Unicredit poised to strike with rival Commerzbank bid if Deutsche Bank talks break down

Italian lender Unicredit could be poised to strike with a rival bid for Commerzbank should merger talks with Deutsche Bank break down.

Italy’s second-biggest bank is preparing a multi-billion-euro offer as Germany’s two biggest lenders continue talks, the Financial Times reported.

Read more: Deutsche Bank denies reports it could raise €10bn for Commerzbank merger

Deutsche Bank has reportedly faced troubles in its discussions and Unicredit has developed plans to buy a large stake in Commerzbank and merge it with another German lender under its ownership, HypoVereinsbank.

Deutsche Bank and Commerzbank began exploratory merger talks last month after Berlin signalled it would not object to any necessary cost cuts or job losses.

Berlin has pushed for the merger to create a national banking champion after becoming concerned over the health of both banks.

The merged bank would become the Eurozone’s second largest lender behind BNP Paribas, with around €1.9 trillion (£1.6 trillion) in assets and a market value of €25bn.

But the potential tie-up has faced opposition from trade unions as well as major investors.

Deutsche Bank shares also slid further following reports it had discussed raising up to €10bn fresh equity as part of the Commerzbank deal.

CMC Markets analyst Michael Hewson said a deal between Unicredit and Commerzbank “made more sense” but would face a number of obstacles.

He said: “Firstly it’s based on the current talks between Deutsche Bank and Commerzbank breaking down.

Read more: Entire Commerzbank board paid slightly more than just one Deutsche banker

“But even if that does happen – which seems likely given trade union opposition as well as the prospect of having to raise extra capital – they will also have to convince the German government, which owns a 15 per cent stake in the German lender.”

He added: “The bigger question is whether this is a wise move given the concerns about the Italian banking sector, the low profitability of the German banking sector, and the prospect that interest rates are likely to remain anchored to the floor for years to come.”