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Andrea Orcel plots UniCredit’s boldest move yet on Commerzbank

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Andrea Orcel plots UniCredit’s boldest move yet on Commerzbank

UniCredit’s announcement on Wednesday morning that it had built a 9 per cent stake in rival Commerzbank caught the German establishment by surprise. But the move was at least seven years in the making.

Shares in Commerzbank jumped 17 per cent as investors bet that the purchase would lead to a full-blown bid by UniCredit, which has been surrounded in takeover rumours since chief executive Andrea Orcel took charge more than three years ago.

The move paves the way for a deeper tie-up between the second-biggest listed lenders in Italy and Germany, potentially leading to one of the most significant cross-border mergers in European banking and kick-starting a much-anticipated consolidation wave across the continent’s fragmented banking sector.

“Orcel is making clear that UniCredit will be the largest consolidated bank in Europe — and that is what Europe needs,” said Cole Smead, chief executive of UniCredit shareholder Smead Capital Management.

Since the former Merrill Lynch and UBS dealmaker took over at UniCredit, he has done little to quash speculation he would embark on a major takeover. In May, Orcel told the Financial Times that “theoretically, most of the rumours are true inasmuch as, in every single market we look at every possible target”.

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The bank’s estimated €6bn of excess capital has only added to the talk.

In fact, a tie-up between UniCredit and Commerzbank has been discussed between the two sides on several occasions over the past few years, the FT has reported. And the Milan-based lender has discussed its interest in its German rival with German government officials on multiple occasions before this week, according to people with knowledge of the talks.

The deal is also viewed as the most likely in Europe by M&A bankers given the potential synergies between Commerzbank and UniCredit’s HypoVereinsbank German subsidiary.

UniCredit has requested permission from the European Central Bank to increase its Commerzbank stake to above 9.9 per cent and executives at the German lender were on Wednesday considering the approach, according to people briefed on internal discussions.

On Thursday morning, Orcel confirmed that UniCredit was considering increasing its stake and potentially merging with Commerzbank.

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“We think there is space given fragmentation of the market to add further value by consolidating,” he said in an interview with Bloomberg TV.

“If there is the basis to do that constructively and strengthen what we can provide to the German economy and Europe then that is a great move for UniCredit.”

While Orcel is the first chief executive at UniCredit to make a public move on the German lender, UniCredit executives first approached German officials about a potential deal as early as 2017. At that time, they decided not to pursue talks due to political opposition to cross-border deals in Germany and the Milan-based lender’s own restructuring plans.

Two years later, UniCredit under chief executive Jean-Pierre Mustier prepared a bid to take control of Commerzbank, which received a €23bn state bailout during the financial crisis.

The plan offered an alternative to the merger that the German lender was then discussing with its domestic rival Deutsche Bank.

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The idea was to combine Commerzbank with HypoVereinsbank, a more complementary fit than the Deutsche proposal that could mean fewer job cuts and branch closures. HypoVereinsbank, which is predominantly based in Bavaria and the Hamburg area, had less overlap with Commerzbank’s nationwide business.

Mustier was also prepared to consider listing the merged bank in Germany, a suggestion that proved politically toxic in Italy and hastened the Frenchman’s exit in 2021.

Talks over both deals fell through, however, and the German state was left with a roughly 16 per cent stake in the bank.

UniCredit revived its interest in Commerzbank soon after Orcel, who succeeded Mustier, aborted a deal to buy Italian lender Monte dei Paschi di Siena in late 2021.

Informal talks were planned between Orcel and Manfred Knof, his opposite number at Commerzbank, in early 2022. But they were abandoned after Russia’s full-scale invasion of Ukraine forced UniCredit to prioritise dealing with its Russian subsidiary.

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Under the original plans, a merger between Commerzbank and HypoVereinsbank would have created a powerhouse in Germany with €785bn in assets, 1,000 branches and 48,000 employees — second only to Deutsche Bank.

UniCredit was then prepared to amass a sizeable stake in Commerzbank and merge the German lender with HypoVereinsbank. The combined entity would have been based in Germany, while UniCredit would have maintained its headquarters and listing in Milan. Commerzbank would have retained a free float of shares listed on the Frankfurt stock exchange.

There is uncertainty about how UniCredit would seek to structure any deal this time around. But the Commerzbank deal follows a similar model UniCredit used when it bought a 9 per cent stake in Alpha Bank from the Greek state last year. Investors predicted the Alpha Bank purchase was a way of UniCredit testing the water in advance of building a bigger position over time — something that has yet to happen.

