Commerzbank’s Aggressive Payout Plan Raises the Hurdle for UniCredit’s Takeover Bid

Commerzbank pays €1.2bn dividend and pledges 100% payout to fend off UniCredit's exchange offer expiring June 16, as analysts see upside but credit risks loom.

The clock is ticking on UniCredit’s attempt to absorb Commerzbank. With the Italian lender’s exchange offer set to expire on 16 June, Germany’s second-largest listed bank has fired a decisive salvo in its defence: a record €1.2bn dividend that puts €1.10 per share into the hands of investors. The payout, delivered on Wednesday, is the centrepiece of a €2.7bn capital return programme for the 2025 financial year that also includes €1.5bn in share buybacks, together representing 100 per cent of adjusted net income.

Chief executive Bettina Orlopp is framing the full distribution as proof that shareholders are better off with the bank remaining independent. “If we are already returning every euro of profit, there is no need for a buyer,” the argument runs. The bank has pledged to maintain that 100 per cent payout ratio through 2028, locking in high expectations that will test management’s ability to deliver consistent earnings.

Operational targets under the “Momentum 2030” strategy provide the second line of defence. Commerzbank aims to achieve a return on equity of 21 per cent and a cost-income ratio of 43 per cent, ambitious benchmarks for a German lender of its size. First-quarter results for 2026 offered a taste of the progress: earnings per share rose to €0.84 from €0.73 a year earlier, even as revenues edged slightly lower.

The stock traded at €36.80 on Thursday, roughly 11 per cent below the median analyst price target of €41.50 and still shy of its 52-week high of €37.75. Barclays rates the shares “Overweight” with a €42 target. The relative strength index of 71 suggests the recent rally – the stock has climbed around 38 per cent year to date – is pushing into overbought territory, though momentum remains on the side of the bulls.

UniCredit currently holds 38.87 per cent of Commerzbank and is offering 0.485 of its own shares for each Commerzbank share. The board has urged shareholders to reject the proposal, pointing to the discount implied by the offer relative to independent valuations. Analysts broadly agree, with the consensus fair value leaving clear upside from current levels.

Yet the path to independence is not without hazards. The European Central Bank is widely expected to raise rates in June, which would support Commerzbank’s net interest income, but credit quality is a growing concern. Analysts project that the default rate among German small and medium-sized enterprises could exceed 2 per cent in 2026 for the first time since the financial crisis – a direct threat to the bank’s core lending business. The 16 June deadline will test whether Orlopp’s combination of record payouts, ambitious targets and cautious warnings can convince investors to stay the course.