Unicredit-Chef Orcel im Gespräch über mögliche Commerzbank-Übernahme

Not really. No meetings around Commerce Tower. Not beyond what we do regularly every quarter.

I think that if you judge from the past, you should be pessimistic. I mean, if you look at the last 15 years, we started with Europe having a GDP 10% greater than the US. Today, we the US have a GDP 50% greater than us. We started with a same GDP per capita. Today the US we are half the US. So this is a massive destruction of value and wealth for all the European citizens in every country.

If you look at the infrastructure what I would call the infrastructure um every technology, AI, data everything that you talk into this area is first and foremost the US then a little bit further down China. We're nowhere. If you look at banks, uh, 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 a great potential. So if you look at talent, even Germany has is in third place for noble laureate. Italy has 25 21. We have an educational system that is very strong. We have 25 university in the top 100s. Usually Europeans are more educated than the rest of the economic blocks. Uh so there is h and if you look about savings

Uh 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 of the US. What are the barriers? The barrier is that we need to want to do it.

I think look being at Uni Credit and being a federal uh group of 13 banks in 13 European country I have to be optimistic so I am optimistic about Europe so

well I think uh 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, uh everybody keeps on saying, 'Yeah, we really need stronger bank. 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 crossber deals. their domestic deals. So even within country there is a fragmentation of views, political views on which transaction are good and which transaction are not good. And I think that what we have learned, not only I but I think other CEOs that are in the middle of transactions is that I think that postcoid governments and politics have become a lot more interventionist I would say protectionist uh into the banking sector and uh while it is absolutely fair that government are worried and need to ensure what's best for

I think there is uh there is a lot of preconceived ideas on what it is and you really need to go into the details. So there is preconceived ideas that in the Europe of today banks from different countries will move savings across the borders will invest in different places we'll take decision in the interest of the original economy and not in others and these are factually incorrect because actually because of how the banking union is structured and the European Union is structured for example if I look at HBB I'm the chairman of HVB 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 breach legal. So if you look at movement of liquidity, Germany does not allow you to move liquidity from Germany into the other countries. So there is no movement of liquidity. So I do think there is a lot of preconceived ideas on both risk and what would happen to the economy and I think these preconceived ideas are bearing having stronger bank and stronger capital markets that will support the transformation. I think 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 market. 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. Um 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. We would not exist. Instead not only we exist but we are the most operationally efficient bank in Europe. the most capital efficient, the lower risk, the most profitable at 20% return on equity. So without banking union, with all of these barriers, we can do it. That's the first point. The second point is when we do M&A for the time being, we doing by being a local. So when we do M&A in Romania, we had the fourth bank, we're now the third bank. Is not a crossber deal. It's a deal between two Romanian bank. 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, for us it's a series of domestic deals. So, nothing changes really. It is a inmarket consolidation. Political views are in other things, but in terms of technically we're merging to German banks, to Italian banks, to Romanian banks, to Austrian banks. So 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 to my optimism of Europe with what is happening now in M&A there is really a very strong I would call dialogue challenge call it whatever you want to call it between European Union institution and single governments on exactly that topic and the European Union is quite uh 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. I think the question for us is we have a bank that is going to that has uh multiply it share price by nine times multiply it profitability by about nine times and that in the next 3 years expects to in increase its core earnings by another 30%. So 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. And I think our motto at Uni Credit is if you start looking at all the barriers that they are and say it can't be done, you won't. And therefore, we continue to say it's never impossible. You just need to find a way.

I think in consolidation the I think what we learned for the future is that you need to take in 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 every country.

Uh I think governments and politicians have an opinion and they're entitled to it, but we haven't done anything more. 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, we are learning something more. I think that I'll give you one idea. uh when I used to do M&A for a living uh beginning of uh uh 2000 still 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 needs to be in the soup for 300 days waiting for views that are not linked to numbers but are linked to political views and that is difficult and you need to incorporate it now in whatever you do.

Well, my answer would be it is a question for shareholder to determine and it is a question that and we 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. And that what does it mean in specific? It means 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. Yeah. It will be determined by how these constituencies shareholder first and the other two will determine what is best.

For the time being, we are exactly where we said we would be uh 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 what we have. I don't think there is any change. We will be around 30% by the end of the year. We now equity consolidate commerce bank. 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 as Commerce Bank does well continues to evolve and transform, their win is our win and we're happy to sit here. M I don't want to dig into history too deep but it was just one question. So one year ago the German government said it wants to keep Kumatsbank independent and not to sell further shares to you.

Just because 4 days before they had sold us 5% in a transparent auction representing the opposite position otherwise we would not be here today.

Yes. So I think I think uh 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 commerce bank. We had discussion before or we would not be here today but we did not have discussion afterwards.

Okay. No discussion since then.

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 in crossber 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 governor will be a critical factor in it.

I'm just saying it's a critical factor. Ultimately all of us management team are accountable to our shareholders, people and clients not to governments but we respect their position and we need to incorporate it.