Is the European banking sector (finally) entering its much expected consolidation phase?
In my previous job as an M&A banker for Deutsche Bank, I spent most of my time working on recapitalisations of banks, and back then Italy was a hot topic. But not because it was going well, rather they had taken too many bad loans and they were in dire need for cash injections to keep the business running.
Now fast forward a couple of years, $UCG (-3,3 %) , seems to have done many right decisions and is in a good position to either build a sizeable stake in $CBK (-2,75 %) , or even consider a fully fledged takeover. Interesting to note, that UniCredit has already a Germany business, so they would be strong synergies in play, both commercially and cost-wise. But the later will raise issues with labour unions.
In case you are wondering why now may be a good time for this:
Many believe that $CBK (-2,75 %) is still cheaply valued, so UniCredit could get in at an attractive price (even if you consider an acquisition premium).
German government wants to further reduce the stake it built when helping the bank during the financial crisis in '08.
Rate environment is getting more friendly again for banks, so profits are likely to improve in the medium term.
Market caps of European banks are still subpar to those of US & Chinese peers. If Europe wants to get more competitive, we definitely need larger banks.
All in all, excited to see what other movements or rather intentions we will see in the next few months!
