FRANKFURT Banking giant Citigroup (C.N) is on
the lookout for acquisitions in Germany and could swoop on a
big bank, its local head told Reuters in an interview, news
that sent German bank stocks shooting up.
"We are watching the German market very carefully, both
locally and globally," said Sue Harnett, Citi's head of German
operations. "All eyes are looking for good opportunities."
The news sent stock prices in Germany's three biggest
commercial banks rising, making them the biggest gainers on the
blue-chip DAX .GDAXI.
Markets are on high alert for big deals in the wake of
Barclays's (BARC.L) exclusive talks with ABN AMRO AAH.AS to
create the world's fifth-biggest bank, closing the gap on
Citigroup, the largest by market capitalization.
Many analysts had recently said Citi's cost shake-up ruled
it out of a megadeal in Europe's biggest economy. But Harnett
said the group's cost-cutting would not hinder it from making a
"You have to separate the cost review with mergers and
acquisitions (M&A)," she said. "The corporation I work for is
very skilled at M&A. We are a big bank. We have lots of money."
"There are a couple of things I would love to have in
Germany. I see opportunities both big and small."
Few banks are for sale in Germany, where the state
dominates the market with hundreds of publicly owned community
lenders, which they do not want to sell.
Citi's private-sector rivals include Commerzbank (CBKG.DE),
Dresdner Bank (ALVG.DE) and Postbank DPBGn.DE. Of those,
Commerzbank is the only one to have flagged interest in being
Commerzbank's shares were trading up more than 3.5 percent
with Postbank up nearly 1.5 percent and Deutsche Bank rising
more than 1 percent in a flat market.
Commerzbank and Deutsche Bank -- with whom Citi once
explored a merger -- were the second and third most actively
traded stocks on the German market. Other European rivals in
the DJ Stoxx European banking index .SX7P slipped slightly.
"The more interesting target for them could be Postbank,"
said Britta Schmidt, an analyst with Fox-Pitt, Kelton. "The
more available would be Commerzbank. And you can't rule out
that they would look at parts of Dresdner although it would be
embarrassing for Allianz to sell."
"They could buy Commerzbank and spin off the parts of the
business that they do not want, Eurohypo, for example. But it
wouldn't be as good a retail exposure as is Postbank."
Germany's Allianz has made no signals that it wants to sell
Dresdner, although many have questioned the logic of the deal
that fused the two and sapped the insurer's profits.
The cut-throat competition in the German market and the
strength of the state in lending makes acquisitions important
Harnett said 2006 had been difficult, with competition
among lenders depressing overall revenues for Citigroup in
"The competition in consumer finance is fierce," said
"If you walk down the street, if you read a newspaper you
are inundated with offers for finance. The key competition
right now is on price. I don't see any let-up so far."