The Dutch government on Tuesday said it will reduce its stake in lender ABN Amro by a quarter to 30% through a trading plan.
Shares of the Dutch bank traded 1.2% lower at the market open and was last down 0.6% as of 9:15 a.m. London time.
The Dutch government, which currently holds a 40.5% interest in ABN Amro, announced via its investment vehicle firm NLFI that it will sell shares using a pre-arranged trading plan set to be executed by Barclays Bank Ireland.
ABN Amro was bailed out by the state during the 2008 financial crisis and later privatized in 2015. The government started reducing its shareholding in the firm last year.
The banking sector has been in the spotlight of late, after UniCredit‘s move to take a stake in German lender Commerzbank sparked questions on cross-border mergers in Europe and the lack of a complete banking union in the region.
Governments have been capitalizing on a rebound in shares to sell their shareholdings in banks that were taken over during the financial crisis. The U.K. and German administrations have both made moves this year to reduce their respective shareholdings in NatWest and Commerzbank.
A Commerzbank AG bank branch, in the financial district of Frankfurt, Germany, on Thursday, Sept. 12, 2024.
Krisztian Bocsi | Bloomberg | Getty Images
Commerzbank and UniCredit are set to begin talks Friday, with the German bank on the defensive over a potential takeover after its Italian counterpart unexpectedly increased its stake earlier this month.
Incoming Commerzbank Chief Executive Bettina Orlopp on Thursday said the two banks would “exchange views” Friday, Reuters reported. Speaking at a financial conference, Orlopp said the German bank was open minded, but that the speed of synergies and risks needed to be considered.
UniCredit earlier this month took a 9% stake in Commerzbank, before looking to boost it to 21% earlier this week and putting in a request to hold as much as a 29.9% stake in the German bank, hinting at a potential takeover bid. The action took the German government, which also owns a stake in the bank, and the management of Commerzbank by surprise.
Orlopp said Thursday she would not get involved with “crazy” sell-downs or “stupid things,” according to Reuters.
A 10-year veteran of Commerzbank, Orlopp was announced Tuesday as the incoming CEO, replacing Manfred Knof who is set to leave the bank at the end of this month.
Her comments on Thursday came as the bank’s board of managing directors and supervisory board unanimously said they supported Commerzbank’s current strategy at an annual meeting. Germany’s second-largest lender said in a Thursday statement that the implementation of its strategy plans until 2027 was “progressing rapidly.”
“Commerzbank is continuously expanding its independent position as a strong pillar in the German banking market and a reliable partner to the domestic economy,” Jens Weidmann, chairman of the supervisory board, commented.
The statement also noted that the board of managing directors was now expecting the bank’s return on tangible equity and payouts to shareholders to be bigger than so far anticipated.
The potential for a takeover or merger has been met with opposition from Germany’s government and several senior figures at Commerzbank. Supervisory board member Stefan Wittmann this week told CNBC he hoped a hostile takeover could be avoided, and said major job losses could occur if it became a reality.
Some investors however have in recent days suggested they would be open to talks about a potential merger.
Orlopp herself earlier this month told journalists that the process had taken Commerzbank by surprise, but urged a calm approach.
Bettina Orlopp, chief financial officer of Commerzbank AG, speaks during a fourth quarter earnings news conference at the bank’s headquarters in Frankfurt, Germany, on Thursday, Feb. 13, 2020.
Alex Kraus | Bloomberg | Getty Images
Commerzbank announced Tuesday it has picked 10-year veteran, and current Chief Financial Officer Bettina Orlopp to helm the bank as chief executive as it seeks to fend off a potential hostile takeover from Italian bank UniCredit.
The bank has been on the defensive as UniCredit looks to become its largest shareholder, signaling the potential for a full takeover.
Earlier this month, the Milan-based bank started building its shareholding with a 9% stake in Commerzbank. UniCredit then announced this week it had acquired additional Commerzbank shares, taking its stake in the German lender to around 21%, and submitted a request to increase its holdings to 29.9%.
Senior officials at Commerzbank and the German government, which was the company’s largest shareholder until UniCredit stepped in, have both said they oppose a hostile takeover. Orlopp will now be put in charge of leading the fight.
Commerzbank said in a late Tuesday statement that its supervisory board is aiming for current Chief Executive Manfred Knof to hand over his duties to Orlopp, “in the near future.” The firm added that the board had agreed unanimously on Orlopp succeeding Knof after an internal and external search for candidates.
