"I just thought: Wow!"

Mr Kotzbauer, turbulent weeks lie behind you. In mid-September it was announced that the Italian bank UniCredit has bought shares in Commerzbank and is aiming for a full takeover. Where did the message reach you?
In the middle of a summer holiday, in Locarno on a campsite, where my wife and I made a stop with our camper van that day. I looked at my emails in the morning and just thought, Wow!

After that, it was probably no longer possible to even think of a holiday.
No, I spent two days on the phone at the lake, but then we ended our holiday. Anything else would have made no sense anyway.

How is it that everyone in the Bank seemed so surprised by UniCredit’s approach? This is not the first time Commerzbank has been traded as a takeover candidate.
The timing was surprising for us, not the general interest. I joined the Board of Managing Directors at the beginning of 2021, and over the past nearly four years, we have put the Bank in a completely different economic situation. At the end of 2020, Commerzbank wasn’t in a good place. This was also because we were busy with ourselves for a long time – a consequence of the merger with Dresdner Bank in 2009, which tied up our forces for almost the entire decade. Now, we are again strong in capital, have good earning power and can regularly return more and more capital to our shareholders. When you do a good job, it makes you more attractive – not only for employees and clients, but also for investors.

On 1 October, Bettina Orlopp replaced Manfred Knof, CEO of the Bank, and you have been appointed deputy CEO. What is the mood on the Board in the light of recent events?
The mood is focussed. We love working together as a team. It's fun, that's important. We won’t move away from what we started in 2021 and our strategy 2027 works already. The Bank is refocussing on what it was originally made up of. It was founded in 1870 by Hamburg merchants for a single purpose: to provide German corporate clients with loans and to accompany them in their expansion internationally. That was the case back then, and that is still the case today.

Is that really such a good idea? 1870 was a long time ago, things have changed.
Of course, a lot has changed since then, but that ethos has remained. I strongly believe in focus. Because focus creates excellence. If you don’t have a focus, you will be arbitrary. This is why we accompany our corporate clients in more than 40 countries around the world and have a market share in the financing of German foreign trade of around 30%. And we are building the bridge back to our home markets for international clients – in addition to Germany, also to Austria and Switzerland. Internationally, we are not involved in purely local business, for me that’s smart – we are focussed. This is the first pillar of our strategy. The second pillar is the business with small-business customers with sales of up to €15 million as well as with private customers at Commerzbank and Comdirect. As you can see: we have a clear strategy that we are convinced of and that is based on independence.

Shareholders could well imagine a merger between UniCredit and Commerzbank, and the prices of both banks have risen. Are the investors wrong?
We on the Board of Management have a fiduciary obligation to examine each proposal in an open-ended manner. But I would also like to make it quite clear that we have not yet had any offer from UniCredit. If a concrete proposal should reach us, then we will of course take a look at it. However, it is important for me to emphasise that a merger would not only concern our shareholders, but also all the others that are today called stakeholders. That includes our 42,000 employees, of whom we employ 28,000 in Germany. We have a social responsibility toward them and their families to secure their economic future. Every job in the financial centre of Frankfurt and in Germany as a whole also has a multiplier effect. A second important group are our clients. I have already explained that in the course of the merger with Dresdner Bank, we didn’t take care of our customers well enough for far too long.

You still cannot ignore your shareholders.
We do not intend to do that either. Incidentally, I say this out of my own interest: I am a Commerzbank shareholder. But I think that we must distinguish between the short and the long view. As a short-term shareholder, some may enjoy the current price increases, but in my view, the long-term perspective is always more useful. And in the long term, a shareholder is only satisfied if the return on shares is a very decent one and he receives attractive distributions over a long period of time. There, I’m all with Warren Buffett, the American star investor.

Does the long-term vision for a merged institution really have to be as bad as you claim? Former CEO Knof has repeatedly stressed how much we need genuine European banks. This would be the opportunity to create such a bank.
Manfred Knof has always rightly said that we need the Banking and Capital Markets Union in Europe and that we need to complete it to be able to compete internationally, with American banks. But that is precisely the point: we do not have this Union yet, for example, there is no common deposit guarantee in Europe – so one very basic pillar of a single European banking market is missing. A merger with UniCredit would essentially be a national consolidation. Essentially, HypoVereinsbank (HVB), a German subsidiary of UniCredit, would then be merged with Commerzbank. Regarding Europe and the banking union, this would not take us any further.

At least this Bank could operate at a lower cost.
That may be, but first of all, we would have to go through a long and certainly very costly phase of integration. And we have seen in Switzerland what happens when two banks come together. The acquisition of Credit Suisse by UBS primarily benefits third parties – for example Commerzbank. Many clients who previously did business with Credit Suisse and UBS are now looking for a new, second bank. So, with a merger, you don’t necessarily build market shares; the opposite may be the case. By the way, even at lower costs, fewer suppliers in the market do not necessarily mean lower prices for corporate clients, because competition is decreasing.

Bettina Orlopp pointed out that a merger with UniCredit could lead to a deterioration in Commerzbank’s rating. How serious would that be?
Commerzbank is currently awarded the “A” rating by the S&P agency, while UniCredit is awarded the “BBB” rating. If our note moves toward the lower UniCredit note, it would significantly increase our refinancing costs in financial markets, for example when issuing bonds. I also see a problem in a field that is very important to me personally: namely in our daily business with some tenders from large multinationals as well as in tenders for financing the green transformation. In this case, we might no longer be able to get involved in that. The differences in the rating between the two banks can also be seen in the light of the fact that Italian government bonds amounting to around €40 billion are in the books of UniCredit.

Are you stoking fear of a new euro crisis with that statement?
Not at all. I only point out facts, no more and no less. But if you are talking about the past, during the global financial crisis of 2008/2009 and even in previous crises, many international banks have reduced their activities in Germany and instead have concentrated on their home market. This is also a fact that should be considered. Corporate clients are particularly at disadvantage.

Nevertheless, UniCredit must be doing a lot of things right, otherwise it would not be in this position of strength.
UniCredit has its costs under control and has a very decent business in Eastern Europe, resulting in high margins. As Commerzbank, we are, of course, also an intensive observer of the German market and have seen that the banking centre of Munich has become significantly smaller since HypoVereinsbank was taken over by UniCredit in 2005. That is a substantial change.

Nevertheless, HVB does do business with small and medium-sized enterprises to a considerable extent. It cannot be said that the end of an independent Commerzbank would hit the small and medium-sized enterprises.
I did not say that either. I don’t want to get into the booking logic of UniCredit either, I’m not entitled to that. From our point of view, in Germany, the Volksbanken and Sparkassen are more likely to take care of loans for SMEs, which are often our main competitors. But despite all the appreciation for the competition, there are only a manageable number of large banks that can accompany German companies in expanding their business abroad.

Do you feel let down by the Federal Government in the current situation?
No, the government has clearly positioned itself by saying that it wants to keep its 12% stake in Commerzbank. The only thing that irritated me a little, was that the government was so surprised by the entry of UniCredit. The whole thing happened as part of a capital market transaction carried out by the responsible finance agency for the federal government. We also carry out such transactions for our clients – and the moments of surprise are limited.

You have been working for Commerzbank since 1990. Is this the most turbulent time of your career?
I wouldn’t say that. In the 1990s, the Cobra investor group became interested in Commerzbank, later we had the financial crisis, then the integration of Dresdner Bank, the merger talks with Deutsche Bank and then the Covid pandemic years. The only relatively quiet years were my first two when I was training as a banker.

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