"That’s not what I’d call failure"

• Commerzbank expects Unicredit to become its majority shareholder and is now relying on constructive talks.
• Kotzbauer considers the bank successful and does not view its defensive efforts as a failure.
• He argues that Commerzbank’s international presence is crucial for German corporate clients and should be preserved.

Mr Kotzbauer, after two years of takeover battle, Commerzbank has announced it will enter “constructive talks” with Unicredit. Have you resigned yourself to your fate?
I wouldn’t put it that way. But as the management board of Commerzbank, we must acknowledge that – subject to approval by the European Central Bank – we now have in Unicredit a majority shareholder that holds just under half of our shares. The task now is to work together in constructive talks to develop a shared view of the future. In doing so, we must consider the interests of all stakeholders: including Unicredit, and the other shareholders, then of course our employees, and naturally our customers. Anything else would be unprofessional.

So, the defensive strategy that the board has been pursuing for the past two years has failed?
That depends on your perspective. The mandate of any management board is to increase the value of a bank for all parties involved. When I look at key figures such as profit, capital strength, share price performance, as well as employee and customer satisfaction, I can say with confidence: this is the most successful Commerzbank we’ve seen in a long time. That’s not what I’d call failure.

You don’t feel you have anything to reproach yourselves for, no mistakes?
Who doesn’t make mistakes? It goes without saying that you must always question yourself. But what was within our power we have done very successfully.

At times, the relationship between Unicredit and Commerzbank seemed poisoned. How is the constructive dialogue you talk about supposed to work?
I advocate taking the emotion out of it. Incidentally, that’s also what our customers want, as I know from many conversations. What matters now is to develop an even stronger Commerzbank. Our employees also expect this: without them we will not achieve this goal. We now want to give this dialogue time, space, and above all the necessary calm. I believe Unicredit sees it in a similar way.

Do they? Unicredit CEO Andrea Orcel has very clear ideas about what a merged bank should look like. Is he really prepared to engage in open talks?
I am confident, because anything else would destroy value. And nobody wants that.

In an F.A.Z. interview as recently as May you used strong language and said that Unicredit’s plan would tear Commerzbank apart.
Our view of the plan communicated by Unicredit in April is unchanged. It was drawn up without any insight into our organisation and the processes that make our business model successful. Now it is the professional responsibility of the boards of both banks to look ahead in a clear and constructive manner to develop a solution that creates value.

For a long time, Commerzbank’s management board gave the impression that this was a hostile takeover. Has that suddenly changed?
For me, it’s no longer a question of whether it is a hostile or friendly takeover. What matters is that we build a shared perspective for the future based on facts. Our CEO, Bettina Orlopp, and Andrea Orcel are in contact about this. But please do not expect me to share any details with you now.

We would, however, like to know more precisely what this shared future should look like in practice. For example, what will happen to the employees?
As part of our strategy planning, we have clear agreements, covering both headcount reduction targets and protection mechanisms for employees. Currently there is nothing more to be said about that.

Are there other things that, for you, are non-negotiable? What about Frankfurt as the headquarters? Will it be retained?
Please understand that I cannot pre-empt the talks. However, I do want to make one fundamental point: even though we have a majority shareholder, we – like the management board of any listed company – are equally accountable to all shareholders. And ultimately, it is also about developing a sustainable model with which the Bank can continue to support the German economy.

That sounds good. But what does that mean in concrete terms?
As someone who has been responsible for corporate clients for many years, this is very important to me: the German economy is not only strongly export-oriented, but also highly internationalised. That means our customers are present on the ground abroad and need the support of a home bank in doing so. I always talk about building a bridge abroad and back again. In my view, it doesn’t work without that bridge.

Andrea Orcel seems to see it differently. He is envisaging larger cost cuts in Commerzbank’s international business.
Two points on that. A cost reduction of around 20 percent in annual expenses by 2028, as set out by Unicredit in its strategy presentation, cannot be achieved solely through cuts in the international business. It would also mean massive cuts in the domestic business. More importantly, though: in a merger the goal must surely be to bring your own strengths to the table. And in the case of Commerzbank, one of those strengths is accompanying German companies around the world.

Unicredit says that this type of business could just as well be handled with local partner banks.
That is exactly what I don’t believe. From 2010 to 2013 I worked for Commerzbank in Shanghai. At that time, there were several periods of liquidity shortages in the local banking system – meaning banks were very cautious in extending credit. As a German mid-sized company, you suddenly find yourself quite abandoned if, in such moments, you rely on local partner banks. Because they then primarily turn their attention to Chinese companies. Therefore, it makes a big difference whether your German house bank is on the ground locally or not. In my view, that is a major competitive advantage for Commerzbank. You shouldn’t simply give that up.

Nevertheless, many of the Mittelstand are wondering whether, given the current unrest, they should remain loyal to you.
Fortunately, what I’m seeing is quite the opposite: the loyalty of our corporate clients is really very high. Of course, the dispute with Unicredit comes up in almost every conversation, but we cannot see any sign in the figures that our customers are turning away from us. On the contrary: we have now been voted Germany’s best corporate clients bank for the second time in a row.

Does that implicitly mean that the Mittelstand are reducing their business with Unicredit’s subsidiary Hypovereinsbank? Some are customers of both banks and need to reduce their dependency.
I don’t want to comment on Hypovereinsbank. But of course, we see that other competitors are trying to use the situation to their advantage. That is why it is now important to take decisions quickly and to be able to clearly demonstrate to customers the benefits of cooperation between Commerzbank and Unicredit. A long period of uncertainty would, in my view, not only harm Commerzbank, but also Hypovereinsbank.

Should the federal government also decide soon whether it wants to retain its roughly 13 percent stake?
That is entirely in the hands of the government. I share the view of our chairman of the supervisory board, Jens Weidmann, that the federal government should not withdraw in the current phase. It is also in the government’s interest to ensure that the German Mittelstand can continue to operate successfully.

Now you’re stirring up unrest.
I’m sticking to the facts.

How do you generally assess the situation of the German economy, what are you hearing from your customers?
Companies in Germany remain under pressure. The sentiment among the Mittelstand is predominantly poor. I’ve been in this business for more than 30 years, and I cannot remember a comparable situation. The willingness to invest in Germany has clearly declined, although the latest economic data provides a little hope. Politics has so far not moved things forward in the way many of our corporate clients had hoped.

Where is the bottleneck?
Not enough has happened that is directly tangible. We have not made progress in cutting bureaucracy. And on infrastructure, too, progress is too slow – whether you look at transport routes, digital infrastructure or energy security. Germany is competing internationally, and if we don’t see improvements here soon, we will no longer be an attractive business location. And yes, we also need to work more to maintain our prosperity. One thing does give me hope, though: I believe that the willingness of companies and employees to change things is there, and we have entrepreneurs in this country who roll up their sleeves and strongly identify with Germany as a business location.

Mr Kotzbauer, you have spent your entire professional life at Commerzbank. After a merger, many board members do not remain in office. Can you even imagine working somewhere else?
That question does not arise for me at the moment.

That sounds like a stock phrase.
But it really is the case. I think you must separate the personal from the bank. This Bank has given me so much over the past 36 years. But right now, it’s not about me, it’s about Commerzbank.

© With the kind permission of the Frankfurter Allgemeine Sonntagszeitung (F.A.S.)