Later on Wednesday the bank announced Knof will leave the company at the end of the month on September 30.
Orlopp’s contract is set out for five years, Commerzbank said, noting that the search for her replacement as CFO is still underway. The CFO said she was “looking forward to this new challenge,” while also noting that “significant tasks lie ahead.”
“Together with all our key partners, we will navigate through the challenges ahead of us successfully,” she said.
Since March 2020, Orlopp has been Commerzbank’s CFO, covering finance, investor relations, tax and treasury departments, according to her bio on the bank’s website. Most recently she was also the deputy chairwoman of the board of directors at the German bank, a position she has held since 2021.
The 54-year-old banker initially joined Commerzbank in 2014 as a divisional board member for group development and strategy. Since then, Orlopp has worked as an executive board member and then member of the board of managing directors overseeing areas including compliance, legal and human resources divisions.
Prior to her time at Commerzbank, Orlopp worked at McKinsey for 19 years. She holds a business administration diploma from the University of Regensburg, where she also completed a doctorate in finance.
Orlopp told journalists last week that current developments with UniCredit were unexpected, but urged calm.
“We have all been very surprised by the process,” she said according to Reuters. “That’s why the most important thing now is simply to sort it out calmly, to think about what’s on the table now and how to deal with it,” she added.
Other officials at Commerzbank have been more direct in sharing their concerns about a tie-up with the Italian bank. Stefan Wittman, supervisory board member at Commerzbank, on Tuesday told CNBC “we certainly hope we can avoid” a hostile takeover and warned that major job losses could occur if UniCredit took over.
This is not Orlopp’s first tumultuous time at Commerzbank. She was at the bank when it began the process of restructuring in 2016 and throughout periods of merger considerations, including interest from Deutsche Bank in 2018 and 2019.
When Orlopp became CFO in 2020, the bank was facing pressure from U.S. private equity group Cerberus, which at the time held an around 5% stake in Commerzbank, according to Reuters. The activist investor demanded personnel and strategy — including cost cutting — changes at the German lender.
The pressure from shareholders to reduce costs saw both the CEO and chairman of the supervisory board at the time, resign from their positions. Knof was then named CEO in 2020 and officially took on the role in 2021.
Thomas Schweppe, founder of 7Square, on Wednesday told CNBC that he believed it was important that the decision to make Orlopp CEO was taken quickly. “The situation is untenable. You cannot defend a company without a credible CEO,” he said.
Orlopp’s extensive experience at Commerzbank will allow her to hit the ground running, which is “very very important,” Schweppe said.
“At the same time obviously she has been part of some decisions that potentially led to the, you know, difficult situation Commerzbank finds itself now in,” he added.
15 February 2024, Hesse, Frankfurt/M.: The lettering “Commerzbank” can be seen on the Commerzbank Tower in the center of the banking city. Boosted by the turnaround in interest rates, Commerzbank is aiming for another profit increase after a record year. Photo: Helmut Fricke/dpa (Photo by Helmut Fricke/picture alliance via Getty Images)
Two-thirds of the jobs at Commerzbank could disappear if UniCredit successfully carries out a hostile takeover of the German lender, a Commerzbank supervisory board member warned on Tuesday.
Stefan Wittmann, who is also a senior official at German trade union Verdi, told CNBC’s Annette Weisbach that “we certainly hope we can avoid” a hostile takeover by the Italian bank. Witmann said Commerzbank’s board had called on the German government to carry out an internal review of the possible takeover, which he hopes will give the bank a six-month period to take stock of the situation.
“But if it [a hostile takeover] is unavoidable, we think that two-thirds of jobs will disappear, that there will be another significant cut in the branches,” he said, according to a translation.
“We will see in particular that UniCredit does not want all Commerzbank customers at all, but that it focuses on the supposedly best customers, namely the wealthy customers,” he added.
Berlin, which was the largest shareholder of Commerzbank after it injected 18.2 billion euros ($20.2 billion) to rescue the lender during the 2008 financial crisis, is likely to play a key role in any potential merger between the banks.
“We are actually concerned with our economic and industrial responsibility. As far as the workforce is concerned, which trade unions are of course particularly focused on, they would always lose out in the merger, regardless of the point in time,” Wittmann said. The bank has yet to respond to a request for comment on Wittmann’s statements.