While there is expectation among some UniCredit investors and bank insiders that it could take the same tack with Commerzbank, there are potential roadblocks to a full takeover.

First, the German government — which is still the biggest shareholder in Commerzbank with a 12 per cent holding — could demand the lender retains a listing in the country as well as its own domestic supervisory board, which is currently chaired by Jens Weidmann, the former German central bank governor.

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“Germany needs to have domestic banks to finance its economy, the Mittelstand, and Commerzbank is key here,” said a banker who has experience negotiating with the German government. “This is not only a financial deal, it is a political deal and UniCredit will need to be careful how they deal with the German government.”

UniCredit also faces resistance from Germany’s powerful unions over potential job cuts and a shift in power from Frankfurt to Milan.

“We will fight such a transaction tooth and nail,” said Stefan Wittmann, a senior official at Germany’s services sector union and a Commerzbank supervisory board member. “If necessary, will also organise public protests.”

There is also a scenario where Deutsche Bank would renew interest in its domestic competitor and launch a rival bid, having failed to strike a deal five years ago. However, people close to Deutsche said the bank’s recovery in recent years made it much less interested in pursuing a deal.

Another potential hurdle for UniCredit is if its own investors — who have enjoyed a 230 per cent share price gain over the past three years — push back against the deal because of concerns it might affect the bank’s promise of returns to shareholders. The bank has committed to returning €8.6bn, its entire 2023 profit pool, to investors in the form of buybacks and dividends, and has built an expectation of further returns.

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Orcel has been clear with investors he would only pursue a transaction if it meets certain conditions, including a 15 per cent return on investment.

But his empire-building met with a muted response on Wednesday. Shares in UniCredit closed flat, giving the Milan-listed bank a market value of €59bn — three times that of Commerzbank. One top 10 shareholder told the FT that they did not expect the return policy to be affected even if UniCredit were to increase its stake in Commerzbank.

“It’s not an either-or,” they said. “On paper it’s the best match [for UniCredit]. It’s a good deal if they can clear it — but whether they can, we will see.”

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Texas flood death toll rises as search continues for victims – UPI.com

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Texas flood death toll rises as search continues for victims – UPI.com

A young girl carries a stuffed bear during a vigil for those lost in the Texas floods at the “Wall of Hope” fence memorial in Kerrville, Texas, on Friday. Photo by Dustin Safranek/EPA

July 12 (UPI) — More than 2,100 searchers from a dozen Texas Counties, other states and Mexico are continuing recovery efforts to find more victims of the deadly flash flooding in central Texas.

The confirmed-deaths toll rose to 129 with 170 still missing after officials in Travis and Kerr counties reported the recovery of more bodies, USA Today reported.

Most of the dead, 103, were found in Kerr County, including 36 children and 67 adults.

Among those missing is Volunteer Fire Chief Michael Phillips, whose rescue vehicle was swept away when flash flooding struck Burnet County.

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Search crews later found the vehicle, but Phillips was not inside.

“Specialist teams and equipment continue to deploy into the search area and work themselves to exhaustion or until nightfall in the effort to find him,” the Burnet County Sheriff’s Office announced on Saturday, according to USA Today.

Many states and Mexico sent entire first responder teams, including Indiana, which deployed personnel from 15 fire and police departments to help the recovery effort, The New York Times reported.

Many volunteer groups also traveled to Kerr County, where most search efforts are focused.

“It’s overwhelming to see so many people come and help in the search,” Kerrville, Texas, resident Amy Vanlandingham told The New York Times.

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“This is our town,” she said. “I do it so I can sleep.”

The Guadalupe River’s flash flooding during the early morning hours of July 4 decimated several local camps and other popular visitor destinations on one of their busiest days of the year.

The bodies of victims likely are situated in debris fields located along more than 100 miles of narrow and shallow valleys along the Guadalupe River in the mostly rural area of Texas Hill Country.

President Donald Trump, first lady Melania Trump and others visited Kerr County on Friday to assess the situation and better gauge the need for federal assistance.

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'Helping every dang soul': Beloved camp director was among those lost in Texas flooding

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'Helping every dang soul': Beloved camp director was among those lost in Texas flooding

Just after the summer session ended in late June, Heart O’ the Hills camper Sydney Sutton sent this photo to the camp’s director, Jane Ragsdale, who was killed in the July 4 flooding in Kerr County, Texas.

