(Bloomberg) -- UniCredit SpA should act quickly if it wants to be successful in a potential acquisition of Commerzbank AG, according to analysts at JPMorgan Chase & Co.
There are hurdles to overcome, such as indications from Commerzbank management that it would prefer to remain independent and press reports suggesting the German government was caught off guard by UniCredit’s move, analysts led by Kian Abouhossein wrote in a note Thursday.
UniCredit “would want to move sooner rather than later,” they said.
The Italian bank surprised investors this month by disclosing it had built a 9% stake in Commerzbank and indicating it may seek talks. Bloomberg News has also reported that Deutsche Bank AG is exploring options to make it harder for UniCredit to buy its smaller competitor.
The JPMorgan analysts said an acquisition of Commerzbank by UniCredit would have “some strategic merits,” but added that any transaction could still fail on price or lack of government support. Commerzbank shares have jumped about 25% since UniCredit unveiled its new holding, rising briefly above €16 euros on Wednesday for the first time since 2012.
An alternative merger between Deutsche Bank and Commerzbank would make strategic sense and would be in the best interest of both Deutsche Bank itself and of Germany, making it potentially a likely outcome, the JPMorgan analysts wrote.
Deutsche Bank would benefit from an increased market share in the German retail banking business, with a “combined double digit market share of loans and deposits in Germany.” It would also create a “better earnings mix,” giving Deutsche Bank more exposure to private banking and less to investment banking, the JPMorgan analysts said.
--With assistance from Steven Arons.
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