The ANNOTICO Report

The frequent inaccurate portrayal of  Germany's economic successes and
Italy's struggle is again shattered by the rescue of a German bank by an
Italian bank. Obviously other German banks were not healthy enough to step
in.

Italy's UniCredito agreed to the €15.4billion (£10.3billion) takeover of
Germany's HVB in what will be the biggest crossborder deal yet seen between
two European banks.

The deal, will create the world's ninth-biggest banking group but is
expected to lead to about 9,000 job losses in an attempt to reap higher
than expected promised savings of almost €1billion a year by 2008.

HVB last year posted a net loss of €2.3billion, largely because of property
writedowns in Germany. UniCredito, based in Genoa, earned €2.1billion in
2004.
 

ITALIANS TAKE OVER HVB IN  €15BN DEAL

The Telegraph Group, UK
By James Moore,
Financial Correspondent
13/06/2005

Italy's UniCredito yesterday agreed the €15.4billion (£10.3billion)
takeover of Germany's HVB in what will be the biggest crossborder deal yet
seen between two European banks.

The deal, sealed yesterday afternoon following parallel meetings of the two
companies' boards, will create the world's ninth-biggest banking group but
is expected to lead to about 9,000 job losses in an attempt to reap higher
than expected promised savings of almost €1billion a year by 2008.

Restructuring the organisation will cost €1.35billion, much of which will
fund redundancy costs. UniCredito will exchange five of its shares for each
HVB share. It has also offered to buy out minority shareholders in HVB's
quoted subsidiaries Bank Austria and Poland's BPH for either shares or cash
for €3.8billion, taking the total size of the deal to €19.2billion.

The company claimed it had created "the first truly European" bank. Some
analysts also believe the move could trigger further consolidation in
Germany's punch drunk banking sector, dragged down by billions of euros of
non-performing loans.

As expected, UniCredito chief executive Alessandro Profumo will become
chief executive of the enlarged group and Dieter Rampl, HVB chief
executive, will be made chairman. One third of an expanded 24-strong board
of directors will be nominated by HVB.

However, almost half of the bank's 11-strong management committee will come
from HVB or its subsidiaries, including Erich Hampel, who will head the key
central European division, while Dr Stefan Hensche will head investment
banking.

The fast-growing Central European operations, headquartered in Vienna, are
key attractions for UniCredito, which has had to risk taking on HVB's
ailing German operations. Significantly, the retail banking operations will
be run by UniCredito's Roberto Nicastra with the Italians also holding the
post of finance director through Ranieri de Marchis.

A source close to UniCredito said: "You don't make money out of paying top
dollar to buy a good bank - the real opportunity is to buy a bank on the
turnaround and realise the upside."

The deal is not expected to complete until October. While reinsurer Munich
Re, which owns 22pc of HVB, has been supportive after it was reassured its
distribution arrangement with HVB would stay intact, others believe too
much attention has been given to carving up board positions. Concerns have
also been expressed at how successful execution of the takeover will be.

HVB last year posted a net loss of €2.3billion, largely because of property
writedowns in Germany. UniCredito, based in Genoa, earned €2.1billion in
2004.

It is the second cross-border European banking merger in the past year. HVB
has been advised by JP Morgan and Citigroup while UniCredito was handled by
Goldman Sachs and Merrill Lynch.

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