Germany's HVB Group on Sunday accepted a 15.4 billion euro (US$18.7 billion) takeover from Unicredito SpA of Italy, opening the way for Europe's biggest ever cross-border banking deal and the creation of a dominant player in the former communist east.
"The management board and the supervisory board of HypoVereinsbank approved the business combination," HVB said in a statement after a meeting of the company's executives in Munich.
The banks said Unicredito, Italy's largest bank, offered five of its shares for each HVB share, valuing the deal at 15.4 billion euros. It said it would also offer cash or stock for outstanding shares in HVB's Austrian and Polish units.
PHOTO: AP
Unicredito said its board backed the offer at a meeting in Milan. However, shareholders in both companies as well as regulators must still give their approval.
The agreement is a triumph for Unicredito chief executive Alessandro Profumo, who is to run the combined bank from Italy's financial capital, Milan.
Under his leadership, Unicredito has emerged as a force with the combination of seven Italian institutions, most of them regional savings banks, in 1998 and 1999.
It has since carried out a string of acquisitions in countries such as Poland, Slovakia and Romania, and also built up its asset-management arm with the acquisition of US fund manager Pioneer in 2000.
It moved for HVB, Germany's No. 2 lender, as the German bank struggled to cut costs at its domestic business after property writedowns last year pushed it to a net loss of 2.3 billion euros. Unicredito, which is currently headquartered in Genoa, earned 2.1 billion euros last year.
"We will become the first truly European bank," Profumo said in a statement which promised investors "compelling" growth in profits.
Acquiring HVB would give Unicredito a major foothold in Germany, the continent's largest economy, and neighboring Austria -- wealthy areas adjoining its prosperous north Italian heartland.
HVB had also pushed aggressively into eastern Europe, and the combination could face tough examination from regulators in countries such as Poland, where it will dwarf competitors.
However, the deal would be a further blow to the prestige of Germany's once-mighty financial industry. Banks such as Deutsche Bank AG have shelved once ambitious expansion plans to concentrate on painful restructuring at home to shore up earnings. Analysts expect more consolidation, including further foreign takeovers.
Shares in Commerzbank AG, itself tipped as a partner for Unicredito as far back as 2001, have risen in recent weeks following renewed speculation that it could be a target for rivals in France or Britain.
It could even darken the hopes of German Chancellor Gerhard Schroeder, under fire over stubbornly high unemployment, in expected fall elections if it leads to redundancies among HVB's 26,000 German employees -- almost half its total work force.
A statement from Unicredito made no mention of job cuts, but forecast savings of about 900 million euros by 2008 from merging overlapping units. While its retail, corporate and asset management business would be based in Milan, the investment banking division would go to Munich.
Vienna would be the headquarters for its central and eastern European business.
HVB chief Dieter Rampl, who would be chairman of the enlarged group, said it had found "the best partner" for both its shareholders and employees.
ROLLER-COASTER RIDE: More than five earthquakes ranging from magnitude 4.4 to 5.5 on the Richter scale shook eastern Taiwan in rapid succession yesterday afternoon Back-to-back weather fronts are forecast to hit Taiwan this week, resulting in rain across the nation in the coming days, the Central Weather Administration said yesterday, as it also warned residents in mountainous regions to be wary of landslides and rockfalls. As the first front approached, sporadic rainfall began in central and northern parts of Taiwan yesterday, the agency said, adding that rain is forecast to intensify in those regions today, while brief showers would also affect other parts of the nation. A second weather system is forecast to arrive on Thursday, bringing additional rain to the whole nation until Sunday, it
RETHINK? The defense ministry and Navy Command Headquarters could take over the indigenous submarine project and change its production timeline, a source said Admiral Huang Shu-kuang’s (黃曙光) resignation as head of the Indigenous Submarine Program and as a member of the National Security Council could affect the production of submarines, a source said yesterday. Huang in a statement last night said he had decided to resign due to national security concerns while expressing the hope that it would put a stop to political wrangling that only undermines the advancement of the nation’s defense capabilities. Taiwan People’s Party Legislator Vivian Huang (黃珊珊) yesterday said that the admiral, her older brother, felt it was time for him to step down and that he had completed what he
CONDITIONAL: The PRC imposes secret requirements that the funding it provides cannot be spent in states with diplomatic relations with Taiwan, Emma Reilly said China has been bribing UN officials to obtain “special benefits” and to block funding from countries that have diplomatic ties with Taiwan, a former UN employee told the British House of Commons on Tuesday. At a House of Commons Foreign Affairs Committee hearing into “international relations within the multilateral system,” former Office of the UN High Commissioner for Human Rights (OHCHR) employee Emma Reilly said in a written statement that “Beijing paid bribes to the two successive Presidents of the [UN] General Assembly” during the two-year negotiation of the Sustainable Development Goals. Another way China exercises influence within the UN Secretariat is
CHINA REACTS: The patrol and reconnaissance plane ‘transited the Taiwan Strait in international airspace,’ the 7th Fleet said, while Taipei said it saw nothing unusual The US 7th Fleet yesterday said that a US Navy P-8A Poseidon flew through the Taiwan Strait, a day after US and Chinese defense heads held their first talks since November 2022 in an effort to reduce regional tensions. The patrol and reconnaissance plane “transited the Taiwan Strait in international airspace,” the 7th Fleet said in a news release. “By operating within the Taiwan Strait in accordance with international law, the United States upholds the navigational rights and freedoms of all nations.” In a separate statement, the Ministry of National Defense said that it monitored nearby waters and airspace as the aircraft