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UniCredit CEO rules out wave of Europe Bank M&A amid hurdles

Bloomberg/Alessia Pierdomenico

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The Chief Executive Officer of UniCredit said that there will be not many mergers in Europe in the foreseeable future, both domestic and cross-border.

Tuesday 14, May 2019

(Bloomberg) –UniCredit’s Chief Executive Officer has ruled out a wave of transactions among European lenders given the hurdles to deals, his latest comments to downplay reports that the lender may be interested in Commerzbank.

Jean Pierre Mustier, the CEO of UniCredit, said, “Mergers in Europe will be very difficult to put together because there is a lot of things which need to be followed, costs need to be controlled, capital needs to be matched as well as execution risks and governance need to be appropriate.”

UniCredit is among European lenders seen as a possible suitor for Commerzbank after the German lender’s merger talks with Deutsche Bank ended without a deal last month.

The Milan-based lender was among banks that had reached out in the past to the German government about a possible bid for Commerzbank. The bank’s strategic plan expiring this year is based on organic growth, though the bank has hinted in the past that it may consider other options in the future.

“It’s important for us to grow on purely organic basis, that is what we do for our plan,” said Mustier.

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After exceeding plans for cost-cutting and asset quality, the CEO is preparing to take his next set of targets to investors.

UniCredit has already said that it expects to accelerate the rundown of non-essential business, adjust its holdings of Italian sovereign debt and improve its capital buffer.

Additionally, as part of the measures, the bank last week sold a 17 per cent stake in FinecoBank, raising more than EUR 1 billion.

The measures are aimed at helping the bank improve its risk portfolio and capital, boost lending and give it more flexibility to increase UniCredit’s dividend payout which is what the lender’s shareholders are looking at, added Mustier.

 

TAGS : UniCredit , mergers and acquisition, Commerzbank, Deutsche Bank, European lenders

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