UniCredit announced Monday it had increased its stake in the German lender to around 21% and submitted a request to boost that holding to up to 29.9%, signaling a takeover bid might be in the cards. Earlier this month, the Italian bank took a 9% stake in Commerzbank, confirming that half of this shareholding was acquired from the German government.
UniCredit believes substantial value can be unlocked within Commerzbank, Germany’s second-largest lender, but it said that further action is required for that value to be “crystalized.”
German Chancellor Olaf Scholz criticized UniCredit’s move on Monday, saying, “unfriendly attacks, hostile takeovers are not a good thing for banks and that is why the German government has clearly positioned itself in this direction,” Reuters reported.
Commerzbank’s supervisory board is due to meet this week to discuss UniCredit’s stake, people familiar with the matter who asked to remain anonymous previously told CNBC.
Wittmann said the mood is currently “very tense” within the company, adding that the bank was surprised by UniCredit’s announcement on Monday, which he described as a “180 degree-turn within 48 hours.”
“[UniCredit CEO Andrea Orcel] last spoke on Friday that he wanted a friendly takeover in agreement with all stakeholders and politicians. And yesterday we were surprised by his hostile takeover attempt. That doesn’t add up,” Wittmann said.
The supervisory board member explained that the two main reasons to regard a potential merger in a critical light are the lack of a banking union in Europe, and the fact that UniCredit has “absorbed itself with Italian government bonds in recent years.”
He questioned what might happen should geopolitical tensions or “upheavals” impact UniCredit’s availability of capital to finance Commerzbank’s industry.
In response to the 2008 financial crisis, the European Commission announced plans to create a banking union to improve the regulation and supervision of banks across the region.
Economist and former European Central Bank Governor Mario Draghi flagged in a recent report that banks in Europe face regulatory hurdles which “constrain their capacity to lend,” also citing the “incomplete” banking union as one factor that impacts competitiveness for the region’s banks.
“We have always spoken out, including as employee representatives on the Supervisory Board, that there can and should be mergers at [a] European level, but only when the banking union is in place. And that is just our second point of criticism, that we say: create the rules of the game and the guardrails first, and then do it sensibly when it is clear which playing field we are on,” Wittmann said.
Commerzbank headquarters in the financial district of Frankfurt, Germany, on Sept. 12, 2024.
Bloomberg | Bloomberg | Getty Images
UniCredit announced on Monday it had increased its stake in German lender Commerzbank to around 21% and submitted a request to boost the holding to up to 29.9%.
The Italian bank acquired the additional Commerzbank shares through financial instruments, it said in a Monday statement. Earlier this month, UniCredit announced it had taken a 9% stake in Commerzbank, confirming that half of this shareholding was acquired from the German government.
“UniCredit believes that there is substantial value that can be unlocked within Commerzbank, either stand-alone or within UniCredit, for the benefit of Germany and the bank’s wider stakeholders. However, as was the case for UniCredit, such potential requires action for it to be crystalized,” the bank said on Monday.
It added that it has hedged the majority of its exposure to Commerzbank in order to provide UniCredit with “full flexibility and optionality to either retain its shareholding, sell its participation with a floored downside, or increase the stake further.”
Its next move will depend on engagement with Commerzbank’s management and supervisory boards as well as its “wider stakeholders in Germany,” the bank said.
Berlin has been a major shareholder of Commerzbank since it injected 18.2 billion euros ($20.2 billion) to rescue the lender during the 2008 financial crisis.
German government officials met last Friday to discuss the state’s shareholding in Commerzbank. They concluded that the bank is a “stable and profitable institute” and its “strategy is geared towards independence. The Federal government will accompany this until further notice by maintaining its shareholding,” the agency said in a Google-translated statement.
Shares of Commerzbank fell sharply in early trade Monday on this news, but pared losses after UniCredit announced it had increased its position and applied to acquire more.
Commerzbank shares were down 0.4% by 11:50 a.m. London time, while UniCredit shares fell 2.3%.
The state is likely to play a key role in any potential takeover of the German bank. Last week, UniCredit CEO Andrea Orcel told local media “it would be an aggressive move” for his firm to launch an unsolicited tender offer to buy out other investors in Commerzbank, Reuters reported.
