative metalworking tradition.
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He was 61 when he died due to complications arising from an auto immune disease, leaving Isabella stunned and heartbroken.
She told The Sun: “It was a massive shock when he died. We were engaged, due to be married in October but instead of planning a wedding, I had to plan a funeral.”
The pair had lived together as a blended family with Isabella’s two sons 16 and 25 and one of Ford’s sons, 22.
Ford had no life insurance or pension when he died, so the drop in income left Isabella’s finances and business under huge pressure, too.
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Two of their sons are in full-time education and so aren’t able to contribute to the family budget, and this month the 25-year-old has just moved into his own flat.
“I was struggling emotionally and grieving but I was now also solely responsible for the business that I had with Ford,” Isabella said.
“You can’t just scale up a skilled craft business when someone else’s output is no longer there.”
Feeling desperate for help, Isabella went to Citizen’s Advice in September to see if there was any financial support she could access.
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The organisation told her about the Bereavement Support Allowance.
The benefit gives lump sum payments of up to £3,500 after a partner has died, as well as ongoing payments up to £350 for 18 months.
Within days of applying, she received the payment.
Support Fund Boost: Up to £500 Grants for Struggling Households
“I was really surprised to find out about it, but the whole thing has been amazing – it was so easy to apply, I did it in about 20 minutes,” she said.
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“And it was facts that you can manage while you are grieving, I didn’t need to go into the details of the death or anything traumatic.”
The Bereavement Support Allowance is not mean-tested and it’s available even if you are not married to your partner – though you will have had to have been living together.
You will need to be under state pension age and your partner’s National Insurance contributions will need to be up to date for you to qualify.
Isabella added: “I just wish I had known about it sooner. In hospital they give you a booklet when your partner dies, but there was no mention of this benefit.
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“It’s a lot of money and made a significant difference to us.
“I think a lot of women could benefit from knowing about this support, especially small business owners. There needs to be greater awareness of it.”
What is the Bereavement Support Allowance?
If your partner dies when you are under State Pension age you could claim for the Bereavement Support Payment.
The benefit isn’t means-tested so it doesn’t matter what your income is, if you have any savings or if you’re working.
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The benefit is available if you were married, but you can also claim if you and your partner were living together, and you look after a child which you get Child Benefit for.
If you have children under the or you’re pregnant, you can get a lump sum payment of £3,500, as well as monthly payments of £350 for up to 18 months.
If you don’t have children and are married, you can still get support. You’ll be entitled to a lump sum payment of £2,500, plus monthly payments of £100 for up to 18 months.
You’ll be asked for your National Insurance number as well as your partners as part of the application.
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You usually need to make a claim within 21 months of your partner’s death – and in most situations you’ll need to claim within three months of death to get the full amount of payments.
You can apply for the Bereavement Support Payment by filling in a form from the gov website or calling the Bereavement Service helpline on 0800 151 2012.
If you need more help, you can contact Citizens Advice in England on 0800 144 8848. You can also talk online or find your nearest Citizens Advice at citizensadvice.org.uk.
Where to get support for bereavement
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There is lots of help and available if you are experiencing grief after the death of a loved one.
NHS therapy and counselling services – NHS talking therapies services are for people in England aged 18 or over. You can speak to your GP about talking therapies or get in touch with the talking therapies service directly without going to your GP.
At a loss – Find bereavement services and counselling across the UK
Child Bereavement UK – Offers support if you are bereaved after losing a child. Or if you’re a child or young person who is grieving after losing someone.
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The Good Grief Trust – a charity run by bereaved people, helping all those experiencing grief in the UK.
Samaritans – if you’re struggling you can call Samaritans any time on 116 123 to talk about anything.
Millennium Hotels & Resorts MEA will be opening two new properties in the Middle East: the Studio M Airport Muscat in Oman, and the Millennium Residences Saadiyat Island in Abu Dhabi in the UAE
What role does physical and human capital play in making countries richer?
