UniCredit S.p.A. ($UCG)

All right. Good morning, everyone, and welcome to the second day of the Morgan Stanley Financial Conference. And I want to thank Andrea Orcel, CEO of UniCredit for being here and for opening our second day. And as usual, let's start from the polling question. If we can get it -- there we go.

So what is the best M&A scenario? From here, tender offer on Commerzbank with a premium to secure ownership, reaching about 30% stake in Commerzbank and purchasing shares on the open market or reaching 30% stake, but then focusing on UniCredit Unlimited or finally focusing on M&A elsewhere. All right. more divided than I thought. So clearly, this is very topical. But yes, we are going to keep you on your toes until the very end. And so we will start from UniCredit Unlimited, if that's okay. So my first question is going to be indeed on the plan. You set out a clear ambition to grow on your core markets and doubling down on transformation. And so can you highlight the key shifts vis-a-vis Unlocked? And can you elaborate on what you will be doing differently in the different regions?

Thank you, Noemi. I actually thought the question should have been asked do no M&A at all. It would have taken 80% of the answers, but -- so Unlimited. So if you look at UniCredit Unlocked, it was at the time a -- let's call it, bold, but conviction that UniCredit could be much better, and we wanted to move from laggard to leader and become a benchmark for the peer group, and we did that. It was particularly focused on unlocking value and it was focused on profitability and efficiency as main drivers. As we reached the end on Unlocked, Unlimited is quite different as we aim higher. The first thing that is different is how we approach the plan, and the plan was approached saying we need to transcend the boundaries. The world is changing. We cannot consider these restrictions as a binding progress. And the second thing that we try to say is in 5 years, the world will be very different. The competitive environment will be very different, and we need to be in a position to compete and win not only with legacy banks, but also with hyperscalers, fintechs and any other competitor in the financial services space. So these are the feeling. And obviously, financially, we move from profitability and efficiency to profitable growth and that is a big move. If you look at the 2 levers of Unlimited, we have the lever 1, Unlimited Acceleration. That lever strive to grow net revenues by 5% compounded over the next 3 to 5 years. We have a granular plan with all the items to do so. We've been prepared for 3 years to do that. The people, the training, the models, the technology, the AI, and this is what we are trying to achieve. As we achieve it, it's not an undifferentiated growth because, number one, we're very focused on profitability and risk. So margin, margin, margin, margin. Secondly, we target the growth across client segments where we think there is an excellent opportunity for us and products where we think we have higher market share. Consumer, less mortgages, small companies credit, less large. So this is a mixed issue as well. With respect to the second lever, Unlimited transformation or transformation 2.0, it is predicated on continuing what we have done in Unlocked, where we have declined our cost 1% every year. So very progressive, very constructive, but continuous. And we are now confident we're going to do that again for the next 3 to 5 years. How are we going to do that? Exactly as we did before, continuing to review the entire chain and machine behind the front end. Actually, the front end is growing, not reducing, significantly growing. But as we review the organization, the process, the way of working, as we put technology to work as we do nearshoring to a greater extent, we now have AI that is allowing us to, with the same work, get much greater impact in terms of what we can achieve because of the impact it has on our processes, et cetera, et cetera, and we can talk about that separately. So when you put those 2 together, then our level of confidence is very high, particularly because like Unlocked, the plan was developed by our people first. We spent an enormous amount of time engaging. And if you were to go through our ranks, everybody knows what it is. Everybody knows what they need to do. Everybody is excited to aim for a decade of unlimited growth and beat the competition. And so that is the core of what we're trying to do, and it will result in our net income growing high single digits, our distributions to be there and maintaining the ROTE actually not at 20%, but increasing it at 25%. Now if we do that, we will be in a sweet spot where growth and distribution, if you look at the combination, it's unmatched by anybody else with the current plan, and that's where we want to land.

Thank you. And talking about a changing world. Investors have been worried about AI and the impact on the bank's profitability and asset quality. So how do you think this will help UniCredit? And do you see this as a threat or an opportunity for the sector?

