The logo of German bank Commerzbank seen on a branch office near the Commerzbank Tower in Frankfurt.
Daniel Roland | Afp | Getty Images
Two months since UniCredit played its opening move to woo German lender Commerzbank, the lenders flaunted their financial strength as one of Europe’s largest banking mergers still hangs in balance.
Both banks reported third-quarter results on Wednesday, with UniCredit posting an 8% year-on-year hike in net profit to 2.5 billion euros ($2.25 billion), compared with a Reuters-reported 2.27-billion euro forecast. It raised its full-year net profit guidance to above 9 billion euros, from a previous outlook of 8.5 billion euros.
For its part, Commerzbank revealed a 6.2% drop in net profit to 642 million euros in the third quarter amid a broader drop in net interest income and higher risk provisions. The lender nevertheless said it has lifted its 2024 expectations for net interest and net commissions income, and confirmed its full-year forecast of achieving a net result of 2.4 billion euro, compared with 2.2 billion euros in 2023.
Speaking to CNBC’s Annette Weisbach, Commerzbank CEO Bettina Orlopp said the bank experienced a “very good quarter,” while acknowledging a clear impact on business from lower interest rates in Europe.
She stressed that Commerzbank was on a path of raising its share value through a blend of capital return and higher profitability and the expediency with which the lender hits its targets.
“We have a very good strategy in place, which is also delivering,” she said — as markets watch for whether the bank will assume a defense strategy to fend off takeover interest.
Commerzbank has so far shied from UniCredit’s courtship. When the Italian lender showed its hand by using derivatives to build a potential 21% stake in Commerzbank, the German lender appointed a new CEO and sharpened its financial targets. On Monday, the German bank said it had received regulatory approval to buy back 600 million euros ($653 million) in shares, due to kick off after the Wednesday earnings report and complete by the middle of February.
Yet Orlopp told CNBC that Commerzbank was not intrinsically opposed to a merger:
“We have nothing to be against, because there is nothing on the table. That’s very important to note. And we also always said we would be very open to discuss, if they had something coming on the table, we will carefully review that with our own standalone strategy and see where we can create more values in the interest of our stakeholders,” she said.
The German government has yet to bless the potential union, with Chancellor Olaf Scholz slamming that “unfriendly attacks, hostile takeovers are not a good thing for banks,” in late-September comments carried by Reuters.
The largest shareholder of Commerzbank, the Berlin administration retains a 12% stake after rescuing the lender during the 2008 financial crisis and divesting 4.5% of its initial position in early September.
But a potential schism at home could waylay Scholz’s ruling alliance from closely supervising the transaction, with coalition members due to hold scheduled talks later on Wednesday.
“Let’s put it this way: we wouldn’t be here if we hadn’t been invited to buy that stake. And it all started in a way that we thought was constructive,” UniCredit CEO Andrea Orcel told CNBC’s Charlotte Reed on Wednesday. CNBC has reached out to the German Ministry of Finance for comment.
Appetite for large European cross-border bank mergers has simmered since the controversial 2007 takeover and later evisceration of Dutch lender ABN Amro by a consortium led by the Royal Bank of Scotland — which brought both banks to collapse during the financial crisis. UniCredit CEO Andrea Orcel, then a senior investment banker at Merril Lynch, advised on the ABN Amro transaction — and has once more turned his eye to international ventures, after the Italian lender walked away from a domestic deal to acquire the world’s oldest bank, Monte dei Paschi, in 2021.
UniCredit is already present in Germany through its HypoVereinsbank branch — which Orcel said he sees, alongside Commerzbank, as “two mirror images.”
Last year, UniCredit purchased a nearly 9% stake of Greece’s Alpha Bank from the state-owned Hellenic Financial Stability Fund. On Tuesday, the Italian lender announced it completed acquiring a majority 90.1% interest in Alpha Bank’s Romanian business and plans to complete absorbing the entity in the second half of 2025.
With a common equity tier 1 ratio (CET 1) — a measure of a bank’s strength and resilience — above 16% in the first three quarters of this year, UniCredit appears equipped to weather the strain of a takeover. Last week, Fitch Ratings upgraded its rating on UniCredit’s long-term debt to BBB+ — just above the BBB grade of Italy’s sovereign bonds — citing the lender’s “multi-year long restructuring, balance sheet de-risking and materially improved loss absorption capacity.”
The ratings company noted that UniCredit’s acquisition of a 21% stake in Commerzbank had had no “immediate effect” on its ratings.