How do incentives influence economic productivity, as explained in the example of China during the Great Leap Forward?
What are the key institutions that help foster economic growth, and why are they important?
Why are private property rights critical for economic growth?
Why do economic freedom and capitalism lead to economic prosperity?
Conclusion
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Considering the advantages the US has for economic growth — such as its younger population, natural resources and entrepreneurial culture — why do you think these factors contribute to the US outperforming Europe economically, and could Europe adopt any of these advantages through less restrictive immigration policies? Why or why not?
Meteorologist David Heckard said Milton remains a powerful Category 5 hurricane as it moves toward Florida.
The 11 p.m. advisory from the National Hurricane Center indicates that Milton will be an intense Category 5 major hurricane with winds of 160 mph.
Milton is expected to weaken some as it approaches the state on Wednesday, but it is highly likely it will be a major hurricane at landfall.
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The updated track shows Milton making landfall somewhere between the Tampa Bay area and the Suncoast early Thursday morning. It is then expected to track across Central Florida overnight Wednesday into Thursday.
A portion of the West Coast is likely to experience a major hurricane strike. Catastrophic storm surges, hurricane-force winds, and flooding rains are all likely.
In Central Florida, Milton will bring significant impacts. Hurricane-force winds over 74 mph, flooding rainfall of 8-14 inches and a few tornadoes are becoming likely.
Stay with Channel 9 for updates on Milton.
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10:30 p.m. update
Here is the possible storm surge along the east coast of Florida with Milton.
Meteorologist David Heckard said the worst surge will likely arrive Thursday afternoon during high tide.
8 p.m. update
Milton remains a powerful Category 5 major hurricane in the southern Gulf.
The 8 p.m. advisory from the National Hurricane Center keeps Milton with winds of 165 mph, making it an intense Category 5 major hurricane.
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Earlier today, Milton had weakened to a Category 4 system.
A Storm Surge Warning continues for all of the east coast of Central Florida, as a storm surge of 3-5 feet will be possible all along the east coast.
Milton is expected to weaken some as it approaches the state on Wednesday, but it is highly likely it will be a major hurricane at landfall.
The updated track now shows Milton making landfall along the west coast of Florida early Thursday morning. It is then expected to track across Central Florida overnight Wednesday into Thursday.
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A portion of the West Coast will likely experience a major hurricane strike. Catastrophic storm surges, hurricane-force winds, and flooding rains are all likely.
Milton will have significant impacts on Central Florida. Hurricane-force winds over 74 mph, rainfall of 8-14 inches, and a few tornadoes are becoming likely.
Stay with Channel 9 for updates on Milton.
6:30 p.m. update
Channel 9 spoke with a certified mental health counselor, Dwight Bain, about how to handle pre-hurricane emotions and post-hurricane psychological recovery.
Hurricane Hunters have measured a very low minimum pressure inside Hurricane Milton.
The pressure has dropped to 905 MB, down from 918 MB in the 5 p.m. advisory. This indicates an intensifying storm.
Winds remain at 165 mph, but winds may increase later tonight.
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5 p.m. update
Milton has strengthened back to a Category 5 major hurricane and continues to move toward the west coast of Florida.
The 5 p.m. advisory from the National Hurricane Center has winds of 165 mph, making Milton an intense Category 5 major hurricane.
Earlier today, Milton had weakened to a Category 4 system.
A storm surge warning is now in effect for coastal Brevard County, as a storm surge of 3-5 feet will be possible all along the east coast.
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Milton is expected to weaken some as it approaches the state on Wednesday, but it is highly likely that it will be a major hurricane at landfall.
The updated track now shows Milton making landfall along the west coast of Florida early Thursday morning. It is then expected to track across Central Florida overnight Wednesday into Thursday.
The threat of a major hurricane strike is likely for a portion of the west coast. Catastrophic storm surges, hurricane-force winds, and flooding rains are all likely.
