Banks Commerzbank warns of risks in takeover by Unicredit

Commerzbank CEO Bettina Orlopp sees major risks in a takeover by the major Italian bank Unicredit. The integration of two large banks would be extremely difficult, Orlopp told the "Handelsblatt".

After the takeover of Dresdner Bank in 2008, the German Commerzbank spent several years merging the systems of the two banks. "We cannot afford such a standstill in today's world, which is characterized by so many technological upheavals and very intense competition," said Orlopp.

Unicredit made a major investment in Commerzbank in September and intends to increase its stake. German SMEs and corporations would receive fewer loans if Commerzbank were taken over by the Italians, the Group CEO continued.

"There is a large overlap between the German Unicredit subsidiary HVB and us when it comes to corporate customers." In the event of a merger, credit exposures to some companies would have to be reduced in order to prevent cluster risks.

In addition, Commerzbank's rating would deteriorate, probably even significantly, Orlopp pointed out. "We would lose customers who have certain rating requirements and only do business with banks with very good credit ratings."

Finally, refinancing costs would also rise. Commerzbank has an "A-" rating from the rating agency S&P, while Unicredit is three notches lower at "BBB".

Works Council announces resistance

Commerzbank's works council has announced considerable resistance in the event of a takeover by Unicredit. "We will be so loud that every investor will think twice about it", said Sascha Uebel, Vice President of the General Works Council, to the "Süddeutsche Zeitung".

"Unicredit will have to fight with us for the next ten years," he continued. In the event of a merger, employee representatives expect up to 18,000 jobs to be lost in Germany.

"We are a strong works council," emphasized Uebel. And with regard to Unicredit CEO Andrea Orcel, he said: "We prevented the merger with Deutsche Bank. Together with the Verdi trade union, we have many opportunities to make life difficult for Mr. Orcel."

SDA