Italy's UniCredit has today beaten expectations with its highest quarterly profit on record and raised its full-year forecast, as it launched a takeover offer for Commerzbank despite strong German opposition.
The €35 billion bid aims to lift UniCredit's stake in the German lender above 30%, from just below that level.
Under German takeover rules, that would allow UniCredit from next year to increase its holding further through open-market purchases.
Commerzbank has rejected the approach and has the backing of the German government in its fight to remain independent.
"Our presence (as a shareholder) is driving Commerzbank to review everything they need to review be more ambitious, change things in a better way, so that can only be positive for everybody," UniCredit CEO Andrea Orcel told CNBC television.
Orcel reiterated the offer, which carries a very low premium for Commerzbank shareholders, was not expected to give UniCredit control of Germany's second-biggest lender.
"For UniCredit shareholders it's a win-win. We end up below control, hopefully above 30%, but below control," he said.
UniCredit's net profit for January-March rose 16% year-on-year to €3.2 billion, well above an analyst consensus estimate provided by the bank of €2.7 billion.
The bank said revenues were supported by a tripling in dividends from financial investments made under Orcel's multi-pronged mergers and acquisitions strategy, offsetting the drag from lower interest rates.
Bringing the life insurance business in house also lifted revenues, UniCredit said.
Orcel, a veteran investment banker at the helm since 2021, has yet to clinch a merger deal despite several attempts. He has instead built stakes in rival institutions including Commerzbank, Greece's Alpha Bank and Italian insurer Generali.
UniCredit said it booked around €400m in dividends from its equity investments.
It now targets a net profit of €11 billion or more this year, up from a previous forecast of "around" that level.
