(Sept 27): Commerzbank AG chief executive officer-designate Bettina Orlopp laid out her strategy to UniCredit SpA’s top leadership in their first substantive meeting since the Italian lender took a large stake.
 
Orlopp explained in a virtual meeting on Friday how she intends to boost the performance of the lender, which on Thursday raised profitability and payout targets, people familiar with the matter said. The meeting, which also included UniCredit CEO Andrea Orcel, was intended to be the first one in a dialog between the two parties, according to one person.

An additional intention was to shift to pragmatism and work together now that UniCredit has become a major investor in Commerzbank, the people said, asking not to be named discussing private information. Other stakeholders including the German government have publicly denounced the way Orcel built the stake in Commerzbank. 

Representatives for the banks declined to comment.

UniCredit has secured a 21% holding in Commerzbank and said a full takeover is an option. Orcel has also indicated he plans to present proposals to Commerzbank on how to improve performance, pointing at his own lender’s higher profitability as proof that his ideas could be of benefit for the German firm.

A sale of UniCredit’s stake in Commerzbank is a possibility, too, if a combination of the two doesn’t come to pass, Orcel has said.

While Orlopp has said Commerzbank’s existing strategy is effective, she has also said she will consider proposals coming from the outside. She has previously indicated she prefers the lender to remain independent, saying “we don’t need” UniCredit, but has stopped short of outright opposition to any deal.

“We will stay very open minded,” Orlopp said at an investor conference on Thursday. “UniCredit is now a shareholder, an investor, and it’s very normal that you exchange views.”

Commerzbank’s share price has risen sharply since UniCredit first disclosed a 9% stake on Sept 11. The Italian lender has since raised it to about 21%, using mostly financial instruments.

The German bank lifted its financial targets and payout ambitions on Thursday. It trails UniCredit on both counts.

Chairman Jens Weidmann, a former Bundesbanker, said the new targets show Commerzbank can expand its “independent position.” He also hinted at its crucial role in funding the country’s companies, calling the lender “a reliable partner” for the domestic economy. 

The German government has criticised Orcel’s approach as “unfriendly” and said it prefers Commerzbank to remain a standalone lender, partly because it’s an important source of funding for the domestic economy. Labor representatives at Commerzbank have lashed out at UniCredit, too.

By contrast, members of the Italian government have indicated they back Orcel’s move. An acquisition of Commerzbank by UniCredit would be in line with the European Union’s aim to reduce barriers for banks to offer their services seamlessly across the bloc, Industry Minister Adolfo Urso said at a press conference in Rome on Friday.

While combining two banks can potentially save costs, such a move risks distracting staff, Orlopp said on Thursday when asked if an acquisition of Commerzbank by UniCredit would make sense. There’s also the risk of client loss, she said.

Whether the benefits of any deal outweigh the costs is something “we need to find out jointly,” Orlopp said. She is set to formally assume the CEO post next week when incumbent Manfred Knof leaves the company.

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