UniCredit CEO Orcel attended virtual meeting with Commerzbank, source says

MILAN (Reuters) – UniCredit chief Andrea Orcel attended a virtual meeting the Italian bank held on Friday with Commerzbank (ETR:) after becoming the German lender’s biggest private investor, a source with knowledge of the matter told Reuters.

Commerzbank’s designated CEO Bettina Orlopp was also present on Friday’s conference call, which a UniCredit source had previously described as the kind of meeting companies hold with their investors. UniCredit declined to comment.

Orlopp, who was appointed Commerzbank CEO earlier this week, told a financial conference in London on Thursday that the two banks would meet to “exchange views” now that UniCredit was a shareholder.

Italian newspapers on Saturday first reported Orcel’s attendance. Il Sole 24 Ore daily also said Commerzbank’s financial targets were discussed on the call, while no mention was made of any potential combination.

Orcel has said publicly a tie-up would be the best outcome after Italy’s No. 2 bank this month built a potential 21% stake in the German rival, subject to supervisory clearance.

A merger, however, would require broad backing from all relevant stakeholders, according to Orcel, who has not ruled out selling UniCredit’s stake – a move that would likely wipe out the 30% takeover premium built into Commerzbank shares since UniCredit bought the stake.

TENSIONS IN GERMANY

UniCredit’s investment has sparked tensions in Germany where Commerzbank’s management, employees and the country’s chancellor, Olaf Scholz, have all voiced opposition.

The Italian government has so far adopted a more cautious stance, but Deputy Prime Minister Matteo Salvini said this week he would not want UniCredit to shift its base to Germany as part of the deal.

A UniCredit spokesperson reiterated on Saturday that with UniCredit being simply an investor in Commerzbank there were no discussions on where a combined entity would be based.

“In any case, UniCredit’s headquarters are in Italy, have always been in Italy, and there is no reason for this to change,” the spokesperson added.

Reuters reported on Friday that UniCredit was discussing with unions plans to slim down its central offices by allowing up to 1,000 staff to retire early and retrain another 600 who would then be largely moved to branches.

A downsized corporate centre in Milan could prove an advantage if UniCredit were to pursue a deal.

Several sources familiar with UniCredit’s long-standing plans to take over Commerzbank say the location of the headquarters has always proved a stumbling block, with Germany keen to defend Commerzbank’s German roots and Italy worried about UniCredit “becoming too German”.

Germany would account for more than 55% of both customer loans and deposits in a combined group.