Christopher Johnson: Italian bank UniCredit UCG is expected to drive growth in the European financial sector for the remainder of the year.
The Milan-based bank’s share price has jumped 53.33% year to date and has been bolstered recently by its move to build a larger stake in German rival Commerzbank.
UniCredit will ask the European Central Bank to increase its stake in its German rival to above 9.9%.
The move is the brainchild of new chief executive Andrea Orcel, who wants to use the bank’s €6 billion (£4.9 billion) of extra cash to transform the business’s prospects.
The deeper tie-up represents a significant shift in merger and acquisitions activity in European financial services.
Although Orcel is the first chief executive at UniCredit to make a public move on the German lender, UniCredit executives have been chasing a deal with Commerzbank since 2017.
But obstacles to the deal remain. The German government—which is the biggest shareholder at 12%—could demand Commerzbank remains listed in Germany, as well UniCredit facing significant resistance from German unions over potential job cuts.
UniCredit is currently trading at €37.67 and pays a gross dividend per share of €1.80.
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