Andrea Orcel im Interview mit Sebastian Matthes: „Wir brauchen größere, stärkere Banken“

Not really. Not beyond what we do regularly every quarter.

I think that if you judge from the past, you should be pessimistic. If you look at the last 15 years, we started with Europe having a GDP 10% greater than the US. Today the US has a GDP 50% greater than us. We started with the same GDP per capita. Today we are half the US. This is a massive destruction of value and wealth for all European citizens in every country. If you look at infrastructure, every technology, AI, data - everything you talk about in this area is first and foremost the US, then a little bit further down China. We're nowhere. If you look at banks, on average they are three times our size for an economy that at the end of the day is similar. And if you look at capital markets, they're more than 300 times our size. So if you look at that, we've lost the train. But if you look at potential, I think Europe has great potential. Even Germany is in third place for Nobel laureates. Italy has 21. We have an educational system that is very strong. We have 25 universities in the top 100. Usually Europeans are more educated than the rest of the economic blocs. If you look at savings, it is true that the US has about 16 trillion in savings and we have only 13 trillion, but in our case more than 40% are in cash in banks rather than being invested, while in the US it's only 16%. So if you unleash all of that there is absolutely no reason why Europe should not punch at the same level as the US. The barrier is that we need to want to do it.

I think, look, being at UniCredit and being a federal group of 13 banks in 13 European countries, I have to be optimistic. So I am optimistic about Europe.

Well, I think banking consolidation is something that if you ask anyone, they will all agree that we need bigger, stronger banks to support the economy. When it becomes personal, everybody keeps on saying, 'Yeah, we really need stronger banks. We really need consolidation.' But not here. I don't think this is necessarily because we're talking about banking union. This is well before banking union because all the deals that are derailed or stopped at the moment are not cross-border deals. They are domestic deals. So even within countries there is a fragmentation of political views on which transactions are good and which are not good. What we have learned is that post-COVID, governments and politics have become a lot more interventionist, I would say protectionist, into the banking sector. While it is absolutely fair that governments are worried and need to ensure what's best for their economies...

I think there are a lot of preconceived ideas on what it is and you really need to go into the details. There are preconceived ideas that in the Europe of today banks from different countries will move savings across borders, will invest in different places, will take decisions in the interest of the original economy and not in others. These are factually incorrect because of how the banking union and the European Union are structured. For example, if I look at HVB - I'm the chairman of HVB's supervisory board - I cannot take a decision that is not in the best interest of the bank because if I did I would breach regulation and legal obligations. If you look at movement of liquidity, Germany does not allow you to move liquidity from Germany into other countries. So there is no movement of liquidity. I think there are a lot of preconceived ideas on both risk and what would happen to the economy, and these preconceived ideas are preventing having stronger banks and stronger capital markets that will support the transformation. A very important point that we always miss is we all talk about industrial transformation and how we need to be stronger in Europe. But to do that, that's the engine, but to do that you need gasoline. Gasoline is banks and capital markets. If we have weak banks and weak capital markets, we are not going to be able to finance the transformation of the country.

I don't think so. If we had accepted the idea that without banking union we cannot operate - I remind you we have 13 banks, 13 legal entities from Italy to Germany to Austria to all the CE countries - we would not exist. Instead, not only we exist, but we are the most operationally efficient bank in Europe, the most capital efficient, the lowest risk, the most profitable at 20% return on equity. So without banking union, with all of these barriers, we can do it. When we do M&A, for the time being, we're doing it by being local. When we do M&A in Romania, we had the fourth bank, we're now the third bank. It's not a cross-border deal. It's a deal between two Romanian banks. When we do a deal in Italy, it's the same. When we do a deal in Germany, it's the same. So as long as we don't buy a bank in another country of Europe where we're not present, for us it's a series of domestic deals. So nothing changes really. It is in-market consolidation. I don't think that banking union has anything to do with it.

I think that there is currently a very big debate, and if you want my optimism about Europe, with what is happening now in M&A there is really a very strong dialogue, challenge, call it whatever you want to call it, between European Union institutions and single governments on exactly that topic. The European Union is quite decisive and proactive in saying, 'Hey, we have agreed to do this together, why are these things happening?' So I want to be very positive on the fact that because of that dialogue, eventually people are going to look into the facts and the reality and it will happen.

It could, but for us it doesn't change anything. We have a bank that has multiplied its share price by nine times, multiplied its profitability by about nine times, and that in the next three years expects to increase its core earnings by another 30%. This is without banking union, and these indicators are at the top of the banking industry. If banking union comes, there is a lot more because I eliminate a lot of the barriers that exist today and I can run it more efficiently. But if it doesn't come, we'll still do that. Our motto at UniCredit is if you start looking at all the barriers and say it can't be done, you won't. Therefore, we continue to say it's never impossible. You just need to find a way.

