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Unicredit could be spoiler in Deutsche Bank tie-up with Commerzbank

Unicredit could be spoiler in Deutsche Bank tie-up with Commerzbank

FRANKFURT/BENGALURU: Deutsche Bank came under increased pressure on Thursday to move forward with a tie-up with Commerzbank following a report that Italy’s Unicredit is preparing a rival bid for the German lender.

UniCredit is preparing a rival multi-billion-euro bid to take control of Commerzbank as Deutsche Bank faces troubles with its move to buy its rival German lender, the Financial Times reported on Thursday.

UniCredit, Commerzbank and Deutsche Bank all declined to comment on the report.

Deutsche and Commerzbank announced talks on March 17, and two people with knowledge of the talks said on Thursday talks were proceeding well and “very carefully”.

Berlin has wanted to prevent a foreign takeover of Commerzbank, sources have said. But a potential merger between Germany’s two largest banks has met stiff resistance from labor unions fearing jobs cuts, and some major investors who question the logic of a merger.

Deutsche and Commerzbank have been divided over the pace of their merger talks, two people with knowledge of the matter said on Wednesday. Commerzbank would like to see a speedy decision on whether to deepen the discussions or not, while Deutsche Bank needs more time.

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Jefferies said in an analyst note that nothing could be ruled out, but there was a lower probability of a Unicredit tie-up “given execution risks attached and unfavorable regulatory backdrop” of cross-boarder mergers.

The Italian lender plans to buy a sizeable stake in Commerzbank and merge it with HypoVereinsbank, the German lender it already owns, the Financial Times said, citing people familiar with the matter.

Shares in Commerzbank were up 3.3 percent by 0718 GMT, while Deutsche Bank stock was down 0.7 percent. Unicredit shares were down 1.2 percent.

The combined entity would be based in Germany while UniCredit would maintain its headquarters and listing in Milan, the report said.

Reuters reported in 2017 that UniCredit had told Berlin it was interested in eventually merging with Commerzbank, with the bank later denying having an interest in the German lender.

The FT reported that one of the parties might decide to walk away from the talks, adding a significant announcement could be made as early as this weekend, citing people briefed on the discussions.