Dividend tracking: UniCredit to follow Commerzbank…

Christopher Johnson: Italian bank UniCredit UCG will boost the growth of the European financial sector for the rest of the year.

The Milan-based bank’s share price is up 53.33% year-to-date and has recently been boosted by its move to build a larger stake in German rival Commerzbank.

UniCredit will ask the European Central Bank to increase its stake in its German rival to more than 9.9%.

The move is being engineered by new chief executive Andrea Orcel, who wants to use the bank’s €6bn (£4.9bn) extra cash to transform the business’s outlook.

The deeper connection represents a significant shift in M&A activity in European financial services.

Although Orcel is the first UniCredit executive to make a public move on the German lender, UniCredit executives have been eyeing a deal with Commerzbank since 2017.

But obstacles to understanding remain. The German government – which is the largest shareholder with 12% – could demand that Commerzbank remain listed in Germany, as well as UniCredit which faces significant resistance from German unions over potential job cuts.

UniCredit is currently trading at €37.67 and pays a gross dividend per share of €1.80.