So I think for us, we are convinced that AI is a big opportunity and not a threat. And I would say the following thing about AI. First of all, AI is not an end in itself. AI is a tool. If it is a tool, you need to be very clear and need to be very convinced what you want to work to use it for. And then you need to be ready to take the very difficult decisions and to execute with determination its rollout. It seems very superficial, but I can tell you it's not easy. In practice, can you completely redesign and get efficiency well above 50% on the corporate lending process, which banks use with hundreds of people on transaction monitoring or on KYC or on onboarding or on payroll or -- and I can continue. Yes, you can. However, it requires you, number one, to wanting to do it because the impacts are difficult and the engagement with all the constituency is difficult. Secondly, you need to do the hard work of redesigning the entire process. Thirdly, you need to find a way to reallocate, retrain, upskill, et cetera, all the people that are getting loose from that, which is why our transformation 2.0 is connected to the acceleration of the top line, where we're hiring thousands of people more, not really hiring because a significant portion of that is an assumption of redeploying of people that may be in corporate lending to be in the corporate origination processes or in the corporate on the front line. So you need all these blocks to be there and you need to have all the organization excited to do it. You can't do it top down because it's very democratic and it's not easy. But if you can do that, I think that the impact on efficiency is significant. We are quantifying it at the moment at about over 5 years effectively EUR 400 million to EUR 500 million net cost reduction net because the growth with inflation, with wages, with investment is a lot more. And we are quantifying it on the top line with this productivity gain on penetration, on segments, et cetera, et cetera. Now the negative that is perceived of AI is the client part of the negative, i.e., clients will use AI to disintermediate bank on deposit, to disintermediate bank or crush the margin on asset management, et cetera. It may well be, but it will take time. It's adoption. And I always say that I have Copilot, I have Gemini, I have Perplexity. How much do I use it? Little. I'm a prehistoric person. It takes time for me to get to use it. My daughter at 15 just uses that. So -- but who has the money, who has the deposit, my generation. So it takes time. We have had AI impact through robo-advisory, et cetera, for a while, and it hasn't destroyed the economics. So we do think if you take 5 years' time, will it gradually or exponentially get to that? Yes. If you look at 1, 2 years' time, we don't think so, and we are not seeing any evidence of that. In 5-year time, if we have done all the things we need to do on the positive side of AI, on the efficiency, on the productivity, et cetera, we will be ready to take that on. And if other organizations have not done all they need to do on efficiency and productivity, we will be able to disintermediate them. So we see that as an opportunity, and we have quantified the impact it's an average, and it can be more or it can be less with what we're going to do on the revenue side and the efficiency side. What I would focus, I will leave you with that more than AI, look at what will happen with the digital euro, that is more significant, depending on the structure of that and look at what will happen with tokenization and stablecoin, that is more significant on deposits. We believe we are at the front end of the game on stablecoin and tokenization. And we think that, that may even disintermediate fintechs because the products they don't have, we do. We can tokenize something that we have. They need people and understanding to do that. So that's an opportunity. Digital euro impact on deposit, the more retail you are, the more potentially there is an impact, but the ECB is going to modulate that. So we are relatively constructive on where it's going to land. But we see that as a much greater impact on deposit than AI in the short term.

So you raised very important points as on -- point that we have heard in the past few days on this page. One of the main obstacle is the engagement of the organization to actually adopt AI and have the right incentives and having people be comfortable with their jobs and -- to actually get...

Noemi, I would say it's not only the engagement, but the discipline of the engagement. It is very easy to give Copilot to everybody. Eventually, it's a cost and what's the impact? Nil. It is much more difficult to roll out Copilot or to roll out any tool with an organization who says, I'm taking the tool to change A, B, C. And as an outcome, I can do more or I can be more efficient, I can be more productive, and I'm quantifying that outcome and therefore, give me that tool, and this is the outcome. That is a lot more difficult. But giving everybody artificial intelligence is easy, but it won't change anything. Actually, it will make your cost rise.

And at the same time, the time of actually that will take for challengers, competitors to actually disintermediate banks when it comes to deposit and eroding deposit margin and asset management margins. And you mentioned also on the tokenization and the digital euro as a tool to maybe -- that may impact retail deposits. But also there is now a tokenization on the corporate side. Can you maybe elaborate on that?