Orcel also cited the German government’s “trust” in the Italian bank as the reason why it was able to buy 4.5% of the state’s stake in Commerzbank.
On Monday UniCredit noted that it has been present in Germany for nearly 20 years and stressed the importance of a “strong banking union” in Europe as being key for the bloc’s economic success.
Analysts are hoping that a move from UniCredit will encourage more cross-border consolidation in Europe’s banking sector which is often seem as more fragmented in comparison to the U.S.
The Commerzbank building (second from right) in Frankfurt am Main, western Germany, on Sept. 25, 2023.
Kirill Kudryavtsev | Afp | Getty Images
UniCredit‘s move to take a stake in German lender Commerzbank is raising questions on whether a long awaited cross-border merger could spur more acquisitions and shake up the European banking sector.
Last week, UniCredit announced it had taken a 9% stake in Commerzbank, confirming that half of this shareholding was acquired from the government. Berlin has been a major shareholder of Commerzbank since it injected 18.2 billion euros ($20.2 billion) to rescue the lender during the 2008 financial crisis.
UniCredit also expressed an interest in a merger of the two, with the Italian bank’s CEO Andrea Orcel telling Bloomberg TV that “all options are on the table,” citing the possibility that it either takes no further action or buys in the open market. Commerzbank has given a more lukewarm response to the merger proposals.
Orcel said the Italian bank was able to buy 4.5% of the state’s stake in Commerzbank because the government trusts UniCredit, Reuters reported Thursday citing local media. When asked if UniCredit would launch an unsolicited tender offer to buy out other investors in Commerzbank, the CEO told the Italian paper: “No, it would be an aggressive move.”
But analysts have welcomed the move by UniCredit, particularly because a tie-up might spur similar activity in Europe’s banking sector — which is often seen as more fragmented than in the U.S., with regulatory hurdles and legacy issues providing obstacles to mega deals.
So far, the market has responded positively to UniCredit’s move. Commerzbank shares jumped 20% on the day UniCredit’s stake was announced. Shares of the German lender are up around 48% so far this year and added another 3% on Wednesday.
Investors appreciate the geographical overlap between the two banks, the consistency in financials and an assumption that the transaction is “collaborative” in nature, UBS analysts, led by Ignacio Cerezo, said in a research note last week. According to UBS, the ball is now in Commerzbank’s court.
Analysts at Berenberg said in a note last week that a potential merger deal, “should, in theory, have a limited effect on UniCredit’s capital distribution plans.” They said that while there is “strategic merit” in a deal, the immediate financial benefits might be modest for UniCredit, with potential risks from the cross-border deal diminishing some of the benefit.
David Benamou, chief investment officer at Axiom Alternative Investments, hailed Orcel’s decision to take a stake in Commerzbank as a “fantastic move” that makes sense because of the increase in German market share it would grant UniCredit.
As Commerzbank “missed on costs in Q2 [the second quarter], currently it’s at a very low valuation, so the moment [Orcel] stepped in, is probably one of the best moments he could have,” Benamou told CNBC’s “Squawk Box Europe” last week.
When asked how imminent a takeover was in the short term, Benamou suggested it was possible, saying, “they will probably come to it.”
According to Arnaud Journois, senior vice president of European Financial Institution Ratings at Morningstar DBRS, UniCredit is already on its way to becoming a leading bank in Europe.
He told CNBC’s “Street Signs Europe” Wednesday that there was a “double logic” behind UniCredit’s move as it enables the Italian lender to access both the German and Polish markets where Commerzbank currently operates.
“UniCredit has been very active in the past two years, doing a few targeted acquisitions … So this is the next logical step,” Journois said.
UniCredit continues to surprise markets with some stellar quarterly profit beats. It earned 8.6 billion euros last year (up 54% year-on-year), also pleasing investors via share buybacks and dividends.
Analysts are hoping that a move by UniCredit will encourage more cross-border consolidation. European officials have been making more and more comments about the need for bigger banks. French President Emmanuel Macron, for example, said in May in an interview with Bloomberg that Europe’s banking sector needs greater consolidation.
“European countries might be partners, but they are still competing sometimes. So, I know that from an EU standpoint — policymaker standpoint — there is appetite for more consolidation to happen. However, we think that there are a few hurdles that make that difficult, especially on the regulatory side,” Journois told CNBC.
