European Morning Credit: Today in European Credit

Research evidence excerpt

European Morning Credit: Today in European Credit

Financials

Unicredit (UCGIM): offer for CMZB closes

The offer period for Unicredit’s bid for Commerzbank ended yesterday with the bank

achieving 47.6% ownership of shares or 49.65% if CMZB’s treasury shares are cancelled.

We see this as a strong position but in fact, contrary to the various breathless reports

we are reading in the press, Unicredit doesn’t appear to us to be as yet positioned to do

anything like a full integration with HVB which is what would actually deliver the value in

any transaction. In the meantime, the bank and the German Government (12% of CMZB

shares) appear to remain implacably opposed to this transaction and there remains some

ambiguity with respect to shareholder support, with CMZB reporting that only 2% of

shareholders tendered their shares versus parties related to Unicredit. However, with

such a large stake, Unicredit is of course well positioned in terms of influence. There is

also the suggestion that the ECB may require Unicredit to consolidate fully

Commerzbank but we see this as contingent on a number of items. To us, it looks a bit

messy, especially given regulatory approvals required over the coming months. However,

pending next steps, we think it’s hard to see this unsatisfactory position as an outright

negative for either Unicredit or Commerz.

(Richard Thomas)

CaixaBank (CABKSM): Fitch upgrades Long-Term IDR to

A+, from A

Yesterday, Fitch upgraded the Long-Term IDR of CaixaBank (A2/A+/A+) to A+ (from A)

which reflected CaixaBank’s strengthened risk profile and more stable earnings

generation, underpinned by structurally improved business opportunities in Spain. The

agency also cites Caixa’s strong and diversified profitability across business lines and