Look, I think at the moment, and things will evolve, okay? But at the moment, digital euro retail, tokenization and the rest, corporate, okay? Stablecoin, corporate. Now stablecoin, tokenization has a potential massive impact on banks, especially if they are strong in SMEs on all the business because you will be able to do, as we have just done, bonds for corporate for 30 million because they are tokenized. I can't do that if they're not tokenized. The costs are not there. So it will allow reaching a part of the market that normally nobody can reach because it's so fragmented. So that part is a sweet spot for banks that are very strong in SMEs and have the capability to do what we're trying to do in terms of product development. We are one of those banks. So we see that positively. That's why we've done one of the first one or the first one in Italy, and we see that taking speed. Once you go into DLT and tokenization, you need to have a means of payment, that's stablecoin. At the moment, if you look at it, stablecoin in euro do not exist. It's all dollar. That's the sovereign issues. But with Qivalis, we are trying to roll out stablecoin in euro by September, and we will. So what does a stablecoin do? By definition, the bank will take mostly because it will be somewhat watched and regulated by the ECB, mostly underlying euros, okay, with limited leverage, and we'll take it and put it in a stablecoin and it will be a means of payment. But the moment you do that, the deposit disappears. Now for corporates, that's not big deals because the market is so competitive on pricing, but it is a question on liquidity. It's not a question on pricing. And so from a return standpoint, it's positive. From a liquidity standpoint, it's negative. But we have -- we, for example, have a ratio between loans and deposit well below 100%, and we don't think that, that is an issue. If that scales and you look at many things being tokenized, you're putting the emphasis on the client segment you serve and your product know-how and technology know-how. If you don't do bonds, if you don't do consumer finance products, if you don't do a whole bunch of products, you have nothing to tokenize. If you do not know how to do it and you're not set up, you can't tokenize them. So we think that this is an opportunity, although there will be a drag on liquidity. On the digital euro, there is different. The digital euro fundamentally is predicated on -- there will be a wallet with a limit, EUR 3,000, EUR 5,000, EUR 2,000, whatever it is. The customer will be free to move the deposit they have on the bank balance sheet onto the wallet. And the moment they do that, these are no longer liquidity or deposit of the bank. The liquidity and deposit of the ECB because it's a direct obligation. That's disintermediation for you. That's when you look at the cost of funding, potentially the cheapest cost of funding, will move to a significant extent there. So it needs to be modulated with care by the ECB. That is an impact both on liquidity and on margins. But we do believe that the way ECB is thinking about it is constructive and it will be managed in a way that can be managed by banks. But the more banks, as I was saying, is retail. The more they have a very fragmented, low balance transactional base of deposit, the more that impacts. And the less, the less. So we are watching this with attention. We're interacting with the ECB significantly to make sure that the objective of having sovereignty and a means of payment offline and everything else that they want to achieve is achieved without the impact on banks. And I think the ECB has a common purpose because if the banks are impacted significantly, it's not only a question of liquidity. If I have entire regions where my profitability comes from cheap deposit and you move them on the digital euro, what am I going to do? Shut it down. If I shut it down, there is disintermediation, there is the certification and there is who is going to do the KYC, the onboarding and the management of those clients because we wouldn't be there. So we do think that there is a common purpose to lend this in a constructive space. So we are -- we know there will be a negative impact. We're preparing for that, but we are relatively neutral about the impact of it.

And speaking to the topic of a changing world and adapting to it, if you -- maybe we can talk about like the start of the year and the changes in geopolitical landscape and possible changes in the macroeconomic conditions. So what is the impact that you see for UniCredit and maybe the sector more broadly?