A cross-border styled merger between UniCredit and Commerzbank would be more preferential than a domestic merger between Deutsche Bank and Commerzbank, according to Reint Gropp, president of the Hall Institute for Economic Research.
“The German banking structure is long overdue for a consolidation process. Essentially, Germany still has almost half of all banks in the euro zone, that’s significantly more than its share in GDP. So any consolidation process would be welcome now,” Gropp told CNBC’s “Street Signs Europe” on Wednesday.
He noted that Commerzbank has always been a “big candidate for a takeover” in the German banking sector because most of the other banks in the country are savings banks which cannot be taken over by private institutions, or cooperative banks which are also difficult takeover targets.
Filippo Alloatti, head of financials at Federated Hermes, said Deutsche Bank is unlikely to present a strong rival offer for Commerzbank.
With a CET1 ratio of 13.5% compared to its target of 13%, Deutsche Bank is rather “limited.” CET ratios are used to gauge the financial strength of a lender. The German bank also has less excess capital than UniCredit and therefore “cannot really afford” a takeover, Alloatti said.
“We’ve been waiting for this,” Alloatti said, speaking about the potential for further consolidation in the sector. “If they [UniCredit] are successful, then of course, other management teams will study this case,” he said, noting that there was also scope in Italy for domestic consolidation.
Gropp acknowledged that UniCredit’s CEO had made a “very bold move” that caught both the German government and Commerzbank by surprise.
“But maybe we need a bold move to effect any changes at all in the European banking system, which is long overdue,” he said.
In comments reported by Reuters, Commerzbank’s Chief Executive Manfred Knof told reporters on Monday that he would look at any proposals from UniCredit in line with the bank’s obligations to its stakeholders.
Knof informed the bank’s supervisory board last week that he would not seek an extension of his contract which runs until the end of 2025. German newspaper Handelsblatt reported that the board might be considering an earlier change of leadership.
The supervisory board at Commerzbank will meet next week to discuss UniCredit’s stake, people familiar with the matter who preferred to remain anonymous told CNBC. There are no plans to replace Knof as soon as that meeting, the sources added.
– CNBC’s Annette Weisbach, Silvia Amaro and Ruxandra Iordache contributed to this report.
UniCredit CEO Andrea Orcel during an interview at the World Economic Forum (WEF) in Davos, Switzerland, on Jan. 18, 2024.
Bloomberg | Bloomberg | Getty Images
UniCredit‘s CEO Andrea Orcel revealed his hand this week as the Italian lender built a 9% stake in Commerzbank — and a takeover bid for the German rival could still be in the cards.
UniCredit faces a number of hurdles before increasing its stake after filing a request to “potentially exceed 9.9% of Commerzbank if and when necessary.” Commerzbank shares soared on Wednesday when news of UniCredit’s position was announced, and compounded gains on Thursday following speculation of an imminent takeover.
“All the options are on the table,” Orcel said Thursday in a Bloomberg TV interview, stressing that “it’s very simple to engage with all the stakeholders and see if the basis for a combination is there. And if it’s not, and it is the basis for sponsoring or propelling further Commerzbank in delivering a … transformation, then we will have delivered a lot of value for our shareholders as well.”
Roughly half of UniCredit’s freshly acquired stake was purchased from Commerzbank’s largest shareholder, the German government, which is seeking to gradually exit its position after injecting 18.2 billion euros ($20.05 billion) to prop up the bank during the 2008 financial crisis. The authorities, which retain a 12% shareholding, last week said that around 13.15 billion euros of the rescue sum had been repaid to date.
All eyes are now on whether UniCredit will make the leap when the German government returns to offload its shares into the market.
“There is the possibility that the government sells down further. We would be interested, at the right terms,” Orcel said Thursday. “There is the possibility that we buy in the open market. Or there is the possibility that we do nothing. But unless we ask for the authorization first, we don’t have that flexibility.”
The Italian bank already has a presence in Germany through its Munich-based lender HypoVereinsbank. In a Thursday note, Berenberg analysts stressed that a Commerzbank takeover would fit with Orcel’s broader expansion strategy and create Germany’s second-largest bank, with a market share of roughly 8% of customer loans.
“UniCredit has always seen itself as a pan-European bank and its CEO wants this to remain the case,” they said. “Expanding its presence in countries where it already has an operation is therefore compatible with this goal.”