Milton will have significant impacts on Central Florida. Hurricane-force winds over 74 mph, rainfall of 8-14 inches, and a few tornadoes are becoming likely.
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Stay with Channel 9 for updates on Milton.
4:30 p.m. update
The City of Melbourne has issued a local state of emergency.
Osceola County School District said all public schools will be closed Wednesday through Friday.
Gov. Ron DeSantis is holding another news conference to share updates on preparations for Hurricane Milton.
Watch DeSantis’ full Tuesday afternoon news conference here:
The governor is speaking from the Florida Horse Park in Ocala.
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2:35 p.m. update:
Universal Orlando Resort announced Tuesday afternoon that its parks and other attractions will be temporarily closed due to Hurricane Milton.
Officials said Universal Studios Florida, Islands of Adventure and Universal CityWalk will be open until 2 p.m. and will be closed for all of Thursday.
Universal said hours of operation are subject to change based on forecast alterations and some attraction and experience availability may be limited on Wednesday.
Universal Volcano Bay waterpark will be closed for all of Wednesday and Thursday.
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Halloween Horror Nights at Universal Studios Florida will also be canceled for Wednesday and Thursday.
Universal said its hotels will remain open during the storm.
The National Hurricane Center said a NOAA Hurricane Hunter aircraft recorded that Hurricane Milton has strengthened back to nearly a Category 5 storm.
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NHC said Milton now has maximum sustained winds around 155 mph and is moving east-northeast at 8 mph.
Hurricane #Milton Advisory 14A: Air Force Reserve Hurricane Hunters Find That Milton’S Intensity Has Rebounded. Today is the Last Full Day For Florida Residents to Get Their Families and Homes Ready and Evacuate If Told to Do So. https://t.co/tW4KeGe9uJ
Officials said Tuesday is the last full day for Florida residents to get their families and homes ready for the storm.
Millions of people have already evacuated from Florida’s West Coast and more will continue to do so.
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1:48 p.m. update:
Florida Highway Patrol reports heavy traffic patterns continue to flow northbound and eastbound on interstate highways in Central Florida.
Parts of northbound I-75 and eastbound I-4 have activated Emergency Shoulder Use (ESU) activity.
The ESU is active in the inside (left) shoulder lanes on northbound I-75 from mile marker 262 near Tampa to mile marker 433 at I-10.
The ESU activity is also open on eastbound I-4 from mile marker 3 near Tampa to mile marker 63 in Osceola County.
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“For those wishing to evacuate, the time is now,” a Florida Highway Patrol spokesperson said. “Stay calm, drive safe, remain alert and [arrive alive].”
Troopers said they are also continuing to escort fuel tankers to assist with delivery of gasoline supplies and debris removal.
Orange County Mayor Jerry Demings will update Orange County’s preparations for Hurricane Milton this afternoon.
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The conference will be at 4 p.m.
Demings will be joined by:
12:08 a.m. update:
SeaWorld Orlando said it will temporarily close its Central Florida parks due to Hurricane Milton.
Officials said SeaWorld Orlando, Aquatica and Discovery Cove will be closed on Wednesday and Thursday.
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SeaWorld said the decision was made to ensure the safety of its guests, employees and animals.
Officials said extra precautions will also be in place to ensure the safety of the animals at the parks.
“A dedicated team of animal care experts, including veterinarians, will remain onsite 24/7 to monitor the animals, safely housed in buildings designed to withstand Category 5 hurricanes. Once weather conditions improve, our recovery team will ensure the habitats are safe for the animals to return,” a SeaWorld spokesperson said.
People looking to return to the parks on Friday should check first to ensure the attractions are open.
There has not been a major shift in the storm’s track and it is still expected to make landfall around 2 a.m. Thursday near Tampa Bay.
Milton will remain at hurricane strength as it moves over Central Florida.
10:50 a.m. update:
State Attorney Andrew A. Bain will hold a news conference Tuesday to warn people against looting and property theft after the storm.