Orcel brushed off the exposure risks associated with its stake build in the German lender and a potential takeover:
“Our CET1 is a lot higher than the one Commerzbank has, [but] we need to look at liquidity, we need to look at everything else, like rating agencies. At the end of the day, I don’t think there is a concern there. If there was, we would know about it before we ever had moved,” Orcel noted, stressing UniCredit’s record in Germany:
“Unicredit went through a real difficult time through the [financial] crisis,” he said. “At no time did we squeeze Germany, at no time did we repatriate capital or liquidity from Germany, at no time did we ask for government support. Something that Commerzbank had to do.”
But the deal is not yet done — and Orcel said UniCredit will only march ahead “if it gives us the returns out investors expect, actually, they need to improve those returns meaningfully.”
Check out the companies making headlines in midday trading. Lululemon – The athleisure company saw shares plunging more than 11% after President Donald Trump’s imposition of tariffs on countries where the firm imports a big portion of its products. In 2024, Lululemon sourced 40% of its products from Vietnam, which was hit by a 46% tariff by the administration. Almost 90% of Lululemon’s products are made in Vietnam, Cambodia, Sri Lanka, Indonesia and Bangladesh. Deckers Outdoor – Shares of the footwear company plunged more than 14% following Trump’s reciprocal tariffs rollout. The Ugg maker has 68 supply chain partners in Vietnam and 125 suppliers in China. Nike – The athletic apparel stock declined 12.1% following the Trump administration’s wide-ranging tariffs upon major trading partners. Nike manufactures roughly half its footwear in China and Vietnam, which will be subject to tariff rates of 54% and 46%, respectively. Discount retail stocks – Shares of Five Below and Dollar Tree shed more than 27% and 9%, respectively, on the heels of the new reciprocal tariff announcement. Both companies are big sellers of imported goods, and Dollar Tree CEO Michael Creedon has said that the company might increase prices to offset the tariff impact. Bank stocks – Shares of several banks Bank stocks pulled back as traders reckoned with the potential economic fallout of Trump’s tariff policy. Shares of Goldman Sachs and Morgan Stanley each slid nearly 8%, while JPMorgan Chase , Bank of America and Citi fell more than 5%, 9% and 10%, respectively. Ford – The automaker’s stock declined nearly 4%. On Thursday, Ford announced that it’s offering employee pricing to all customers on multiple models in a program called “From America for America.” Trump’s 25% tariffs on imported vehicles went into effect Thursday. Big Tech stocks — Shares of mega-cap technology names plummeted amid investor concerns that the businesses will face pressures from Trump’s tariffs. Tesla declined nearly 5%, while shares of Amazon and Apple fell more than 7% and 8%, respectively. Alphabet shares also moved more than 3% lower. Semiconductor stocks – Shares of chipmakers also took a hit after the tariff announcement, even after the White House said that semiconductors wouldn’t be subject to the new levies. Shares of Nvidia and Advanced Micro Devices both fell more than 6%, while Broadcom declined more than 8% and Qualcomm slumped more than 9%. Microsoft – Shares shed about 3% after Bloomberg, citing people familiar with the matter, reported that the company is scaling back its data center projects around the world. RH – The luxury home furnisher nosedived 43.5%, on track for its worst day on record after fourth-quarter earnings and forward guidance came in weaker than expected. RH earned $1.58 per share, excluding items, on $812 million in revenue, while analysts polled by LSEG penciled in $1.92 per share and $830 million in revenue. CEO Gary Friedman told analysts that the company was operating within the ” worst housing market in almost 50 years .” Wayfair – Shares tumbled 25% on the back of Trump’s newly announced tariffs, with countries such as Vietnam, Thailand, Cambodia and the Philippines all receiving higher tariffs than the baseline 10%. During a February earnings call, Wayfair CEO Niraj Shah said that these aforementioned nations “have grown as places where folks have factories and where our goods are coming from.” Lyft – The ride-sharing stock dropped more than 9% after receiving a double downgrade to underperform from buy at Bank of America, citing increasing headwinds from autonomous vehicles. Lamb Weston – Shares gained more than 9% after the food processing company posted better-than-expected third-quarter results. Lamb Weston reported adjusted earnings of $1.10 per share on $1.52 billion in revenue, while analysts polled by FactSet were expecting 86 cents per share on $1.49 billion in revenue. — CNBC’s Alex Harring, Hakyung Kim, Yun Li and Lisa Kailai Han contributed reporting.
