Aurelio Medel (5 Días) | The head of Unicredit accelerates acquisitions to maintain profit growth and attempt to lead European consolidation. Andrea Orcel took over Unicredit with the stock below 10 euros and has driven it above 40. However, shares of the second Italian bank began to show signs of fatigue in the summer, and not only because it has already quadrupled its value. It is also due to the fact that the strategy focused on reducing the balance sheet is running out (the volume of credit has decreased by 5%) and cutting costs (15% fewer staff and 12% fewer offices). This is compounded by the aggressive interest rate cuts implemented by the European Central Bank: yesterday marked the fourth since June.
As a result, the 12-month Euribor, the main reference for banks, has dropped by 1.2 points this year. In this scenario of decreasing margins and exhausted cost-cutting, he has turned to his expertise in corporate operations. Orcel is riding a fixed-gear bicycle on a wire. If you stop pedaling, you fall. You either cut costs, or profits decline. But, confident in his skills and charm, he has taken on the even more difficult challenge of pedaling backward on the handlebars while juggling two balls in the air, switching hands. Can anyone do more? His audacity has led him to attempt to buy Commerzbank and Banca Popolare di Milano (BPM) to merge them with his units in Germany and Italy, simultaneously and against the opposition of three fundamental pillars: the boards of directors of the targets, their main shareholders, and the respective governments.
In the Eurozone Monopoly, the most interesting spots are the four major economies: Germany, France, Italy, and Spain. Interestingly, the banking sector is one of the few areas where Germany has hardly any pieces. Its largest player, Deutsche Bank, has struggled for years to find the right roadmap. In contrast, the unexpected Spain has had two players (Santander and BBVA) and another emerging player (CaixaBank) for two decades, thanks to an intense process of consolidation, which still has the fate of Sabadell at stake.
If BBVA succeeds, it will have more arguments to leap over the Pyrenees, but if it fails, both will find themselves in a position of weakness. For the Basque bank, it would be very tough to make the same mistake twice. Its managers would face significant scrutiny and would need a quick plan B to balance their balance sheet, which is too exposed to emerging markets like Mexico and Turkey. If they can’t come up with anything, Orcel could pull out the PowerPoint for Operation Colón, that strategic alliance conceived 25 years ago, which began with a share exchange between BBV and Unicredit, and whose “ultimate goal” was the merger, as Pedro Luis Uriarte said on October 25, 1999, four days after agreeing to merge with Argentaria. That operation never materialized. If the bid for Sabadell fails, BBVA might just be the third ball in tightrope walker Orcel’s act.