UniCredit took a similar cross-border step last year, when it purchased a nearly 9% stake of Alpha Bank from the state-owned Hellenic Financial Stability Fund, although it has yet to make any more moves targeting the Greek bank.
Until recently, Germany’s largest lender Deutsche Bank had been seen as the prime contender to take over Commerzbank, following an abrupt collapse of initial talks in 2019. Whispers cooled in January, however, when Deutsche Bank CEO Christian Sewing said that merger and acquisition activity was not a priority for the group at the time.
A UniCredit takeover of Commerzbank would emerge as a rare, if long-awaited, instance of consolidation among Europe’s banking titans. The resource-intensive and time-consuming process is often stymied by regulatory hurdles and limits on large exposures.
Orcel, however, is angling in on Commerzbank at “probably one of the best moments he could have,” according to David Benamou of Axiom Alternative Investments.
“It’s a fantastic move, financially,” Benamou told CNBC’s Steve Sedgwick on Thursday.
He noted that the stock building comes when Commerzbank has yet to validate its August share buyback plan involving a first tranche of 600 million euros, or roughly 3.3% of its market capitalization as of Thursday, with the European Central Bank — meaning the scheme is not yet fully priced into the German bank’s “very low” valuation.
Analysts from Berenberg added that a potential acquisition of Commerzbank would “materially” reduce the odds of UniCredit pursuing domestic consolidation in Italy — where the lender backed out of talks with the world’s oldest bank, Monte dei Paschi, in 2021.
Additionally, “UniCredit would have to navigate through potential political and trade union objections about the deal, which could limit the value extraction from this acquisition. Lastly, as the combined entity would be a bigger and more complex bank, it could be faced with increased capital requirements,” Berenberg said.
Already, Commerzbank is seeking to fend off a potential acquisition, Reuters has reported, while Frank Werneke, the head of one of Germany’s largest trade unions Verdi, called on the German government to retain its share in Commerzbank “until further notice in order to avert a takeover,” according to a Google-translated statement.
From left to right: Johan Pihl, Doconomy’s chief creative officer and co-founder, and Mathias Wikstrom, chief executive officer and co-founder.
Doconomy
Swedish climate-focused financial technology startup Doconomy told CNBC on Thursday that it’s raised 34 million euros ($36.9 million) from leading European banks, including UBS and Commerzbank.
Doconomy, which offers tools to help bank customers measure the carbon footprint of their everyday spending, raised the cash in a Series B financing round co-led by UBS Next and CommerzVentures, the venture arms of UBS and Commerzbank, respectively.
Credit ratings agency S&P Global came on board as a new investor, while existing shareholders Motive Ventures, PostFinance and Tenity also participated.
Founded in Sweden in 2018, Doconomy works with the likes of Boston Consulting Group, Mastercard, S&P Global, and the United Nations Framework Convention on Climate Change to calculate the climate cost associated with financial transactions.
Among the firm’s tools is the AIand Index, a cloud-based service for banks that helps their customers convert every transaction into its corresponding CO2 footprint. The index is used by more than 100 financial institutions in more than 40 countries.
Doconomy plans to use the fresh cash to drive expansion into North America and roll out new products, CEO and co-founder Mathias Wikstrom told CNBC in an interview.
“Going forward, we want to enable every bank in every corner of the world to engage their clients in the ESG [environmental, social, and governance] work of the bank,” Wikstrom said. “We see a connection between the E and S, the environmental and the social. We can’t isolate those two different streams.”
Wikstrom said he was “very happy” to see partnerships emerging with the likes of UBS and Commerzbank, describing it as an “alliance of the winning both money and intellect into getting this issue under control.
News of Doconomy’s latest funding follows the firm’s February 2023 deal to acquire Dreams Technology, a platform that uses behavioral science to boosts customers’ digital engagement and financial wellbeing.
Wikstrom said that Doconomy’s valuation in its Series B round is unchanged from the price at which it raised funds in its Series A, which saw the firm raise cash from the likes of Citi Ventures, Mastercard, and Ikea parent company Ingka.
Doconomy’s growth story hasn’t come without its challenges. More recently, the firm faced attacks from right-wing online commentator Jordan Peterson and his followers.
It’s not really hurricane season anymore, it’s fear season.