Firstly, I don't want to be perceived as setting a trend, but we announced Unlocked and a month later, Russia invaded Ukraine and the world changed. And we announced Unlimited, and we have what we're seeing now. But I think we have been discussing now for over 5 years that we keep on looking at the past, but we have a new normal. What's the new normal? The new normal is volatility. The new normal is geopolitical uncertainty. The new normal is constantly changing environment and requirement to be more agile and adapt. So if you look at the past, what did you have? Stability, budget, top-down control on the execution of the budget in our organization. I strongly believe and I continue -- and everybody now is more and more convinced that the new normal is direction, framing, empowerment, which means the environment change, people in down the organization needs to be empowered to adjust what they're doing, maybe do more NII, less fees, maybe adjust what they're doing to respond to the environment without waiting for the center to tell them what they do. And they can do that because they know what we're trying to do and they have a framework. It takes a long time to get to that. And we've been working on that relentlessly for 5 years. So for us, everyone knows where we want to go. The environment shifts or changes. I'm very impressed with what the people are doing to adapt to that and still get to the outcome. Now this is fundamental because for the time being, I think every bank will tell you that the year has started well, solid. And probably any impact from what you're seeing now is probably going to be later. So I don't think there will be some impact, a substantial impact in Q1. Can there be more impact later? Possibly. The second topic is, if you look at it that way, Unlimited is structured to exactly thrive in this kind of environment. Let me give you a few examples. Take top line. We have started by telling you we're not going to differentiate anymore between NII fees and net insurance. And why are we doing that? Because they are interrelated. So if now there is an environment of slower growth, higher rates, we are 65% NII, margin on NII increases. Volume on NII decreases. Is that negative, not necessarily because I will generate more capital like I did in 2023. On the fee side, we're very diversified on the 35%. So investments, insurance, they get affected. Client risk management, we are off the charts at the moment. Payment off the charts. So they compensate. So that aggregate in this environment should do relatively well. And it interacts with all the levers of the plan of trying to gain share where we want to take shares because usually, people pull back in this environment, and we are ready to move forward. The second one is efficiency or cost or inflation. We have the lowest cost base relative to revenues and in absolute of any of the peers. And we've already taken $1.2 billion in '24, $1.4 billion in '25 to front-load all that we need to do to manage our cost, manage our investment. That means, in other words, that I don't need to do a lot more in '27, '28. I may do more if I continue to front load or I can ride what I have done in the past. So there is more inflation and pressure on cost. I will manage that, and I will keep them within the 1%. Then you go on cost of risk, and we said 15 to 20 basis points. But you know how risk-averse we've been and how much we have provisioned, and we have never touched our overlays. We have EUR 1.7 billion. The cycle becomes more negative because of the deceleration. We have EUR 1.7 billion. And I would highlight that less than 5% of our lending portfolio is on energy-intensive sector or on sectors that are really, we think, affected by this crisis, that European corporates after having the shock of Russia are a lot more diversified and liquid than they were before. And then just to talk on the topic of the day, our exposure to private credit is marginal to almost 0. So we are quite comfortable we can do that. Then you move down on the P&L. As we have been taking below the line, EUR 1.2 billion, EUR 1.4 billion of integration cost, front-loading, we can modulate that and take a lot less if we need to support our bottom line when you get to the bottom line, and that's why we're confident we can keep it. And we have excess capital and excess capital means 2 things. One, if the market locks on securitization or if people pull back and we need to push forward, we have excess capital to deploy. If that's not necessary, we have excess capital to buffer our distribution and keep them where we want them to keep. So for us, not only in Q1, but if I look at what is reasonable to expect during -- in the scenarios in 2026 and '27, we think we're quite confident that we can deliver in the reasonable scenario. Obviously, if it goes beyond reasonable, then all bets are off. But we are going to be relatively more defensive than many people expect.

Now on Commerzbank. So can you walk us through the rationale of the exchange offer, the timing and your expectation on the future conversation with the German stakeholders?

So for us, this offer, the main purpose of this offer is to break the stalemate. The situation in which we have all been in the last 18 months or thereabout is suboptimal for everybody. It's uncertain, it's abrasive. It's everything you want to say, everybody has an opinion, is not a good situation. The only way you can, one way or the other, resolve this situation is with a constructive face-to-face engagement where all parties put on the table what are their concerns, what are the red lines and we all try to solve them. We may solve them or not, but at least we will know what they are, and we will have attempted. To date, we haven't done that. The last 18 months, we tried, we haven't done that. This software creates an opportunity to do exactly that. And this objective is why we think whatever happens, it's a win-win. And this is the purpose and domain. If we want to the different purpose, we would have come out in a different way, but we came out this way to achieve that.

Okay. And in this context, what are the key relevant stakeholders, all the -- all the parties. What do you mean by that?

Well, look, I think, as you know, there are parties that everybody know exists. There is obviously the top levels of Commerzbank. There are the workers' council. Obviously, there is the government, who is a coalition, the shareholders. And we always forget one critical one, they are the people who are going to be quite affected by whatever happens and they are the clients, okay? And I would say, because this is often forgotten, that applies in spades to UniCredit. We have people, we have governments, we have business, we have workers' council in Germany, et cetera. So everybody has concern, everybody has objectives. And today, for a certain reason, we have been unable to engage. And I hope that as we go forward, we will be able to engage, and we will be able to jointly try to resolve as many issues as possible.

And can you explain why you want to cross the 30% threshold specifically and now?

