UniCredit CEO Orcel on His Pursuit of Commerzbank

Thank you for saying. Well, from our standpoint, we have been consistently trying to engage in a meaningful dialogue to review facts as opposed to statements, but we do not believe are backed by facts. As a shareholder, we feel very strongly that we need to be ambitious. We have demonstrated at UniCredit and we think Commerzbank can express a lot more value than it does at the moment, most for its shareholders, but also for its employees and the clients it serves. Furthermore, we do think that the current plan puts Commerzbank at risk in the medium term to face a competitive environment and to face risks that would require yet another restructuring plan and a difficult one. Or could the entire bank address for that? Genuine concern. We have put our views forward yesterday after failing to have any meaningful engagement. And as you know, on May 7th, on April 17th, Commerzbank was very clear that they remained on their position that the bank needed to remain independent and that there was no value and refuse any further engagement with us. So where does that leave you? Cross-border bank deals often proceed without management support, but rarely do they proceed without government support, or at least a government saying actually this doesn't work for them. Are you prepared to move forward without political support in Germany? So I hear a lot about this is a cross-border bee deal, but this is effectively mostly a merger between the second and third largest bank in Germany. And if you look at the views we provided yesterday, most, if not all of the value comes from the merger of two separate second and third banks in Germany. So it is an in-market deal, it is not a cross-border deal. Obviously, the group is pan-European and the group would incorporate that bank into the broader group. But it is an in-market merger with respect to the situation and the position of everybody. We believe we've been very respectful for 18 months. We bought the stake in an auction transparently. We reached 30%. We tried to engage for 18 months. We launched an offer. We tried to engage within the offer to land a joint plan in the best interest of everybody. We were dismissed after two weeks with a refusal to engage on any detail. And therefore, we have no other option but to present our views publicly, given that we have an offer document and we need to explain what is in that offer document. Commerzbank was well aware that if we did not present a joint plan, we would have had to come back with a plan from our side and we restricted that just to our views to provide a basis for further engagement. If that further engagement occurs, we would welcome it. If it doesn't, it is now up to the 70% shareholders beyond us to take a view whether they want to remain in Commerzbank with the current premises or whether they want to do something else. For UniCredit as a shareholder, we have a win-win. If we land below control, this is the scenario that will provide us with the absolute best returns and in our opinion, will provide an opportunity to do a deal further down the line and much better terms. If instead we get a landslide and we reach control, then we will implement the views we have put forward. Views that we have already successfully implemented at HVB and across 13 banks in UniCredit group. And we will create value above the cost of equity. So from our standpoint, we've done everything we needed to do in order to be in a position to let shareholders and indeed the other stakeholders of Commerzbank make a decision.

Look, the control is a topic that is interpreted differently in Europe as many other things. In some jurisdictions you need to be above 50 plus one. This is, for example, the case of Poland. In every jurisdiction you need to demonstrate structural control of a shareholder meeting. This, in fact, is that the case in Germany? So for us to reach control, we would need to demonstrate structural control of the AGM of Commerzbank, something that we can manage very easily not to do. So we will have really two scenarios, one where we don't have control and we go back to status quo, launch our share buyback and go back to full focus on implementing our Unlimited plan. You will see results of that already in our May 5 results and wait to see what happens at Commerzbank. With respect to the impacts on capital, we have been very clear: a 100% deal impacts about 200 basis points, a 50% deal impacts about 280 basis points, 80 basis points excluding the pull to par. So it's 80 basis points more that affects our returns. But in terms of capital position, we have enough capital to absorb both.

I normally don't speculate and I use facts probably. That's why I am cautious when I say some things. In my opinion, it is up to about 70% to take a view. We have shown very clearly what is the financial case to tender. We have put forward our views, the value we can create, and there is now no doubt that we can create substantial more value than what is in Momentum and even more if we reach a combination. The numbers are not challengeable because they emerge directly from what we have already done at ECB and across UniCredit in the last four years. So a blueprint. We know how to implement it. We will implement it. We will extract those value. We know what we're talking about. So it's only about that the shareholders will need to decide whether they believe waiting is better for them or tendering is better for them. And I guess we will not know that until the very end of the offer. But as I said, for us, we have reached 30. We've tried to engage for 18 months. We launched an offer in order to have an opportunity for a meaningful, transparent engagement to address a lot of topics that are now being thrown at us that so far has failed. Commerzbank has remained on the position of day one and refuses to look at any other alternatives. So shareholders are now aware of our views, of the risks, of the possibilities and are in a position to take a view. And for the time being, we would be very glad to engage constructively. But if that is not possible, the offer will run its course and we will see where we are at the end of the offer.