Mathias Wikstrom
CEO, Doconomy
Last week, Peterson targeted the company in a post on social media platform X, labelling it the “soft positive planet-saving voice of the worst imaginable corporate/fascist/green tyranny.”
The Canadian psychologist, who gained internet fame critiquing so-called political correctness, is a noted skeptic who described climate change as “the idiot socialist get-out-of-jail-free card.” He once framed rising greenhouse gas emissions as a positive for making the planet “green in the driest areas.”
Climate scientists say this is misleading, as it doesn’t take into account the negative effects intensified droughts, wildfires and heatwaves caused by global warming have on plants and ecosystems.
Wikstrom told CNBC that the situation concerning Peterson’s attacks on his firm “illustrates that we need to educate a lot of people.”
“Fear will lead to frustration and frustration will potentially lead to protests, and protests will lead to violence and violence will lead to damage done,” he told CNBC.
Wikstrom said that he hopes that the more the likes of Peterson and other climate skeptics keep “banging the drum,” the likelier that their sentiments will eventually sound “hollow.”
“Looking at what’s happening in Hawaii, in Canada, in France, in Spain, in Greece — we have the floods, we have the fires, we have so many concerns now,” he said. “It’s not really hurricane season anymore, it’s fear season.”
Climate fintech is a niche area of financial technology that has attracted heightened interest from investors, as world governments push corporates to hit ESG targets and reduce carbon emissions associated with their operations.
Michael Baldinger, chief sustainability officer of UBS, said the bank’s venture investment into Doconomy “underscores our focus on fostering innovation to provide the data and actionable insights our clients need to make informed choices about their investments and effect the change they want to see.”
Commerzbank on Thursday reported a 55% hike in net profit for 2023, as high interest rates helped the German banking giant report its best results in 15 years.
Net profit for the year beat expectations to come in at 2.2 billion euros ($2.36 billion), up from 1.4 billion euros a year earlier. For the fourth quarter, net profit was 395 million euros, down over 16% on the same quarter the year before, but ahead of consensus estimates published by Commerzbank.
Investors welcomed the results, with shares provisionally ending the session around 5.5% higher.
High interest rates were a driving factor behind the results, with net interest income up around 30% for 2023 as a whole, and 8.5% higher in the fourth quarter.
In its outlook, the bank recognized that “continuing economic slowdown will remain a challenge in the current financial year.” However, it said it expects net profit to be above 2023 levels.
The Commerzbank building (second from right) in Frankfurt am Main, western Germany, on Sept. 25, 2023.
Kirill Kudryavtsev | Afp | Getty Images
In an analyst note Thursday, Deutsche Bank’s Benjamin Goy and Marlene Eibensteiner described the numbers as a “solid set of 4Q23 results” and reiterated their buy rating on the stock.
“While the pre-provision profit was modestly below expectations, the net profit was 9% ahead of consensus. More importantly, the mix was good with net interest income and costs beating expectations by 2%,” they wrote.
“The 2024 guidance is in line with expectations, however for a bank that beat and raised its own 2023 net interest income guidance five times it remains to be seen whether the implied net interest income slow down is too conservative again in our view.”
The results follow a major business overhaul at Commerzbank, which was bailed out by the German government during the 2008-2009 financial crisis. The bank said it had reduced costs to 6.4 billion euros in 2023, down from 6.5 billion euros the previous year.
Christian Sewing, Chief Executive Officer of Deutsche Bank, has acknowledged that a recession in Germany is inevitable, and urged leaders to accelerate its decoupling from China.
Denis Balibouse | Reuters
Deutsche Bank CEO Christian Sewing on Thursday said that merger and acquisition activity is not a priority for his group, as speculation resurfaces over the future of domestic rival Commerzbank.
The two German lenders abandoned a merger plan in 2019, but concerns about bank profitability, and reports that the German government’s is considering selling some of its company stakes, have rekindled whispers about a possible tie-up in recent weeks.
The state still has a 15% stake in Commerzbank, but Reuters reported earlier this week that Finance Minister Christian Lindner is open to disposing of it.
The merger of Germany’s two biggest banks would create a combined entity with around $2 trillion in assets, although Deutsche Bank’s low valuation could complicate any such move. The bank trades at around 12 euros per share, a fraction of its book value, and a significant portion of assets would need to be marked down.
Speaking to CNBC on the sidelines of the World Economic Forum in Davos, Switzerland on Thursday, Sewing appeared to pour cold water on the rumors, at least for now.
