Commerzbank Announces Share Buyback, Pledges Increased Payouts to Counter UniCredit Threat
Commerzbank AG has unveiled plans for a share buyback of up to €400 million and a dividend proposal of €0.65 per share at its upcoming AGM. These actions aim to enhance capital return and safeguard the bank from a potential takeover by UniCredit SpA.
In a statement released Friday, Commerzbank CEO Bettina Orlopp emphasized the bank's commitment to increasing payouts in the future. The total payout for last year's profits will amount to €1.73 billion.
The announcement has sent Commerzbank shares surging as much as 2.4% to €18.80, their highest level since August 2011. The stock has gained nearly 20% year-to-date.
Orlopp's announcement is part of her strategy to bolster Commerzbank's independence amidst UniCredit's growing stake in the company. The Italian bank is reportedly considering a takeover bid.
"A high share price is always the best defense against a takeover," said Andreas Plaesier, analyst at Warburg Research.
Commerzbank's profitability has also seen a significant boost, rising 20% to €2.68 billion last year, surpassing analyst expectations. The bank is targeting a return on tangible equity (ROTE) of 12.3% by 2027.
While Orlopp is expected to announce job cuts as part of her profitability drive, large-scale deals are unlikely, according to Bloomberg News.
"Commerzbank is on the right track," said Tobias Lukesch, analyst at Kepler Cheuvreux. "The bank will likely present higher targets for profitability and payouts at its investor day next month."