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What buying Commerzbank would mean for UniCredit and German banks

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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.

UniCredit's bid for Commerzbank is next 'logical step' for the bank's strategy, analyst says

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.

Right fit for UniCredit?

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.

UniCredit's Orcel is targeting Commerzbank at the 'best moment,' analyst says

What does it mean for the sector?

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.

Will Deutsche Bank swoop?

Deutsche Bank, which was still seen as the prime contender to take over Commerzbank following an abrupt collapse of initial talks in 2019, is said to be mounting its own defense strategy in the wake of UniCredit’s stake.

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.

ECB has no grounds to block UniCredit's higher Commerzbank stake: Federated Hermes

However, Deutsche Bank could put on a “brave face,” Alloatti suggested, and consider another target such as ABN Amro. The Dutch bank, which was also bailed out during the 2008 financial crisis by the state, has been the subject of acquisition speculation.

“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.

What’s next?

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.

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Apple iPhone assembly in India won’t cushion China tariffs: Moffett

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Street's biggest Apple bear says a production move to India is unrealistic

Leading analyst Craig Moffett suggests any plans to move U.S. iPhone assembly to India is unrealistic.

Moffett, ranked as a top analyst multiple times by Institutional Investor, sent a memo to clients on Friday after the Financial Times reported Apple was aiming to shift production toward India from China by the end of next year.

He’s questioning how a move could bring down costs tied to tariffs because the iPhone components would still be made in China.

“You have a tremendous menu of problems created by tariffs, and moving to India doesn’t solve all the problems. Now granted, it helps to some degree,” the MoffettNathanson partner and senior managing director told CNBC’s “Fast Money” on Friday. “I would question how that’s going to work.”

Moffett contends it’s not so easy to diversify to India — telling clients Apple’s supply chain would still be anchored in China and would likely face resistance.

“The bottom line is a global trade war is a two-front battle, impacting costs and sales. Moving assembly to India might (and we emphasize might) help with the former. The latter may ultimately be the bigger issue,” he wrote to clients.

Moffett cut his Apple price target on Monday to $141 from $184 a share. It implies a 33% drop from Friday’s close. The price target is also the Street low, according to FactSet.

“I don’t think of myself as the biggest Apple bear,” he said. “I think quite highly of Apple. My concern about Apple has been the valuation more than the company.”

Moffett has had a “sell” rating on Apple since Jan. 7. Since then, the company’s shares are down about 14%.

“None of this is because Apple is a bad company. They still have a great balance sheet [and] a great consumer franchise,” he said. “It’s just the reality of there are no good answers when you are a product company, and your products are going to be significantly tariffed, and you’re heading into a market that is likely to have at least some deceleration in consumer demand because of the macro economy.”

Moffett notes Apple also isn’t getting help from its carriers to cushion the blow of tariffs.

“You also have the demand destruction that’s created by potentially higher prices. Remember, you had AT&T, Verizon and T. Mobile all this week come out and say we’re not going to underwrite the additional cost of tariff [on] handsets,” he added. “The consumer is going to have to pay for that. So, you’re going to have some demand destruction that’s going to show up in even longer holding periods and slower upgrade rates — all of which probably trims estimates next year’s consensus.”

According to Moffett, the backlash against Apple in China over U.S. tariffs will also hurt iPhone sales.

“It’s a very real problem,” Moffett said. “Volumes are really going to the Huaweis and the Vivos and the local competitors in China rather than to Apple.”

Apple stock is coming off a winning week — up more than 6%. It comes ahead of the iPhone maker’s quarterly earnings report due next Thursday after the market close.

To get more personalized investment strategies, join us for our next “Fast Money” Live event on Thursday, June 5, at the Nasdaq in Times Square.

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Warren Buffett’s top stock picks come with 15% income bonus in new ETF

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Invest like Buffett: VistaShares CEO on new ETF that follows the investor

In a year that hasn’t been kind to many big-name stocks, Warren Buffett’s Berkshire Hathaway is standing near the top. Berkshire shares have posted a 17% return year-to-date, while the S&P 500 index is down 6%.

That performance places Berkshire among the top 10% of the U.S. market’s large-cap leaders, and the run has been getting Buffett more attention ahead of next weekend’s annual Berkshire Hathaway shareholder meeting in Omaha, Nebraska. It’s also good timing for the recently launched VistaShares Target 15 Berkshire Select Income ETF (OMAH), which holds the top 20 most heavily weighted stocks in Berkshire Hathaway, as well as shares of Berkshire Hathaway. 

Berkshire is currently the biggest holding in the ETF, at 10.6% of the fund. Other top holdings in the ETF from among the ranks of Berkshire’s biggest bets include Apple, American Express, Kroger, VeriSign, Bank of America, Citigroup, Visa and of course Coca-Cola, a long time favorite of the man known as the Oracle of Omaha.