Erika Sutton


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Erika Sutton

Jane Ragsdale spent her summers by the Guadalupe, the very river that killed her a week ago today in the catastrophic July Fourth flood. Mention her name in Kerrville, Texas, this week, and folks tend to do two things: tear up and smile.

“I mean I can’t tell you how many people, acquaintances of mine say, ‘My dear, dear friend died.’ And then they said, ‘Did you know Jane Ragsdale?’ and I say, ‘Yeah, I did,’ ” said Karen Taylor, who lives in nearby Hunt, Texas. For her, Ragsdale was West Kerr County personified.

“Everybody’s friendly here, but she embodied that friendliness and generosity and love for others. I just can’t imagine life without her,” Taylor said.

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Ragsdale, who was in her late 60s, did a lot of things, but she’s best known as the owner and director of Heart O’ the Hills camp for girls. She was born into the business.

Jane Ragsdale ran the Heart O’ the Hills camp for girls in Kerr County, Texas. The camp was between sessions when the deluge hit. The only person killed there was Ragsdale.

Jane Ragsdale ran the Heart O’ the Hills camp for girls in Kerr County, Texas. The camp was between sessions when the deluge hit. The only person killed there was Ragsdale.

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Kerrville Daily Times

Her family bought a boys’ camp, Camp Stewart in 1966, the year Ragsdale turned 9. They bought Heart O’ the Hills about a decade later. Ragsdale helped run it from the start. By 1988, she was in charge.

Unlike Camp Mystic, the girls camp where at least 27 perished when the deluge hit, Heart O’ the Hills was between sessions. The only person killed there was Ragsdale.

“I’ve never in my life met someone like Jane,” said Kathy Simmons, who was a good friend of Ragsdale’s.

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Simmons was at Heart O’ the Hills picking up her granddaughter just the week before the flood, on the last night the camp was open.

“We had a candlelight service on the river at 9 p.m., and it was so beautiful. There were prayers and there were songs,” Simmons said. “Jane always led the children in songs. And every one of those girls and those counselors absolutely idolized her.”

After Heart O' the Hills camper Sydney Sutton sent a photo of herself to Jane Ragsdale, the camp director wrote this letter back to Sydney.

After Heart O’ the Hills camper Sydney Sutton sent a photo of herself to Jane Ragsdale, the camp director wrote this letter back to Sydney.

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Erika Sutton

The summer camps on the Guadalupe River in Kerr County are institutions. Generations of girls and boys go through them, often forming life-long attachments. Simmons considered Ragsdale the heart and soul of her camp, both spiritual leader and educator.

“I mean, Jane taught these girls how to change a tire, how to ride a horse, how to swim, how to shoot a gun, archery, cooking. I mean, the necessities of life,” Simmons said.

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In the off-season, when she wasn’t running the camp, Ragsdale often traveled to Guatemala, where she volunteered as an interpreter and a project organizer. It was mission work she started doing when she was 19 and studying journalism. She was a badass. But she was also about the sweetest person in town.

“Jane was one of the most genuine, kind, honest people and very intelligent, very warm,” recalls Mindy Wendele, president and CEO of the Kerrville Area Chamber of Commerce. “She had a smile that you knew Jane Ragsdale was smiling at you.”

Wendele grew up with Ragsdale, who she describes as a real go-getter: deeply involved in the Chamber of Commerce, a board member of the local liberal arts college, a class leader in high school.

“Anytime that we were out with Jane and her family at Heart O’ the Hills, we had just a fabulous time, just fabulous memories out there,” Wendele said.

Now, with some of the camps and almost all of the riverfront in ruins, Kerr County faces a monumental clean-up and rebuilding effort.

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Another reason to miss Jane Ragsdale.

“Oh, she would be out there volunteering. She would be out there clearing property,” Simmons said. “She would have her boots on, her gloves on, she would be helping every dang soul that needed to be helped.”

So the flood took one of Kerr County’s most capable citizens, but Ragsdale’s influence on the community and the girls who came through Heart O’ the Hills camp is going to last a long time.

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Video: Clashes After Immigration Raid at California Cannabis Farm

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Video: Clashes After Immigration Raid at California Cannabis Farm

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Clashes After Immigration Raid at California Cannabis Farm

Federal agents fired crowd control munitions at protesters who blocked a road outside of the farm. Some demonstrators threw objects at the agents’ vehicles.

Please make a path for emergency vehicles or chemical munitions will be deployed.

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