On Friday, German bank Commerzbank announced its highest quarterly profit since 2011, just before an important shareholders’ meeting where they aim to garner backing to counteract moves from Italy’s UniCredit.
Since last year, UniCredit has significantly increased its holdings in its German rival, which has sparked speculation about a potential complete acquisition. However, this idea faces strong opposition from authorities in Berlin.
In the first quarter from January to March, Commerzbank saw its net profit climb by 12 percent to reach €834 million ($936 million). This was unexpected as experts had anticipated only a minor decline.
“The company recorded its highest quarterly profits since 2011, proving our ability to expand even during difficult economic periods,” stated CEO Bettina Orlopp.
Revenue for Germany’s second-largest bank surged nearly 12% to reach €3.1 billion, thanks largely to higher-than-expected gains from both interest and commissions.
The leaders of Commerzbank plan to leverage the upcoming annual general meeting scheduled for next Thursday to garner backing for their strategy aimed at maintaining the bank’s independence.
Employee representatives and labor unions are urging workers to organize demonstrations during the event in Wiesbaden, a city located west of Frankfurt, which serves as the financial hub, according to reports from the Handelsblatt business newspaper earlier this week.
The potential union between UniCredit and Commerzbank started in September when Italy’s second-largest bank disclosed that it had acquired a stake in its competitor. This revelation sparked speculation that CEO Andrea Orcel was aiming for a significant European banking consolidation.
Since then, UniCredit has increased its stake to approximately 28 percent, and in March, the European Central Bank approved the bank’s plan to acquire up to 29.9 percent of Commerzbank.
In response, Commerzbank has declared its intention to eliminate approximately 3,900 positions, primarily within Germany, along with initiating share repurchases, aiming to enhance its appeal to investors.
UniCredit’s moves have stunned the corporate and political circles in Berlin, where newly appointed Chancellor Friedrich Merz had formerly characterized a potential takeover of Commerzbank as “hostile.”
Nevertheless, Orcel has minimized the likelihood of launching an immediate takeover bid for Commerzbank, stating in March that he was prepared to wait until as late as 2027 to assess whether such action would be sensible.
Leave a Reply