“It’s a really well-balanced portfolio chosen by the most successful investor the world has ever seen,” Adam Patti, CEO of VistaShares, said in an appearance this week on CNBC’s “ETF Edge.”

Berkshire’s outperformance of the S&P 500 isn’t limited to 2025. Buffett’s stock has tripled the performance of the market over the past year, and its 185% return over the past five years is more than double the performance of the S&P 500.

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Berkshire Hathaway is one of 2025’s top performing stocks.

In addition to this long-term track record of success in the market, Berkshire Hathaway is getting a lot of attention right now for the record amount of cash Buffett is holding as he trimmed stakes in big stocks including Apple, which has proven to be a great strategy. The S&P 500 has experienced extreme short-term volatility since President Donald Trump’s inauguration on January 20. Even after a recent recovery, the S&P is still down 8% since the start of Trump’s second term.

“The market has been momentum driven for many years, the switch has flipped and we’re looking at quality in terms of exposure, and Berkshire Hathaway has performed incredibly well this year, handily outperforming the S&P 500,” said Patti.

Berkshire Hathaway famously doesn’t pay a dividend, with Buffett holding firm over many decades in the belief that he can re-invest cash to create more value for shareholders. In a letter to shareholders in February, Buffett wrote that Berkshire shareholders “can rest assured that we will forever deploy a substantial majority of their money in equities — mostly American equities.”

The lack of a dividend payment has been an issue over the years for some shareholders at Berkshire who do want income from the market, according to Patti, who added that his firm conducted research among investors in designing the ETF. “Who doesn’t want to invest like Buffett, but with income?” he said.

So, in addition to being tied to the performance of Berkshire and the stock picks of Buffett, the VistaShares Target 15 Berkshire Select Income ETF is designed to produce income of 15% annually through a strategy of selling call options and distributing monthly payments of 1.25% to shareholders. This income strategy has become more popular in the ETF space, with more asset managers launching funds to capture income opportunities and more investors adopting the approach amid market volatility.

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More Americans buy groceries with buy now, pay later loans

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People shop for produce at a Walmart in Rosemead, California, on April 11, 2025. 

Frederic J. Brown | Afp | Getty Images

A growing number of Americans are using buy now, pay later loans to buy groceries, and more people are paying those bills late, according to new Lending Tree data released Friday

The figures are the latest indicator that some consumers are cracking under the pressure of an uncertain economy and are having trouble affording essentials such as groceries as they contend with persistent inflation, high interest rates and concerns around tariffs

In a survey conducted April 2-3 of 2,000 U.S. consumers ages 18 to 79, around half reported having used buy now, pay later services. Of those consumers, 25% of respondents said they were using BNPL loans to buy groceries, up from 14% in 2024 and 21% in 2023, the firm said.

Meanwhile, 41% of respondents said they made a late payment on a BNPL loan in the past year, up from 34% in the year prior, the survey found.

Lending Tree’s chief consumer finance analyst, Matt Schulz, said that of those respondents who said they paid a BNPL bill late, most said it was by no more than a week or so.

“A lot of people are struggling and looking for ways to extend their budget,” Schulz said. “Inflation is still a problem. Interest rates are still really high. There’s a lot of uncertainty around tariffs and other economic issues, and it’s all going to add up to a lot of people looking for ways to extend their budget however they can.”

“For an awful lot of people, that’s going to mean leaning on buy now, pay later loans, for better or for worse,” he said. 

He stopped short of calling the results a recession indicator but said conditions are expected to decline further before they get better.  

“I do think it’s going to get worse, at least in the short term,” said Schulz. “I don’t know that there’s a whole lot of reason to expect these numbers to get better in the near term.”

The loans, which allow consumers to split up purchases into several smaller payments, are a popular alternative to credit cards because they often don’t charge interest. But consumers can see high fees if they pay late, and they can run into problems if they stack up multiple loans. In Lending Tree’s survey, 60% of BNPL users said they’ve had multiple loans at once, with nearly a fourth saying they have held three or more at once. 

“It’s just really important for people to be cautious when they use these things, because even though they can be a really good interest-free tool to help you kind of make it from one paycheck to the next, there’s also a lot of risk in mismanaging it,” said Schulz. “So people should tread lightly.” 

Lending Tree’s findings come after Billboard revealed that about 60% of general admission Coachella attendees funded their concert tickets with buy now, pay later loans, sparking a debate on the state of the economy and how consumers are using debt to keep up their lifestyles. A recent announcement from DoorDash that it would begin accepting BNPL financing from Klarna for food deliveries led to widespread mockery and jokes that Americans were struggling so much that they were now being forced to finance cheeseburgers and burritos.

Over the last few years, consumers have held up relatively well, even in the face of persistent inflation and high interest rates, because the job market was strong and wage growth had kept up with inflation — at least for some workers. 

Earlier this year, however, large companies including Walmart and Delta Airlines began warning that the dynamic had begun to shift and they were seeing cracks in demand, which was leading to worse-than-expected sales forecasts. 

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