UniCredit expects Commerzbank to adopt its roadmap from January

By Valentina Za, Tom Sims and Christian Kraemer

MILAN, July 23 (Reuters) - UniCredit wants Commerzbank to start adopting the strategy the Italian bank has mapped out for its German rival from January, or it could use its 48% stake to install a new board, Chief Executive Andrea Orcel said on Thursday.

As UniCredit reported better than expected earnings and upgraded its profit outlook, Orcel asked for talks with the Berlin government — a Commerzbank shareholder — and the German lender's worker representatives.

Both, however, responded saying Orcel should engage with his Commerzbank counterpart Bettina Orlopp.

"We are in a position to call an extraordinary general meeting and exercise ... control," Orcel told analysts.

"We would do that if that's necessary, but our expectations are (not to have) to do that at the moment, if we have everybody on board and on the same direction ... from January 1."

Orcel, a veteran dealmaker whose takeover approach for Commerzbank has included a skilful use of derivatives, indicated he had bargaining chips to offer.

   "We got to control (of Commerzbank) potentially without making any concession, as you usually would in a transaction. So now we are quite open," he told CNBC television.

BANKS MUST TALK, SAY GERMAN GOVERNMENT AND COMMERZBANK WORKERS

UniCredit first invested in Commerzbank in 2024, prompting Germany to reject the Milanese lender's approach as hostile and back Commerzbank's quest to remain independent.

A German finance ministry representative on Thursday renewed criticism of what the government has called UniCredit's aggressive tactics and said it was up to the two banks to talk.

A Commerzbank spokesperson called for "a constructive approach", while the head of the bank's works council, Sascha Uebel, criticised UniCredit for turning to worker representatives. 

"Can we all please act like adults now? Under corporate law, management decides what happens in a company," he said.

Germany still owns 12% of Commerzbank after a 2009 bailout — a stake UniCredit needs to buy to eventually merge Commerzbank with its own German business HVB in two or three years' time. 

Even before that, UniCredit sees economic gains from Commerzbank adopting its strategy. On Thursday it raised by 50% the estimated benefits to €1.2 billion ($1.4 billion) before taxes.

Citi analysts said that was "highly ambitious within the timeframe."

UNICREDIT AND COMMERZBANK: A CLASH OF CULTURES

Commerzbank CEO Orlopp has said that terms for any takeover negotiations should reflect the importance of Germany for the combined group and respect the Frankfurt-based lender's business model.

"There is going to be a bit of culture shock," said Kilian Huber, professor at the University of Chicago Booth School of Business. 

"UniCredit seems to be a lot more careful about the marginal dollar they spend, while Commerzbank prides itself on the long-term customer relationships and paying close attention to each business."

Declining costs and strong net fees drove UniCredit's second-quarter profit to €2.9 billion.

UniCredit now expects 2026 income comfortably above €11 billion, compared with previous guidance for a result in line or above that figure. It says this will rise to significantly more than €13 billion in 2028, excluding the full consolidation of Commerzbank.

By cancelling a planned €4.75 billion share buyback, UniCredit will keep its core capital at 13% of assets this year despite the hit from consolidating Commerzbank into its accounts.

Orcel said all relevant authorisations could arrive in the fourth quarter, earlier than anticipated.

The buyback cancellation weighed on the bank's shares, which fell 3.6%. 

($1 = 0.8779 euros)

(Reporting by Valentina Za in Milan and Tom Sims in Frankfurt; Additional reporting by Christian Kraemer in Berlin; Editing by David Goodman and Joe Bavier)