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Bain is planning to speak at 11:30 a.m. from the State Attorney’s Office in Orlando.
“People should be focused on their safety, not worrying about the threat of theft or looting. Anyone caught engaging in looting, burglary or theft during this time will be prosecuted to the fullest extent of the law and there are enhanced penalties for looting under Florida’s current state of emergency order,” said a spokesperson from the State Attorney’s Office.
Channel 9 will have a crew at Bain’s news conference and will provide live coverage on WFTV.
10 a.m. update:
Duke Energy said it has increased its preparations before the landfall of Hurricane Milton in Florida.
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The energy company says it has increased its storm resources from 10,000 to 16,000 in Florida.
Duke Energy said it is convening 16,000 power line technicians, vegetation workers, damage assessors and support personnel at The Villages, Suwannee Valley Farmers Market and Richie Brothers Auction.
These staging sites are outside of Hurricane Milton’s projected path, but also close to the impacted areas as soon as possible.
“Hurricane Milton’s intensity is expected to be unlike anything the Tampa Bay area has ever experienced before,” said Todd Fountain, Duke Energy Florida storm director. “Duke Energy Florida is preparing to respond accordingly – with an army of resources at the ready – and we strongly advise our customers to use this time to protect their homes and businesses, while helping ensure their family members, friends and neighbors are safe.”
Duke Energy said crews are prepared to start safe power restoration as soon as weather and other conditions allow.
9:10 a.m. update:
Gov. Ron DeSantis held a news conference Tuesday morning to share the latest details on Florida’s preparations for Hurricane Helene.
Watch DeSantis’ full news conference here:
DeSantis said Florida continues to fulfill requests from communities in the potential path of Hurricane Milton.
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Hundreds of first responders have been deployed along Florida’s west coast to begin search and rescue operations as soon as the storm passes.
Power restoration resources are being placed in advance of the storm, including 30,000 linemen who are coming to Florida from all over the country.
8:20 a.m. update:
Inmates in Lake County are being used to help fill sandbags for residents preparing for Hurricane Milton.
The Lake County Sheriff’s Office said inmate crews are filling bags at PEAR Park, Minneola Athletic Complex, and North Lake Regional Park (Umatilla) locations.
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Deputies said the inmates were assisting residents that are not capable of filling their own sandbags.
Lake County officials said 14 locations are open for residents to get sandbags.
The county sandbag sites will be open daily from 7 a.m. to 7 p.m. or until weather conditions become unsafe.
Gov. Ron DeSantis will hold a news conference Tuesday morning to share updates on the preparations for Hurricane Milton.
DeSantis is set to speak around 7:45 a.m. from the State Emergency Operations Center in Tallahassee.
Florida Division of Emergency Management Director Kevin Guthrie, Florida Department of Transportation Secretary Jared Perdue, Florida Department of Highway Safety and Motor Vehicles Director Dave Kerner and Major General John D. Haas Adjutant General of Florida will join DeSantis at the event.
Watch DeSantis’ full Monday afternoon news conference here:
WFTV will have live coverage of the governor’s news conference on Channel 9 and wftv.com.
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6:40 a.m. update:
Channel 9 is seeing major traffic slowdowns in western Central Florida as people evacuate ahead of Hurricane Milton’s arrival.
Bumper-to-bumper gridlock traffic was seen Early Tuesday morning on I-75 in Pasco County.
A traffic camera near 275 shows thousands of drivers barely moving on northbound I-75 in the Wesley Chapel area.
The Florida Division of Emergency Management said it is partnering with Uber to provide free rides to and from shelters in counties evacuating from Hurricane Milton.
We have partnered w/@Uber to provide Floridians free rides to & from shelters in counties evacuating for #Milton. Get a ride:
📲 Open the Uber app 👤 Tap Account on the bottom right & tap Wallet ✅ Add promo code MILTONRELIEF
Find a state-approved shelter:…
— FL Division of Emergency Management (@FLSERT) October 8, 2024
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People who qualify can access the rides by opening the Uber app, open their account on the bottom rights, open the “Wallet” and adding the promo code MILTONRELIEF.