I think what we learned for the future is that you need to take into great consideration politics in doing M&A in banking at the moment, and this is not specific to any country. It is specifically in Germany, in every country. Governments and politicians have an opinion and they're entitled to it, but we haven't done anything more here so we haven't learned anything more here. In Italy, we have learned something more. In Spain, my colleagues have learned something more. In Portugal, in Poland, in Romania, they're learning something more. I'll give you one idea: when I used to do M&A for a living, beginning of 2000s, it would take for an offer about 120 days to be closed and there was almost no government involvement. Today that average has moved to 300 days, which means banks who do M&A need to be in the soup for 300 days waiting for views that are not linked to numbers but are linked to political views. That is difficult and you need to incorporate it now in whatever you do.

Well, my answer would be it is a question for shareholders to determine. We forget that, and when I say we, I think management teams and boards. We are here to do the best for our organization. We have a fiduciary duty to do the best for our organization. We have shareholders who have put their money on it and we owe it to them. We have employees who have their career in it and we owe it to them. And we have clients who expect to get things. So in my opinion, if there is no external blockage like we had in Italy, it will be determined by how these constituencies - shareholders first, and the other two - will determine what is best.

For the time being, we are exactly where we said we would be when we moved through derivatives to 30%, which was last year. We have obtained all the authorization - regulatory, legal, antitrust, German antitrust, you name it. We now can convert and we are gradually converting as we're unwinding the position. I don't think there is any change. We will be around 30% by the end of the year. We now equity-consolidate Commerzbank. We're very comfortable with that situation because our average cost of investment is much, much lower than the market. The return on investment for our shareholders is about 20%. Much higher than anything else that I can find out there. So for the time being, for as long as Commerzbank does well, continues to evolve and transform, their win is our win and we're happy to sit here.

Just because four days before they had sold us 5% in a transparent auction representing the opposite position. Otherwise we would not be here today.

So I think first of all let's be very clear. Since the day we bought that famous 5% from the German government, we have had from that day onward no discussions with respect to merger, combination, or other things that go beyond an investment between us and Commerzbank. We had discussions before, or we would not be here today, but we did not have discussions afterwards.

We had discussions over a long time. The two banks have been talking for a long time. Sometimes Commerzbank wanted to do something. Sometimes it was the other option.

The point is at this point in time, as I answered before, you need to factor in government and politics into any combination in banking in Europe, domestic, cross-border, or other. It is a critical factor. It's not the only factor. Us doing more will be dependent on a number of things. The position of the government will be a critical factor in it.

I think the signals at the end of the day are - at the moment everybody speculates what's next. And I keep on getting a lot of speculation on what the takeover will look like, whether the plan exists or doesn't exist. Given that there are no conversations, nobody knows exactly what the plan is. That does not mean that it doesn't exist, because we have one. So this is speculation about headquarters, speculation about difficulty of integration, speculation about investment, about cost cuts, about where the decision is going to be made, what it's going to look like. If you want to eliminate the speculation, we are here. We're very, very happy to have a constructive dialogue with anybody who wants to have it. So far, we have failed to have that dialogue.

They were very kind to reply, taking note of a letter that we sent, but as they should, they asked us to engage directly with Commerzbank.

Again, firstly, I'm not trying to convince anybody because I'm not having a dialogue with anybody, and no one has wanted to sit down and review what it could look like. However, Germany has a very fragmented banking sector. Germany, if you compare it to any other country in Europe, if you look at the ability to service your client, that is an issue. It's an issue on investment in IT, which is subpar. It is an issue in products that you can distribute. It is an issue of your ability to compete. Actually, the segment of banks that are gaining the most market share in Germany are American, because they have critical mass, they have products, and they're attacking the best economy in Europe. I don't think European banks have enough critical mass to counter that. So why HVB and Commerzbank? Because these are what we call revenue-led mergers. HVB is in Bavaria, south of the country, a little bit in Hamburg. Commerzbank is at the center. HVB is very strong on large corporate and mid, not much in retail. Commerzbank is very strong in Mittelstand and small and a lot in mass market. So segment-wise of clients and geographically, there is very limited overlap, which is not true, for example, of Commerzbank versus other German banks. Given our philosophy, this would be a merger where we would try to capture a lot more share of revenues, not drive it through cost cuts. For Germany, the greatest market share that this combination would have would be in the Mittelstand at 12 to 13%. That same market share in Spain is 25%. In Italy it's 20%. So if you have 12 to 13%, it means you have seven or eight choices every time you go and ask for a product. I don't think there is a question of choice. There is a question of investment. Banks need scale because technological and AI investment requires billions, and we are behind. You need greater scale or you can't afford it. If you look at the smaller banks and their technology investment, it's all maintenance. Nobody does change. Why don't they do change? Because if they did change, the results will plummet. You need size to do that. UniCredit has executed 353 acquisitions and integrated them on one platform. The fact that it wasn't successful in other places does not mean it's not successful for everybody. The additional firing power we would have in Germany would be 20 to 30 billion. It's a lot in terms of equity geared up. So for the transformation of Germany, it's very good.