Italians help to break EU’s bank merger deadlock

By Aoife White

Date: 16/06/05

The pace of European banking consolidation picked up on Sunday (12 June) when Italy's biggest bank Unicredit announced plans to merge with Germany's HypoVereinsbank (HVB), creating the largest bank in Central and Eastern Europe.

Unicredit said the deal, worth €19.2 billion, would save the new group nearly €1bn by 2008, as it cuts costs and boosts revenue in fast-growing markets in Eastern Europe. HVB owns banks from the Balkans to the Baltic states but its core business is in Germany where it is second only to Deutsche Bank. Unicredit is hoping to tempt HVB shareholders with a five-for-one share offer and wants to pay cash for shares in HVB's subsidiaries, Bank Austria and Poland's BPH. Unicredit will seek the backing of its own shareholders on 27 July before launching a formal offer in August. The deal might not be completed until early October and it will also need to be cleared by anti-trust and banking supervisors.

The banking sector reports fewer cross-border mergers than other areas of business activity, with most deals happening between neighbouring countries.

The European Commission is currently looking at possible obstacles and plans to present a report to finance ministers at the informal Ecofin in Manchester in September.

Article reports on the merger between Italy's biggest bank, Unicredit, with Germany's HypoVereinsbank (HVB), creating the largest bank in Central and Eastern Europe, 12 June 2005.