The National Hurricane Center confirmed Hurricane Milton is nearly a Category 5 storm after weakening to a Category 4 overnight.
NOAA officials said Hurricane Milton is still an “extremely powerful” system.
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Milton has maximum sustained winds around 155 mph and is moving east-northeast at 12 mph.
4 am CDT – Extremely powerful Hurricane #Milton is just north of the Yucatan Peninsula. Forecast to remain an extremely dangerous hurricane when it reaches Florida Wednesday night. This is a very serious threat and residents in Florida are urged to listen to local officials.… pic.twitter.com/UifYnQO9rf
NHC said Milton poses an extremely serious threat to Florida, and residents are urged to follow local officials’ orders.
Current forecast timing has Milton making landfall at a major hurricane around 1 a.m. Thursday.
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2 a.m. update:
Milton has weakened to a Category 4 storm but remains a powerful major hurricane.
The 2 a.m. advisory from the National Hurricane Center states that Milton’s winds are 155 mph, making it a Category 4 hurricane.
Earlier Monday, Milton recorded a central pressure of 987 mb, making it one of the strongest hurricanes in the Gulf on record.
Milton is expected to be a Category 4 or 5 storm through Tuesday, then weaken some as it nears Florida. It is expected to remain a major hurricane at landfall.
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Original story:
Hurricane Milton is maintaining a Cat. 5 status with slightly weaker winds.
The 11 p.m. advisory on Oct. 7 from the National Hurricane Center has winds of 165 mph, showing some slight weakening.
Earlier on Monday, Milton recorded a central pressure of 987 mb, making it one of the strongest hurricanes in the Gulf on record.
Hurricane Warnings continue for most of Central Florida, including Metro Orlando, and Hurricane Watches are in effect for Brevard, Volusia, and Flagler counties. Hurricane-force winds are expected area-wide late Wednesday into Thursday.
Milton is expected to maintain its Category 5 strength through Tuesday, then weaken some as it nears Florida. It is expected to remain a major hurricane at landfall.
The latest track shows Milton making landfall along the west coast of Florida early Thursday morning. It is then expected to track across Central Florida on Thursday.
The threat of a major hurricane strike is now becoming likely across the west coast of Florida. A catastrophic storm surge and hurricane-force winds are possible along and south of the landfall point.
In Central Florida, the threat for significant impacts continues to increase. Hurricane-force winds over 74 mph, rainfall over 10 inches and storm surge along the east coast of 3-5 feet are all possible.
Michela Tindera Back in the spring, my colleague Owen Walker had a morning of superlatives. It starts by stepping into the elevator of a skyscraper in Milan. He rides up to the top floors of Italy’s tallest building. That’s where he enters the executive level of a bank called UniCredit, which is not only Italy’s second-largest bank. It’s also, at the time, Europe’s best-performing bank. And inside he meets one of Europe’s best-known bankers and dealmakers: UniCredit CEO Andrea Orcel.
Owen Walker Andrea Orcel is a kind of a big, imposing guy. He’s got his jacket off. He’s got his sleeves rolled up. He’s got that big, bright smile. But he’s also known and described often as a kind of a chess player who’s thinking three or four moves in advance.
Michela Tindera That sort of strategic thinking propelled UniCredit’s share price to more than quadruple in the last few years since Orcel became CEO. And Owen wanted to ask Orcel what his next chess move might be.
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Owen Walker voice clip Well, maybe if you can start by giving us a description of what you’ve done in your three years.
Andrea Orcel voice clip OK, so it’s a question I get a lot and I think there are always targets . . .
Owen Walker In the entire time he’d been at UniCredit, there’d been constant rumours, constant speculation about what he would do with UniCredit. Would he be looking to buy a rival, would he be looking to merge parts of the business?
Andrea Orcel voice clip The last few years and the last few months with all these rumours . . .
