UniCredit Deems Commerzbank Overvalued, Intensifies Takeover Effort

UniCredit SpA has sharply raised the stakes in its effort to acquire Commerzbank AG, criticizing the German bank's current strategy and valuation. The Italian lender claims Commerzbank is overvalued and not adequately prepared for future challenges, unveiling a revised takeover proposal that contrasts strongly with Commerzbank's own plans.

Trading reactions were mixed Monday morning, with UniCredit's shares slipping 2.3% to €68.51 in Milan, while Commerzbank edged up 0.9% to €36.37 in Frankfurt. This divergence underscores the tension as UniCredit pushes its case to shareholders.

UniCredit's presentation singled out Commerzbank's "Momentum" plan, warning it carries significant downside risk and accusing the current valuation jump-over 20 percentage points since last September-of being unsupported by fundamental performance. Notably, the Italian bank highlighted a €200 million cost overrun in Commerzbank's 2025 numbers, which it said was only offset by a €500 million net interest income surprise largely attributed to portfolio replication and international loan growth abroad outpacing domestic expansion.

The alternative blueprint from UniCredit, dubbed "Commerzbank Unlocked," aims for a return on tangible equity over 19% by 2028, a cost-to-income ratio roughly 7 percentage points better than Commerzbank's projection, and a net profit of about €5.1 billion, up from €4.5 billion under the existing plan. Achieving these results would demand €1.7 billion in investment and a €500 million upfront charge for loan loss provisions.

Looking further ahead, an integration incorporating HypoVereinsbank, UniCredit's German subsidiary, could push group net profits to around €21 billion with an aggressive 30% cost-to-income target by 2030. This larger-scale merger concept would require €3.4 billion in investment, marking a significant restructuring bet.

UniCredit sought to directly address Commerzbank's earlier public criticisms, particularly on job cuts. The presentation suggests that sixty percent of cost savings would come from international, non-core activities rather than Germany-based HR jobs and claims German job cuts over five years would be less than half the 15,000 figure cited by Commerzbank's supervisory board.

On governance, UniCredit proposes that Germany would become the leading profit center within the group by 2030, with about 95% of decisions made locally-a proposal Commerzbank reportedly declined to explore. According to UniCredit, the German bank has also rebuffed detailed talks, limiting its ability to judge the value of UniCredit's offer.

While the document presenting this counteroffer isn't public yet, UniCredit warned that any consideration of its bid should be based solely on the forthcoming formal offer document.