UniCredit’s Ambitions: A Pan-European Powerhouse
This year, marking a milestone in UniCredit’s new sponsorship contract with Ferrari’s Formula 1 team, the bank’s chief executive, Andrea Orcel, drew parallels between the two companies. “These are two brands that started in Italy with dreams of creating something more global,” Orcel explained, and in the case of UniCredit, he envisioned a pan-European future.
However, Orcel’s ambition for UniCredit is currently facing challenges. There has been German opposition to the Italian bank’s acquisition of Commerzbank, forcing Orcel to put the takeover plans on hold. At the same time, Rome utilized extraordinary powers to block his attempt to purchase the smaller Milanese rival, Banco BPM.
Challenges and Setbacks
The recent setbacks have raised questions about whether Orcel, known for being a relentless dealmaker, will remain satisfied running UniCredit in its current form. There are questions on whether Europe’s most renowned M&A banker perhaps underestimated the complexities in what should have been his natural territory.
Orcel, however, remains steadfast in his ambition to transform UniCredit into a regional powerhouse. He told the Financial Times that “when you talk about the dream of Europe having large, pan-European banks, then we would be the first one to do it.” But with two significant targets currently off the table, analysts, investors, and rivals are eager to know what Italy’s most valuable bank will do next.
Derailing Mergers and Acquisitions
Less than a year ago, UniCredit was confident that its plan to finalize two transformative deals was still on track. It aimed to integrate BPM entirely by June 2026 before launching a move on Commerzbank. However, Italian Prime Minister Giorgia Meloni’s government used its so-called golden power to block the swoop on BPM, and UniCredit’s plan to take over Commerzbank faced opposition from the German bank’s board and Berlin.
The critics argue that Orcel misread the political mood. They claim that banks are sovereign assets and essential for a country, and one cannot decide to force their way in if the government is uncomfortable. They believe Orcel wanted to push forward without considering local sensitivities, which are essential, and he misread the political context.
Shareholders and Analysts remain Optimistic
Despite the M&A roadblocks, shareholders and analysts remain optimistic about UniCredit. Since Orcel took the helm in April 2021, its share price has surged almost 650% – outshining its large European peers over the same period. The stock has risen two-thirds this year, and analysts see further upside despite challenges.
UniCredit is expected to enhance its performance through robust cost discipline, low credit provisions, rising fee income, and efficient capital deployment. However, the boost to European lenders’ net interest income from higher rates in recent years is starting to wane. UniCredit’s NII fell more than 5% in the three months to the end of September compared with the same period last year.
Looking Ahead
Despite the challenges and setbacks, Orcel appears undeterred in his mission. “UniCredit is a strange, wonderful animal,” he said. “We have a logo on the Ferrari. We have the best income ratio and return on equity of our peers. The job is so fulfilling.” As he looks forward, he envisions a UniCredit that continues to expand and thrive, not just in Italy, but across Europe.
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