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Owen Walker So he essentially told us that, yes, there’d been a lot of speculation, a lot of rumours about a potential deal, but of course, it had to be on their terms. And he was quite clear on this point.
Andrea Orcel voice clip The interest is there at the right conditions, and we haven’t found the right condition and we have had the discipline to say no. And we will continue to say no. No matter how much pressure we are under, we will say no.
Michela Tindera Say no — that is until a few weeks ago.
News clips UniCredit making an investment in Commerzbank . . .
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The Italian banking giant UniCredit says it’s bought a 9 per cent stake in Germany’s Commerzbank and is seeking approval to buy more . . .
Owen Walker These moves by UniCredit have really caused a stir across the European banking sector because UniCredit is one of Europe’s biggest banks. If UniCredit were to pursue a full takeover of Commerzbank, this would be the first big cross-border deal in European banking since the financial crisis.
[MUSIC PLAYING]
Michela Tindera So Europe’s veteran star banker Andrea Orcel wants to make Italy’s second-largest bank even larger with the help of a German bank. It’s a deal that could take UniCredit to the next level in global banking. But is Europe really ready for this kind of merger?
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I’m Michela Tindera from the Financial Times. Today on Behind the Money, why is UniCredit making this bid for Commerzbank? And how will this shape the future of banking in Europe?
[MUSIC PLAYING]
For a while now, Owen — who covers European banking for the FT — tells me that authorities in the EU have been itching for a big bank merger.
Owen Walker There is a lot of enthusiasm for European banks to get bigger. For Europe to really compete on a global scale and have banks that can compete on a global scale, it needs to allow its banks to do cross-border deals to grow and take over businesses and banks in different countries, and then to almost create these superbanks across European states, which can really compete then with their US rivals.
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Michela Tindera There’s this idea that in order to tackle some of the big infrastructure and green technology projects that are needed for the future, the continent needs much bigger banks to finance that stuff.
Owen Walker And so for European banks to really be able to grow and have the capacity, the lending capacity as the US banks, it’s all about the cross-border deals. You’re not going to be able to get a domestic leader to get on the scale of the US banks and to be able to provide the financing that they can.
Michela Tindera All this might explain why UniCredit’s potential acquisition of Commerzbank is creating such a stir in European banking. And there’s also this UniCredit CEO, Andre Orcel and his track record when it comes to big banking deals.
Owen Walker Andrea Orcel was really the superstar investment banker, dealmaker of the early 2000s in Europe. He was at Merrill Lynch. He was primarily dealing with banks, with financial institutions. And in that period, there were a lot of big deals happening in Europe.
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Michela Tindera That all changed with the financial crisis. Afterwards, banking M&A in Europe became a bit of a dead zone. Too many banks were laden with toxic debt and required government bailouts.
Owen Walker And really, it’s been a lost decade and a half when they’re looking to comparisons with the US rivals. The US banks, not only do they dominate the US market, they’ve also expanded internationally in Europe, in Asia, across the Middle East and South America. Whereas European banks, they’re often playing really in their domestic market, so therefore they haven’t been able to grow at the same rate as US banks. And you have in Europe a very fragmented market.
Michela Tindera So the air is ripe for consolidation which brings us to what’s going on with UniCredit and Commerzbank. So Owen, to fully understand what’s going on here, let’s start by retracing UniCredit’s steps so far. Because this hasn’t exactly been a clear-cut, you know, one-and-done takeover attempt of Commerzbank.
Owen Walker So in mid-September this year, UniCredit caused a sensation across Europe by announcing it had bought a 9 per cent stake in German lender Commerzbank. Now, this seems to come out of nowhere.
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Michela Tindera Basically, UniCredit buys part of Commerzbank from the German government and another chunk of Commerzbank on the open market. And it ends up with the option to quickly increase its stake in the German lender to 21 per cent. These latest actions are waiting on approval from the European Central Bank at the moment. So things are in a bit of a holding pattern. But shareholders did react enthusiastically to UniCredit’s early moves.
