This is CNBC’s live blog covering European financial markets.
UniCredit may not want to take over Alpha just yet, analyst says
As markets digest UniCredit‘s decision to double its stake in Greek bank Alpha, one analyst has suggested a full acquisition may not be on the cards.
The Italian lender appeared this morning to continue its M&A trend while bidding for peer Banco BPM and Germany’s Commerzbank simultaneously.
However, JPMorgan’s equity analysts suggest that UniCredit is likely to pursue Alpha as a takeover target, only if its other deals do not materialize.
“Whilst the partnership with Alpha is progressing well and Greece’s macro prospects are positive, we do not expect UCG to consider a full acquisition at this stage as the group remains focused on Italy and the Banco BPM transaction, which makes the most strategic sense, in our view,” said JPMorgan’s analysts led by Delphine Lee.
“However, should UCG fail to change the Golden Power conditions and drop out of the BAMI bid, Alpha could represent an attractive alternative, in our view, with limited political interference,” she added, referring to the government’s conditions — the ‘golden power’ — for approving a takeover of Banco BPM.
— Ganesh Rao
UK utility Thames Water fined for ‘undeserved’ dividend, environmental failings
British utility firm Thames Water has been fined £123 million ($166 million) by its regulator for paying dividends to its shareholders while it was failing to meet environmental protection and performance targets.
The company was hit with a £104.5 million penalty, amounting to 9% of the company’s turnover, for breaches of rules relating to its wastewater operations.
Additionally, the company was charged an £18.2 million fine for paying dividends to its shareholders during the time it was not meeting operational and environmental targets set by the regulator.
“We are clear that dividends must be linked to performance for customers and the environment. We will not stand by when companies pay undeserved dividends to their shareholders,” said David Black, chief executive of water regulator Ofwat. “This is the first time we have used these new powers, and this sets the standard. We will protect customers from water companies that seek to take money out of their businesses, where their performance does not merit it.”
Thames Water’s chief executive warned earlier this month that its ability to operate as a private company was at risk owing to stringent fines from the regulator.
RBC Capital Markets analysts have said other companies in the sector are in a similar situation to Thames.
“We have seen a similar narrative in the past from Thames as the company attempts to invest to fix the problems in its network, whilst also facing pressure on performance from the regulator. The argument is slightly lessened but not dissimilar for many companies in the sector given the need for a strong balance sheet to invest in the network,” the analysts said on May 14 in an email to clients.
— Ganesh Rao
‘There is much more to come’: UniCredit raises stake in Greek bank Alpha
The deal-making spree continues at Italian lender UniCredit, which has revealed that it raised its stake in Greek bank Alpha to about 20%.
UniCredit had previously disclosed a stake of 9.6% in November 2024.
The bank said the transaction will add net profits of 180 million euros ($204 million) per year, with a return on investment of about 16%.
“This step strengthens our successful partnership with Alpha, which has already delivered value well in excess of expectations. And there is much more to come,” said Andrea Orcel, chief executive of UniCredit, in a statement. “We have confidence in Alpha’s leadership, their strategy, and Greece’s growth trajectory. Throughout this partnership, our engagement with Greece’s government and leading institutions has been extremely positive. Their approach and support has contributed significantly to the partnership’s success, and to this further investment.”
The news comes on the back of rating agency Moody’s raising its outlook for the Italian lender’s bonds from “stable” to “positive.” It is currently rated “Baa1” in the investment-grade category.
Shares of UniCredit and Alpha rose by 2.25% and 6%, respectively
— Ganesh Rao
European shares edge higher
Markets have just opened in Europe, and regional stocks are in mixed territory, with the pan-European Stoxx 600 trading flat.
London’s FTSE 100 and the French CAC 40 are marginally higher, while Germany’s DAX — which hit a record high in Tuesday’s session — is around 0.1% higher.
— Chloe Taylor
Auto giant Stellantis appoints Antonio Filosa as new CEO
Auto giant Stellantis on Wednesday appointed North American chief operating officer Antonio Filosa as its new chief executive, ending a months-long campaign to fill the firm’s leadership void.
The multinational conglomerate, which owns household names including Jeep, Dodge, Fiat, Chrysler and Peugeot, said it would hold an extraordinary shareholder meeting in the coming days for Filosa to be elected to the board to serve as an executive director of the firm.
Read the full story here.
— Sam Meredith
Sterling and euro extend losses
The British pound was 0.2% lower against the U.S. dollar on Wednesday morning, putting it on track for its second day of losses versus the greenback.
Sterling has risen 7.7% against the dollar so far this year.
Meanwhile, the euro was also trading 0.2% lower against the U.S. currency, putting the currency on course to extend its losses for a second day.
The euro has gained more than 9% against the U.S. dollar since the beginning of the year.
— Chloe Taylor
German import prices unexpectedly contract in April
Maria Feck/Bloomberg via Getty ImagesA container ship at the Port of Hamburg in Germany.German import prices fell by 0.4% year on year in April, figures from the Federal Statistical Office showed on Wednesday.
Analysts had been expecting an annual rise of 0.2%, according to LSEG data.
The previous month had seen import prices rise by 2.1% in Germany.
— Chloe Taylor
Here’s what to expect today
Bloomberg | Bloomberg | Getty ImagesThe La Defence business district in Paris, France.Investors can expect a swathe of economic data out of Europe on Wednesday, including German import prices, final French gross domestic product figures, French and German employment data, and an update on Turkish economic confidence.
Global investors will also be awaiting minutes from the U.S. Federal Reserve’s May meeting, which are due later on Wednesday.
There are no major corporate earnings expected out of Europe on Wednesday, but investors on both sides of the Atlantic will be monitoring U.S. chipmaking giant Nvidia’s earnings when they’re released after Wall Street’s closing bell.
— Chloe Taylor
What’s happening outside of Europe?
Stocks listed in the Asia-Pacific region were in mixed territory on Wednesday, with the Japanese Nikkei 225 last seen trading 0.3% higher, while South Korea’s Kospi added 1.8%. Australia’s S&P/ASX 200 shed 0.2% after the country posted a higher-than-expected rise in inflation, while Hong Kong’s Hang Seng was down 0.4%.
On Wall Street, stock futures were flat ahead of Wednesday’s trading session. It follows broad gains on Tuesday, as investors reacted to U.S. President Donald Trump pausing 50% tariffs on the European Union when markets reopened from the Memorial Day holiday.
— Chloe Taylor, Lee Ying Shan
Opening calls
Good morning from London. It’s just over 90 minutes until European equity markets open, after which stocks look set to trade in mixed territory.
Futures tied to the German DAX index are currently down 0.2% and FTSE 100 futures are marginally lower. French CAC 40 futures are bucking the trend with a 0.2% rise.
— Chloe Taylor
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