UniCredit chief Andrea Orcel backs French president’s call for bank deals
Executives at European lenders have long called for consolidation to compete with US and Asia rivals
UniCredit chief executive Andrea Orcel has welcomed French President Emmanuel Macron’s support for consolidation in Europe’s fragmented banking sector, but warned big cross-border deals were still some way off.
European bank executives and policymakers have long called for closer ties between the continent’s banks to help them to compete better with US and Asian rivals.
Macron called for more dealmaking in the sector as part of EU efforts to create a so-called capital markets union across the bloc during an event in Paris this month to promote the city’s finance sector.
“It’s good to have this . . . commitment from a major European leader,” said Orcel in an interview with the Financial Times, adding that further development of the EU’s banking union and capital markets union initiatives would also be needed to encourage cross-border deals.
“If the rules . . . don’t change, no one is going to be interested beyond domestic [deals] because you can’t make synergies.”
Macron said in an interview with Bloomberg last week that European banks such as France’s BNP Paribas had been held back by their inability to buy foreign rivals. Asked whether cross-border deals could include takeovers of French banks — including Société Générale, the country’s third-largest lender — he said: “Yes, for sure.”
UniCredit has previously been rumoured as a potential suitor for SocGen, but Orcel ruled this out to the FT. He also said that consolidation, including through domestic acquisitions, would require backing from regulators and governments.
Spanish bank BBVA recently launched a hostile bid for domestic rival Sabadell, which has led to speculation that a wave of bank dealmaking could be on the cards. But BBVA’s approach was criticised by the Spanish government.
Orcel, who advised on some of the biggest European bank takeovers in the run-up to the global financial crisis while a dealmaker at Merrill Lynch, became chief executive of Italy’s second-biggest bank three years ago.
Since then, UniCredit has been persistently linked with potential M&A deals both in Italy and across Europe.
It came close to buying state-owned Monte dei Paschi di Siena in 2021, only to abort the deal at the last moment, which created tensions with the Italian government.
It has also been linked with several other banks, including Banco BPM, which is seen as the best domestic fit for UniCredit, Russia’s Bank Otkritie and Germany’s Commerzbank.
Orcel said that because UniCredit operated in 13 markets and had excess capital it was more prone to speculation about deals.
“Theoretically, most of the rumours are true inasmuch as, in every single market we look at every possible target,” he said.
“The interest is there under the right conditions, but we haven’t found the right conditions yet, and we have had the discipline to say no.”
He added that though UniCredit’s significantly improved share price put it in a stronger position to do a deal than when he joined three years ago, shareholders would need to be satisfied that a takeover would be a better use of excess capital than returning it to them in the form of buybacks and dividends.
One part of the business that has marred Orcel’s three years at UniCredit is its subsidiary in Russia, where it has the second-biggest exposure among western banks.
Last week, a St Petersburg court ordered the seizure of €463mn of assets belonging to UniCredit, equivalent to about 4.5 per cent of its assets in the country. The court also made similar rulings on assets belonging to Deutsche Bank and Commerzbank.
UniCredit is indemnified on the assets, though it is still expected to provision for potential losses in its next quarterly results, according to people with knowledge of its exposure.
The court ruling was part of a long-running legal case, which is set to continue for some time to come.