Owen Walker When UniCredit first announced its initial 9 per cent stake in Commerzbank, the shares in the German lender rose 17 per cent in the hours that followed. Now, interestingly, UniCredit shares also went up, albeit a little bit, which is very rare in this kind of takeover-type scenario. And that really tells you that not only the buyers, but also the sellers and shareholders think this is a positive development. And it probably tells you that they’re thinking, well, look, UniCredit has been very good at returning cash to us in recent years. But we have been expecting this deal and this is the deal that makes most sense. So it has really been pretty well supported by the shareholders on both sides.
Michela Tindera But that enthusiasm hasn’t been mirrored by Germany’s government.
Owen Walker The initial response has been very much anti-UniCredit continuing its acquisition of Commerzbank. Olaf Scholz, the German chancellor — he described these as unfriendly attacks, hostile takeovers — said that this wasn’t the sort of thing that the German government would support. They see this as, you know, a foreign bank buying one of their big players. You know, you have to remember that Commerzbank is very important to the German economy. It finances and provides loans for the Mittelstand, which is the small and medium-sized companies in Germany, which really do make up the backbone of its economy. And so there’s a feeling, I think, within the German government and among German politicians that UniCredit coming from Italy and taking over Commerzbank could be bad news in the long run because maybe there could be some overseas or some foreign interference in the way that Commerzbank is run and that may have some impact on its ability to really prop up the key part of the German economy.
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Michela Tindera But isn’t a cross-border bank merger what European governments have been wanting? You know, there’s been this lull in dealmaking. So why is Germany complaining? Isn’t this a bit hypocritical?
Owen Walker Yeah, I think hypocrisy is really the word here. That’s certainly the word that’s been used by Italian politicians and also other regulators. At the FT, we’ve written stories about central governors in other countries, members of the European Central Bank really sort of seeing the approach from Germany as being very strange, considering how Germany’s been one of the biggest advocates for bigger European banks for at least the last decade and a half.
I think what this shows and Germany’s reaction to this shows is that you can want to have bigger banks, but ultimately most governments and most politicians want it on their own terms. Of course, they would like their own national champions going out and buying rivals in other countries. But when it comes to their own big banks being bought up, that is the point where politics gets involved and it’s no longer a question of big cross-border European banks. It’s more about self-preservation and self-interest.
Michela Tindera Yeah, everybody wants this until it comes on to their own turf, and then they want their own bank to be the one making these big acquisitions.
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Owen Walker Exactly. And that really ultimately is gonna be one of the key problems with big cross-border mergers in the banking sector, because ultimately they will come up against local political resistance.
Michela Tindera Coming up: how this UniCredit-Commerzbank deal could change the way other bank CEOs are thinking about M&A. And what this deal could mean for Andrea Orcel’s future.
[TECH TONIC PODCAST TRAILER PLAYING]
With so much official opposition to UniCredit’s takeover of Commerzbank, you got to wonder why the Italian bank’s even bothering? It looks far from a done deal after all. So I asked Owen, what’s the logic driving UniCredit’s interest?
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Owen Walker When people have looked at the potential for cross-border dealmaking in European banks, the most obvious one by far is a tie-up between UniCredit and Commerzbank. And actually, the two sides have been having on-off talks about a merger since at least 2017. Now, what drives the logic of this deal is that UniCredit already owns a very large bank in Germany, a bank it bought in 2005 called HVB. And there’s a very nice fit between Commerzbank and HVB. HVB is very much a regional player, whereas Commerzbank is much more across the whole of the country.
So again, there’s some nice synergies there, which means that were UniCredit to buy Commerzbank, I mean, I think there’s a lot of understanding that what they would look to do is to merge Commerzbank with HVB, create a much bigger player in Germany and really look to dominate the German domestic market.
