CBK in demand, will ING get involved? As we explained in our report Can UniCredit run a German bank better?, CBK is now a much more profitable bank, largely due to higher rates and significant cost-cutting efforts implemented over the last few years. Given UC''s 21% stake (including derivatives) and a request to build a stake up to 30%, the bank now appears ''in play'' despite the German government and CBK management apparently being opposed to a transaction. Will European governments and supervisors block a deal? This would be a very negative signal to send to bank investors at a time when many voices argue for a faster implementation of the Banking Union and Capital Markets Union. Will another combination be on the table? Will DB react? Will ING react? ING to the rescue? Some investors have wondered, given ING''s presence in Germany and Poland, whether the Dutch bank, perhaps more culturally aligned with Germany, could come to the rescue and fend off a hostile bid with an orange-knight bid. This possibility is the main motivator of this report. Where would the synergies be? EUR900m seems a realistic number We believe the main synergies would be in German + Polish retail businesses, though ING''s German cost base is low, suggesting these may not be very significant. We also see synergies and capital release in CBK''s wholesale division. Central functions could benefit, even if only in procurement. A fairy tale or a horror movie for Halloween? Our maths on a theoretical transaction is not convincing either way. We assume that ING would have to pay c50% more than the price prior to UC''s move, capital requirements would increase, and ING would have to issue a significant amount of new shares. All in all, we would expect a deal to be broadly EPS neutral - a lot of work for little near-term reward. We have an Outperform on both ING and CBK, the latter is one of our top picks in Europe as is Unicredit.