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Italian banking group UniCredit and Germany’s Commerzbank had planned a merger talk earlier this year but could not proceed because Russia invaded Ukraine in late February, the Financial Times reported citing sources.
In early 2022, UniCredit CEO Andrea Orcel arranged a meeting with his counterpart at Commerzbank for the merger of the Italian bank’s German arm HypoVereinsbank.
A merger would have created a €785bn German bank with a network of 1,000 branches and 48,000 employees.
In 2005, the Italy-based bank bought HypoVereinsbank, which is said to have built a local footprint across Bavaria and the Hamburg area.
According to sources aware of the development, UniCredit had first shown interest in a merger with Commerzbank in 2017 and prepared an offer in 2019.
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Originally, the Milan-based bank had planned to build its stake in the German bank and merge it with HypoVereinsbank.
According to analysts, a merger between UniCredit and Commerzbank is one of the most promising deals in the European banking space because there is very little regional overlap between the banks’ German businesses.
However, the Russia-Ukraine war has forced UniCredit to shift its focus toward managing its exposure to Russia.
It is one of the few western banks with significant exposure to Russia and could lose around €5.3bn in the worst-case scenario.
The lender is conducting a strategic review of its business there as it considers exiting the country.