So again, the offer is for 100%. The offer is that is structured to be at the regulatory minimum, [indiscernible]. So we took what is required, and that's what it is. And why did we do that? Because the objective is to open a window of 12 weeks of engagement and dialogue and put all our cards on the table and try to then come out of that engagement with a common vision, a common strategy, a common plan that we can all back or at minimum, reduce the level of misunderstanding and the level of angst that everybody has by misinterpreting each other. That is the win-win. That is the objective. I'm relatively, how do you want to say, neutral or relaxed on the outcome. But the outcome can be 3 scenarios. Scenario 1 for us, the way we view it is at the end of this offer, and now we are parking the engagement, which will be the win, our stake in Commerzbank is either slightly below 30% as it is today or above 30%, but does not reach control, okay? In that situation, what changes? Very little to nothing, i.e., we still equity consolidate, the return from the stake is the same. We still have our puts in case of downside. Our returns are the same. UniCredit Unlimited is the same, relatively limited, but we will have all the positive for having engaged and understanding where we stand. There is one thing that will change because that is the position that we have taken at Board level. Now we are ready to engage proactively, which means going forward, even in that scenario, we will be much more public, much more proactive, always constructive on what we want, why we want it, and we will try to convince the other shareholders and stakeholders that, that is the right path. What exactly do we want? Well, it's quite easy for you, and I'm not jumping forward because the reason we don't have a vision and strategy and a plan out there is because the only way to do it constructively is to do it jointly with the other party. Otherwise, it moves into Unilateral, and that's a completely different setup. What we want? Well, if you look at the vision of UniCredit, we want much more focus on core strengths, Germany, Poland, Less focus on noise aside, international, corporate center, much more balanced in the way we achieve results on all the levers, not to get to the outcome, a level of growth that sacrifice may, may sacrifice margin, may sacrifice risk, but actually a much more balanced and focused way of doing that and most importantly, in the core economies where we are. And if you look at what is the outcome, very simple. If you take UniCredit unlocked and you look at UniCredit, what we have achieved by doing exactly that in terms of all the KPIs, net revenue growth, cost-income ratio, risk, cost of risk, et cetera, you can have an idea of what it is. And if you want to know what can be done in Germany, just look at HVB. HVB has done exceptionally well and now have a return on equity of 20%. They have a cost-income ratio of 38%, and we are growing no less than other banks who have not done that. We think that -- and by the way, very important because we all -- we never talk about them. The people of HVB are excited like the people of UniCredit. They are determined to achieve that. They understand where we are going, and they want to get there. So that is scenario one. It will -- it would be after the engagement, and it will start a period of much more open dialogue and drive to try and move the trajectory of Commerzbank towards unlocking all the value that they can unlock. And I took very positively the comment yesterday that what they have on the plan are floors or minimums and they can go further. Great. But what we are saying is, yes, but how is important because it needs to be sustainable, it needs to be balanced, It needs to be risk averse to a certain extent. So this is one. The scenario two is that we exceed 30%, and we move into control land. What changes from an industrial standpoint, nothing vis-a-vis what I just said, but the execution of those principles and on the entering plan would be down to our team, the team of HVB and our teams. And given the experience, given the motivation, given the drive that they have, we think we can execute that at pace, and we can execute that in much faster time than anyone else. The third option is we exceed control and we get close or at the level where we can eventually because it wouldn't be done immediately, execute a merger. At that point, you add to the value created in scenario 2 or in scenario 1, the synergies from consolidating the two groups. And therefore, the value increase one more time and creates a lot of value for all. Now in that last case, you would have a bank that is a leader in Germany, leader in the Mittelstand, where we intend to grow much more than is being done at the moment, not only through lending, but through the provision of a number of services that are not being provided at the moment, like hedges on rates, commodities and FX. Look at what's happening after the situation now. This is a part that is really flying for us, payments and trade finance and a number of other things where we can push further and support the economy more. It would be helping German transformation and all of that will be in certain in a federal pan-European group that would be, roughly speaking, 1/3 Germany, 1/3 Italy and 1/3 Austrian CEE. We would have redefined what UniCredit is as east of Center East, we would be the leader, and that would have a lot of value for what we can achieve in terms of exchanges inside. So this is -- these are the scenarios. At the moment, our expectation because we are based on not knowing anything else, as that we're going to land somewhere in one and that we had no regrets because it's a win-win just if we can trigger an engagement of dialogue, understand where everybody stands and break this stalemate that has been plaguing us for now 18 months.