“I wouldn’t say it’s on top of my priority, to be honest. I have always said for years that M&A in the banking industry, particularly in Europe, must come at some time, but most important for that is that certain preconditions are met — preconditions from a regulatory point of view, finalization of the banking union,” Sewing said.
“Obviously, with regard to the sharply increased interest rates, you have to think about fair value gaps given the mortgage books of a lot of banks, so I don’t think it is a priority for this year.”
The European Banking Union was created in 2014 and seeks to ensure the bloc’s banking and financial systems are stable.
This left the bloc unable to implement a portion of its banking union legislation described by Eurogroup President Paschal Donohoe as “a key element of our common safety net.”
“Therefore, we are focusing on our own business,” Sewing concluded. “If, in this own business, there are possibilities and options for doing the one or the other smaller add-ons, like we have done with Numis, then obviously we are looking at it.”
The European Central Bank has likely pressed pause on its rate hiking cycle, the chief financial officer of Commerzbank told CNBC on Friday.
The ECB raised interest rates in July, completing a full year of rate increases. ECB President Christine Lagarde flagged that the central bank could continue or pause rate hikes at its next meeting in September, but definitely will not cut. The ECB’s main rate currently stands at 3.75%.
Commerzbank CFO Bettina Orlopp told CNBC that the ECB is unlikely to raise rates in September — going against the grain of several analysts who expect a final rate hike next month.
“It is not our assumption we will see [a] rate cut, we do not assume there will be rate increases [too],” Orlopp said when asked about the outlook for 2024. “We will stick to the 3.75% that we currently have.”
Commerzbank is the second largest lender in Germany by market capitalization, and its performance is closely linked to the interest rate environment.
Second-quarter results out Friday showed a 20% jump in the bank’s net profit, compared with the previous year. Revenue also came in higher than analysts had anticipated, reaching 2.6 billion euros ($2.84 billion). The solid results led the German lender to increase its expectations for net interest income in 2023 to “at least 7.8 billion euros,” from a previous guidance of 7 billion euros.
Orlopp added that: “If there were to be another interest rate hike like in the fall, that would be again an upside potential for us.”
A lot of uncertainty remains about which direction the ECB will take in September, with the central bank arguing its decision will depend on data.
“We are very close to the peak in rates and I think the peak is going to come in the next couple of months,” Akshay Singal, EMEA head of short-term interest rate trading at Citi, told CNBC’s Street Signs on Friday.
“[The] September meeting will be the last hike for all of them, if they do [increase rates],” he added, referencing the ECB, Bank of England and Federal Reserve.
A logo stands on display above the headquarters of Deutsche Bank AG at the Aurora Business Park in Moscow, Russia.
Andrey Rudakov | Bloomberg | Getty Images
Deutsche Bank shares fell by more than 9% in early trade on Friday following a spike in credit default swaps on Thursday night, as concerns about the stability of European banks persisted.
The German lender’s shares retreated for a third consecutive day and have now lost more than a fifth of their value so far this month. Credit default swaps — a form of insurance for a company’s bondholders against its default — leapt to 173 basis points on Thursday night from 142 basis points the previous day.
Deutsche Bank’s additional tier one (AT1) bonds — an asset class that hit the headlines this week after the controversial writedown of Credit Suisse’s AT1s as part of its rescue deal — also sold off sharply.
Financial regulators and governments have taken action in recent weeks to contain the risk of contagion from the problems exposed at individual lenders, and Moody’s said in a note Wednesday that they should “broadly succeed” in doing so.
“However, in an uncertain economic environment and with investor confidence remaining fragile, there is a risk that policymakers will be unable to curtail the current turmoil without longer-lasting and potentially severe repercussions within and beyond the banking sector,” the ratings agency’s credit strategy team said.
“Even before bank stress became evident, we had expected global credit conditions to continue to weaken in 2023 as a result of significantly higher interest rates and lower growth, including recessions in some countries.”
Moody’s suggested that, as central banks continue their efforts to reel in inflation, the longer that financial conditions remain tight, the greater the risk that “stresses spread beyond the banking sector, unleashing greater financial and economic damage.”
European banking stocks sold off sharply in early trade Friday as jitters surrounding U.S. bank SVB Financial — which plunged 60% Thursday — spread around the world.
