UniCredit CEO Orcel participated in a virtual meeting with Commerzbank, the source says By Reuters

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

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

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

Italian newspapers first reported Orcel’s presence on Saturday. Il Sole 24 Ore daily also said Commerzbank’s financial goals were discussed on the call, while no potential combination was mentioned.

Orcel publicly stated that a tie-up would be the best outcome after bank no. 2 of Italy this month built a potential 21% stake in the German rival, subject to regulatory approval.

A merger, however, would require broad support from all relevant stakeholders, according to Orcel, who did not rule out selling UniCredit’s stake – a move that would likely wipe out the 30% takeover premium embedded in Commerzbank’s shares since UniCredit bought the package.

TENSIONS IN GERMANY

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

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

A UniCredit spokesman reiterated on Saturday that, with UniCredit simply being an investor in Commerzbank, there had been no discussions about where a combined entity would be based.

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

Reuters reported on Friday that UniCredit was discussing plans with unions to downsize its head offices, allowing up to 1,000 staff to take early retirement and retrain another 600, who would then be mostly moved to branches.

A reduced corporate center 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 concerned that UniCredit is “becoming too German”.

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