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UniCredit steals a march on the competition

Italy’s UniCredit has bolstered its presence in the ‘new Europe’ with its purchase of HVB. But, as Nick Spiro reports, integration will present it with a real challenge.
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On the face of it, Alessandro Profumo, chief executive of Italy’s UniCredit, has pulled off a masterstroke in central and eastern European (CEE) banking. By shelling out €15.8bn in June to acquire Germany’s HVB, he has not only clinched Europe’s largest cross-border banking deal, but also created the biggest player in the ‘new Europe’.

The merger of UniCredit’s assets in the region, which account for one-fifth of the bank’s net profit, with the prized central European operations of HVB’s Bank Austria subsidiary, will create a CEE banking powerhouse. It will have twice the number of branches and assets and more than double the profits of Belgium’s KBC, formerly the largest banking group in the region. According to a report by Morgan Stanley, operations should generate more than €1bn in 2006, a quarter of the combined UniCredit-HVB group’s earnings.

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