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UniCredit has opened a new offer to increase its holding in Commerzbank, pressing ahead despite strong resistance in Germany, while income from that investment helped lift quarterly results.
The Italian bank said net profit for the January to March period rose 16% from a year earlier, prompting it to improve its outlook for the full year.
At the same time, it launched its €37bn ($43bn) share-based offer, with a result expected by 8 July.
In a statement, chief executive Andrea Orcel said: "If we do not acquire control as a result of the offer - the expected scenario to date - the status quo works well from our point of view."
"By our very presence, we are promoting an improvement of Commerzbank," he added.
The proposal, set out as an all-share transaction, would take UniCredit’s direct equity interest to above 30% from 27%.
When first presented, it included only a modest premium, and it is now below Commerzbank’s market value.
Under German takeover law, moving beyond that level would enable UniCredit to add to its position next year through purchases in the open market, reported Reuters.
Commerzbank, supported by the German government in its effort to stay independent, said it would respond after examining the offer.
Orcel has also taken stakes in Greece’s Alpha Bank and in Italian insurer Generali.
About €400m in dividends from the holdings in Commerzbank and Alpha Bank contributed to first-quarter revenue, helping counter the effect of lower interest rates and the winding down of UniCredit’s profitable Russian operations.
Orcel also told CNBC that he does not expect a future in which UniCredit ends up with full control of Commerzbank.
“If we get to control, which is not the expected scenario at the moment, what we would do is very clear, and the returns on that would be … very positive for our shareholders, and also for the shareholders of Commerzbank, but it’s up to them,” he told CNBC’s Carolin Roth.
“We’re not really fretting it. We are just focusing on delivering, and we’ve done all we could to engage, and now we are just looking at what shareholders will do.”
UniCredit unveiled a comprehensive turnaround strategy for the German lender, to overhaul what it describes as “a story of operating underperformance”.
It also criticised Commerzbank’s current Momentum strategy, arguing the plan relies on “aggressive” risky non-core bets in international markets while leaving the bank “ill-prepared” to compete with US and fintech entrants in Germany.
"UniCredit presses ahead with Commerzbank stake increase" was originally created and published by Retail Banker International, a GlobalData owned brand.
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