Michela Tindera And why now in 2024, as opposed to as you mentioned, there were some talks in 2017 or, you know, what sets the scene today that makes this a possibility versus any other time?
Owen Walker What we’ve also seen in the last few years is European banks very much return to profitability after years of sluggish growth. This is all on the back of rising interest rates, which are really good for banks to generate profits. UniCredit itself has been one of the most profitable banks in Europe. In fact, it has about €6bn of surplus cash at the minute. So that has really given Orcel a war chest to potentially go out and buy businesses. So all these things really point to very favourable, almost perfect conditions for UniCredit to come in and potentially look for a takeover of Commerzbank.
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Michela Tindera So where does this potential takeover stand right now with UniCredit and Commerzbank?
Owen Walker At the moment, we’re really not in a position where this is a full takeover, hostile bid in any shape or form. For this to progress, the ECB needs to give its approval, which really everyone is expecting. It’s just how long that takes. There is a lot of administrative work, a lot of paperwork. If that gets slowed down and, you know, goes from a two-month process to a nine, 12-month process or even longer, could UniCredit and Andrea Orcel lose interest in this, decide that it’s just not worth pursuing? That’s definitely a potential. And the way that this latest holding has been structured would allow UniCredit to pull out at fairly short notice without losing too much money, and actually pursue something else were another more attractive deal or an easier deal were to come up.
Michela Tindera What does this overture by UniCredit to Commerzbank . . . what do you think that means more broadly for the European banking sector? Do you think that this is giving other ideas to other CEOs? Maybe I should try this. Maybe I shouldn’t.
Owen Walker Undoubtedly, this move by UniCredit for Commerzbank has got a lot of bank CEOs, bank board members and their advisers dusting off the old playbooks on, you know, their potential M&A targets. However, my thought is that were UniCredit to buy Commerzbank, I don’t see this as really kickstarting, you know, a wave of cross-border dealmaking across Europe. What it might do is prompt other banks in Europe to start thinking more about other deals that could potentially do in these circumstances.
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But that is as much about the change in dynamics of European banks over the past couple of years with the increased profitability, with the rising share prices and the additional capital that banks have these days, which they didn’t have coming out of the financial crisis. And you combine all of those things and yes, deals in European banks seem more likely at this point, but I’m not sure that we should be expecting the huge cross-border deals that have been long hoped for a European level since the financial crisis.
Michela Tindera Now, I want to circle back to the person who’s leading this charge, Andrea Orcel. So, you know, however this deal goes, what do you think this means for him and his reputation as Europe’s great banking dealmaker?
Owen Walker Andrea Orcel has played this situation masterfully so far. By that, I mean he’s effectively built up a 21 per cent stake in a rival bank without paying much for premium. He has managed to turn the protestations of the German government into the appearance of hypocrisy and to be able to say, well, if you’re going to stop us buying Commerzbank, then that means you don’t believe in what you’ve been preaching for the past 15 years about the importance of cross-border dealmaking. And he’s also structured a lot of the holding in Commerzbank in a very interesting way, which basically gives him the optionality to move in and move out quite quickly.
So I think we should be thinking about Orcel’s role and reputation here as he won’t do this deal unless he wants to and unless the conditions are right. If he doesn’t do the deal, it will be because A, he’s decided it’s not appropriate for UniCredit to pursue, or B, there’s a better deal elsewhere. So it’s gonna be a fascinating next 12, 18 months to see exactly how this progresses. But I think one thing’s for sure is that when it comes to Andrea Orcel, he gets what he wants. And I think we can be sure that’s gonna happen in this case, too.
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Michela Tindera Behind the Money is hosted by me, Michela Tindera. Saffeya Ahmed is our producer. Sound design and mixing by Katie McMurran and Joseph Salcedo and Breen Turner. Topher Forhecz and Manuela Saragosa are our executive producers. Special thanks to Dan Stewart and Persis Love. Cheryl Brumley is the global head of audio. Original music is by Hannis Brown. Thanks for listening. See you next week.
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