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Capital Markets

UniCredit advances – but must stay on its toes

Central and eastern Europe's leading institutions have been quick to praise UniCredit's acquisition of HVB, which creates the region's biggest bank. But, they warn, it had better stay on its toes, as rivals will look to profit from any loss of focus that the alliance brings.

Bergen: an opportunity
to gain market share?

WHEN DOES IT make sense to pay more than €15 billion for a bank principally to get access to its subsidiary, which operates outside its home market? For Italian bank UniCredit, the answer is when the subsidiary in question operates in central and eastern Europe, where banks have reported profits in the first half of 2005 up as much as 60% on the same period in 2004.

Although UniCredit has not bought Germany's HVB solely for its central European assets – since the acquisition also gives it access to the bank's German client base – it is HVB's ownership of Bank Austria Creditanstalt that has excited most interest.

With assets of €733 billion, the new bank will have more than double the total assets of its nearest competitors, and will enjoy a customer base of more than 28 million and more than 7,000 branches across 19 countries.

"The new group's CEE business will be run separately," says Dirk Albersmeier, head of M&A for Germany at JPMorgan, one of the banks advising HVB on the transaction.

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