Check out the companies making headlines before the bell. Lululemon – Shares tumbled more than 12% on the heels of President Donald Trump’s new wide-ranging tariffs . According to an SEC filing , the company sourced 40% of its products from Vietnam in 2024 – a country that was slammed with a 46% tariff. Almost 90% of Lululemon’s products are made in Vietnam, Cambodia, Sri Lanka, Indonesia and Bangladesh. Nike — Shares slumped about 9% after the United States lifted tariffs Wednesday. Nike manufactures roughly half its footwear in China and Vietnam, which will be subject to tariff rates of 54% and 46%, respectively. Discount retailers — Dollar Tree and Five Below tumbled more than 10% and 15%, respectively. Dollar Tree CEO Michael Creedon previously said the company may raise prices on items to offset the impact of new U.S. tariffs. The two companies are big sellers of imported goods. Ford — The automaker slipped 2.3%. Reuters reported that Ford will offer employee pricing to all customers on multiple models to absorb tariff costs, in a program called “From America for America.” Big Tech — Shares of mega-cap technology companies such as Nvidia fell as investors worried that the businesses will come under pressure from President Donald Trump’s new tariff regime. Nvidia dropped more than 5%, as did Tesla . Shares of Amazon.com slid more than 6%. Apple declined by more than 7%. Microsoft — The tech stock declined 2.3%. Bloomberg released another report stating that the XBox and Windows company is scaling back data center projects in the U.S. and overseas. JPMorgan , Citi , Goldman Sachs , Morgan Stanley — Bank stocks retreated sharply early Thursday as investors weighed the economic fallout of Trump’s tariff policy. Shares of JPMorgan Chase were down 3.8%, while Citi, Goldman Sachs and Morgan Stanley all slid more than 4%. RH — The luxury home furnisher plunged 28% after posting weaker fiscal fourth-quarter earnings and first-quarter guidance than Wall Street had estimated. RH earned $1.58 per share, excluding one-time items, on $812 million in revenue in the fourth quarter, while analysts polled by LSEG had penciled in $1.92 per share and $830 million in revenue. CEO Gary Friedman acknowledged to analysts that the company was operating in the “worst housing market in almost 50 years.” Deckers Outdoor — The footwear company that makes Ugg boots sold off more than 12% after the Trump administration’s reciprocal tariffs rollout. Deckers has 68 supply chain partners in Vietnam and 125 suppliers in China. Wayfair — The furniture retailer weakened about 12% on the back of higher U.S. tariffs on goods from Cambodia, Vietnam, Thailand and the Philippines. CEO Niraj Shah said during an earnings call in February that the countries “have grown as places where folks have factories and where our goods are coming from.” — CNBC’s Alex Harring, Jesse Pound, Sarah Min and Sean Conlon contributed reporting
‘The Big Money Show’ co-hosts discuss buy now, pay later spending options and the impact it will now have on your credit score.
Small, everyday purchases like a meal from DoorDash are now able to be financed through eat now, pay later options — a practice that some experts deem “predatory.”
“You’ve got to have enough sense to not follow the urge to finance a taco, okay? You have got to be an adult,” career coach Ken Coleman told “The Big Money Show,” Wednesday.
“This is predatory, and it’s going to get a lot of people in deep trouble.”
DoorDash and Klarna are now partnering up to extend buy now, pay later options to consumers. (Reuters, Getty / Getty Images)
Financial wellness experts are continuously sounding the alarm to cash-strapped consumers, warning them of the devastating impact this financial strategy could have on their credit score as some lenders will begin reporting those loans to credit agencies.
Consumers may risk getting hit with late fees and interest rates, similar to credit cards.
“So your sandwich might show up on your FICO score, especially if you pay for it late,” FOX Business’ Jackie DeAngelis explained.
Major players like Affirm, Afterpay, and Klarna have risen to prominence at a time when Americans continue to grapple with persisting inflation, high interest rates and student loan payments, which resumed in October 2023 after a pause due to the COVID-19 pandemic.
Ramsey Solutions personal finance expert and ‘The Ramsey Show’ co-host George Kamel discusses the ‘buy now, pay later’ craze and the trend that celebrates the financial benefits of being childless.
“The Big Money Show” co-host Taylor Riggs offered a different perspective, suggesting that company CEOs have a “duty” to attract as many customers as they want.
“Unfortunately for me, this always comes down to financial literacy — which I know is so much in your heart about training people to save now by later,” she told Coleman, who regularly offers financial advice to callers on “The Ramsey Show.”
Coleman continued to come to the defense of financially “desperate” consumers, arguing that companies are targeting “immature” customers.
“I’m for American businesses being able to do whatever they want to do under the law. That’s fine. But let’s still call it what it is: it’s predatory, and they know who their customers are,” Coleman concluded, “And I’m telling you, they’re talking about weak-minded, immature, desperate people.”
FOX Business’ Daniella Genovese contributed to this report.