So you have a clear view of what the combined entity could be, and you're very constructive on Germany, Mittelstand and Poland. And the most frequent question that I've heard in these days is about the offer itself. So how should we think about the option of an offer with a premium to actually get as close as possible to full ownership?

At this point, this is not a scenario that we are considering. However, at this point, any change would be based on the outcome of dialogue and engagement. So let's hypothetically say we have a dialogue, it's productive. We can all back an outcome that all stakeholders feel comfortable with, number one. Number two, a number of the concerns that we have in terms of areas where we would need to prepare for plugging in gaps or whatever it is, are not justified or we are reassured or whatever, on that basis, could we review the terms of the offer, which then would become something completely different because we would move from break the stalemate and create engagement to, we had engagement and we have an outcome that is positive and that supports a common vision, a common strategy, a common plan and a way forward that everybody is behind, then in that scenario, depending on what that is, can we review the term? Of course, we can. At the moment, we can only say that based on what we have now, the expectation is scenario one, can we evolve towards some other scenario? Yes, we can. Most of the -- how we evolve to that scenario and what does it mean in terms of offer terms, et cetera, is very much determined by the outcome of this engagement. One, it need to occur. Two, we need to see if we're all trying to resolve compromising and getting to a lending that makes sense. And then depending on that lending, we can in "price that impact" on our assumption and review what we need to review.

Thank you. So I have a few more questions, but I would like to open for Q&A if there is any questions from the room.

Very clear. Just one point of clarification, please, on what you set out for Commerzbank. Any change in the terms of the offer would only be if there is a recommended deal by both sides. Is that what I should hear from what you said?

So I would say that at this point in time, if there is a landing with a recommended deal, which would mean, by and large, all stakeholders agree, and I always remind people that we take very seriously and we respect the stakeholders of Commerzbank, we also expect people to take very seriously the stakeholders of UniCredit because it takes 2 to be happy to have a good marriage, okay? But if we were to do that, that's for sure. Can it evolve in something else? At the moment, we're not considering to evolve in something else, but after this engagement, depending how it goes, depending what are the views of all the stakeholders, if we do not have a common ground, but the overriding view is that we should go in another direction, then let's talk about that other direction. But in this process at the moment, we think either we're trying to break the stalemate and we understand that we don't make any progress, okay, then we will regroup and think or there is progress and a common ground, and that could be a foundation to do something much more. Can we do something if we don't get there? I don't exclude any option, but I'm saying that just because I don't exclude any option. It depends what it is. Is there a 90% or an 80% support towards a certain outcome, then we will reassess whether we need to go with the 80% as opposed to 100%. But for the time being, it's very premature to discuss anything like that.

Is there another question from the room? All right. So I'll go on and I would like to ask you if you could remind us the expected capital impact of the offer and also the impact on capital return, especially on share buybacks in general return 30% of your payout.

Okay. So the first thing is offer or no offer scenario, no scenario. I think we have demonstrated in the last 5 years what we think about capital returns. We want them sustainable. We think they're critical to our equity story and the equity story of any bank in the sector. And that is also why our plans, our visions, our strategy always takes in mind what is the ultimate impact, not only on amounts, but on capital generation in order to be compelling on the capital return side. Any transaction will not affect that principle. Actually, we would apply them to what we purchased. Now second thing is if we land into scenario 1, i.e., between where we are today and no control, nothing much changes from that standpoint. We have equity consolidation. If we get some more share, we will have greater contribution. The consumption of capital is marginal to nil because we are paying in shares. We will continue with the current strategy. And I don't think that there is much change. If we get to control and gradually up, obviously, there is a significant impact on capital. And as it's always the case, you get significant impact at the beginning, you take the shot. And then after you've done all your restructuring charges and everything else, you start pumping out a significant additional amount of capital and that you can return to shareholders. And we always look at that relation with a few principles that we do. Number one, the dividends are sacrosanct. So this is the cash you actually get. The rest is stock that is moving, but you could potentially sell it in the market. But at the end of the day, dividends and dividend per share. And we try to defend those all the time. Secondly, in this case, obviously, the share buyback of '25 will be affected. Potentially more, it depends which scenario I don't have all the scenario. But we will address that at the time. And we will explain how that will affect -- it's in a way, I'm using part -- I'm using those share buyback to buy shares in something else and I bring my earnings in through there as opposed to buying my own. That's why it's very important that our metrics of exceeding hopefully significantly the return of our share buyback in any acquisition that we make works because even if I don't do a share buyback, I bring in additional earnings at a better return after I do all the synergies. So in that case, we are affected. For the time being, we intend to continue on our path, i.e., we're seeking approval by the AGM of the dividend and the share buyback of 2025. That continues. Secondly, the process of authorization of our share buyback of 2025 is with ECB and is ongoing. That does not change. But we have been very clear that in order to decide what we do with the share buyback or the outcome of the share buyback, we need to wait for the completion of the offer and to see where we are. And I think the regulator will do exactly the same thing, if I may, but that's my speculation. So this is what you should expect.

