HypoVereinsbank (HVB) and Unicredito appear to be moving closer to a possible merger, with the German and Italian banks agreeing on the distribution of posts and even on the price terms of the tie-up.
Is the end nigh for an independent Hypovereinsbank
Alessandro Profumo, the head of Italy's biggest bank in terms of market capitalization, would be chief executive of the joint company, and HVB chief Dieter Rampl would head the combined entity's supervisory or non-executive board, a source close to the negotiations told AFP news service.
Albrecht Schmidt (left) is likely to leave the bank while Dieter Rampl (right) would stay
German press reports have said that HVB's current supervisory board chief Albrecht Schmidt, who is believed to oppose the deal, would step down.
The two sides had also moved closer to agreeing a price, the source continued.
The merger would take the form of a share swap, with Unicredito offering five shares for every HVB share. That would correspond to a price of 22 euros per HVB share or just over 16 billion euros ($19.7 billion) in all.
No deal this week?
The source was nevertheless skeptical that a final deal would be announced this week, since a number of details still had to be settled.
Those details include the fate of HVB's highly profitable Austrian unit, Bank Austria Creditanstalt.
The business daily Handelsblatt reported on Monday that Unicredito may have to launch a public takeover offer to buy out the minority shareholders in the unit, which would add another two billion euros to the overall takeover price.
Financial Times Deutschland said that HVB would remain autonomous, constituting a separate division within the Unicredito group. The two banks had announced last week that they were in tie-up talks.
German government not opposed
If a deal does come about, it would be the biggest cross-border banking merger in Europe, creating the fourth-biggest bank in the euro area and the ninth biggest in Europe as a whole.
The German government signaled it had no objections to a possible tie-up between HVB and Unicredito.
German Finance Minister Hans Eichel doesn't seem too worried about the potential merger
Such a transaction would not "be a bad thing" in that it would contribute to the consolidation of the European banking sector, said finance ministry spokesman Stefan Giffeler.
But Giffeler refused to comment further, insisting that the talks were a matter for the banks alone.
On the Frankfurt stock exchange, HVB shares were little changed in mid-afternoon trading, changing hands at 19.78 euros, down 0.01 euros or 0.05 percent on the day.