Bloomberg Audio Studios podcasts, radio, news. The German Chancellor says his government is against hostile and aggressive tactics in the country's banking sector. Friedrich Merz was speaking to industry executives after Commerzbank formally rejected UniCredit's takeover bid, saying it lacks value and undermines the trust. And with us now for an exclusive conversation is the chief executive of UniCredit, Andrea Orcel. Andrea, thank you so much for joining us. Bettina Orlop, the chief executive of Commerzbank, dismissed this as a speculative attempt to dismantle Commerzbank's successful business model. How do you respond to that? And does it definitely close any room for negotiation?
Thank you, Francine. 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 that UniCredit, and we think Commerzbank can express a lot more value than it does at the moment, both 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 put the entire bank at risk. 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 7th, Commerzbank was very clear that they remained on their position that the bank needed to remain independent, and that there was no value, and refused any further engagement with us.
So, where does that leave you? I mean, the cross-border bank deals often proceed without management support, but rarely do they proceed without government support, or at least the 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 deal, but a VC 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 2 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 at much better terms. If instead we get a landslide and we reach control, then we will implement the views that 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 stakeholder of Commerzbank, make a decision.
We reported last week that the ECB is considering to require you to consolidate Commerzbank. So, how likely is that to happen if, you know, your stake rises above 30% but stays below 50%? Would that impact your capital buffer?
Look, the control is a topic that is interpreted differently in Europe, as many other things. In some jurisdiction, you need to be above 50 plus one. This is, for example, the case of Poland. In other jurisdiction, you need to demonstrate structural control of a shareholder meeting. This, in fact, is 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 5th results, and wait to see what maps out in 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.
What would be the trigger point? So, you know, once you cross after crossing that 30% threshold, what's the trigger point to then launching a full takeover offer?
So, let's be very clear. In Germany, we have already launched an offer for 100%. So, differently from other jurisdictions, as we have offered to buy up to 100% of the capital of Commerzbank, if we cross the 30% in this offer, we're no longer obliged to offer to do any other offer, and can freely buy in the open market as much as we want, all the way up to 100% without ever launching another offer. So, if we cross 30% and remain below control, it will be our decision if and when we want to increase that participation to reach control and to move up. And for the time being, I signaled clearly yesterday that after trying this other step to bridge the gap that exists between us and Commerzbank, i.e., launching an offer, if we do not reach control, we will take a pause, and we will focus on other topics that we have internally.
I mean, at this point, with what you know now, how many investors from Commerzbank do you think will accept the offer? What's your base case, or your baseline?