And completion of the offer, is it like the settlement, so 2027? Or is there...

No. I think as you have all realized, the processes for certain offers in Europe are still, let's say, not very speedy. I think we will know the outcome in June '26 or a little bit later if by any chance, the timing of the offer is longer. That point, you will have clarity. The settlement is later because in German offers, you get a number of the approval, antitrust, et cetera, et cetera, et cetera, at the back end, and they therefore build at the back end. And therefore, the settlement is in 2027. But already in 2026, we will know what is the outcome. And if the outcome is no control, we can proceed. If the outcome is controlled, we will know that by '27, something will happen, and we will react accordingly to be in a capital position that is defensible.

One more time, I will open to Q&A, there's anyone in the room?

I'm Rene Petersen from Nordic Asset Management. You didn't mention anything about your current or your interest in consolidation in Italy during your presentation this morning. As an outsider to Italian businesses, it's quite difficult to gather what the heck is going on. Can you comment about the surface, so to speak?

So you have no -- so shall we use the same word and say that the consolidation process in Italy at this point in time is in a stalemate, maybe somebody breaks it, but it's in a stalemate. If you look at the 3 potential groups that people speculate could be aggregated among themselves or with us or whatever, they all have "influencing or controlling" shareholder or group of shareholders that do make any offer unfeasible unless you first have an agreement with them. I'll let you speculate what the view of those shareholders in every one of the 3 situation is. But at the moment, it is fair to say that we have not seen, especially vis-a-vis us, any opening for negotiating anything, okay? We also think that the -- it will be difficult to negotiate because when you have, let's say, de facto controlling shareholders in those groups, they all want something and lending to a situation where everybody is happy is a lot more difficult than what we're talking about here today. So at the moment, that is the situation. I do believe that Italy requires much more consolidation, maybe a little bit less than Germany requires more consolidation, but Italy does. I do believe that eventually something will happen. But it will be led -- shareholder led, I think, because you need to overcome that hurdle. Can that change? Possibly. Maybe if we all read the newspapers, there is one situation that seems to be a little bit more fluid than others. But then again, once the shareholder meeting is done, there will be new CEO, new management, new this and new that. Again, speculating, it's not exactly a moment where the next day they want to do something with someone else. There is a lag. The last thing that I would say for us, we are very proud of our Italian routes. But to a certain extent, these are routes that we have much expanded, okay? Our model of bank, our vision, where we want to go is pan-European. That does not mean I'm not very proud to be Italian and what we do in Italy. And it does not also mean that we couldn't be more consolidated in Italy if we tried, okay? But it does mean that I look at the pan-European first and foremost. And if you look at the pan-European first and foremost, then a potential combination or an agreement with Commerzbank propels the group firmly into that and changes the nature of the group once central, there wouldn't be any more debate about that. And so if I had a choice, as I thought I had a choice in September of 2024, I would lead with what changes the group and structure it firmly in a certain direction, what we're talking about now. And it is not that it's not important, but at that point, it would be within a pan-European group of a certain nature, not the opposite. I don't know the timing. Every time everybody says this will not happen in life, you can be certain that it will happen soon. So I'm not making any prediction. Many people are talking, many people are speculating. But look, if there is an outcome, I would say this, our process in Commerzbank should be over one way or the other in June. And so we will watch with attention, and we will see what there is. But as I said, because you need to have an agreement among shareholders, whoever gets that agreement and its firm it's very difficult to break it because they would have come together towards that agreement.

Fantastic. Thank you very much. And thank you, Andrea Orcel for being here.

Thank you very much.