UniCredit Drops out of Berlin Bank Auction
Published April 11th, 2007
UniCredit has dropped out of an auction for a Berlin community lender in the face of competition from state-owned banks determined to stop the it from falling into private hands, sources close to the matter said.
The auction of Landesbank Berlin is the first-ever sale of a German savings bank — local state-owned lenders with a loyal customer base — in which private-sector commercial banks can bid.
The city of Berlin announced that seven would-be buyers had joined the second round of bidding for the group which one source said carried a price tag of more than 4 billion euros ($5.4 billion).
UniCredit, however, is unwilling to trump the group of German savings banks who have entered the second round and is out of the race.
UniCredit’s departure now leaves Commerzbank as the only private commercial bank in the auction.
“The savings banks want to keep Landesbank Berlin in the family,” said one source.
The Italian bank’s chief executive Alessandro Profumo recently hinted as much when he ruled out paying a “high political premium.”
Quitting the auction gives UniCredit a free hand to look elsewhere after it asked shareholders to allow it hike its capital by up to 7 billion euros for acquisitions.
