UniCredit has ramped up its stake in Commerzbank, raising it from 21% to 28%, igniting speculation about the Italian bank's intentions to take over the German lender. This strategic pivot has not only drawn attention from investors but has also provoked ire from the German government, which perceives the move as uncoordinated and potentially hostile.
The increase is deemed by UniCredit as part of its ambition to reach a 29.9% stake. According to the bank, the operation aligns with its previously stated goals and emphasizes its belief in Commerzbank's potential value. UniCredit stated, "This move reinforces our view, shared by many, of the substantial value within Commerzbank needing to be crystallized. It reflects belief in Germany, its businesses and communities, highlighting the importance of a strong banking sector for economic growth."
German government spokesman Wolfgang Buechner was quick to respond, criticizing the maneuver as "uncoordinated and unfriendly." He elaborated, "Unfriendly attacks and hostile takeovers are inappropriate in the banking sector," embedding the sentiment of resistance within the federal government. The deputy spokesman reiterated the expectation from the German authorities for UniCredit to treat the participation as merely investment-oriented, easily reversible if necessary.
This isn't the first time UniCredit has attracted governmental scrutiny. Previously, its buildup of Commerzbank shares back in September had already sent ripples through German political circles, leading to frosty reactions. Buechner pointed out, "UniCredit has described this stake as purely investment and can dissolve it anytime," indicating the government's desire for UniCredit to act on this option.
Commerzbank, for its part, noted it had "taken note" of UniCredit's announcement. A spokesperson for the bank stated, "We continue to implement our strategy and are upgrading it," but refrained from commenting on the ownership dynamics. The bank is set to present its strategic plan to investors on February 13.
Concerns around potential job losses due to any consolidation between the banks have stirred unrest among Commerzbank's labor representatives, who referred to UniCredit's approach as "activist and hostile." This signals the deep-rooted fears around staff cuts tied to any traditional banking merger or acquisition.
UniCredit's latest move seems at odds with remarks made last month by CEO Andrea Orcel, who suggested the bank was content to wait until after Germany's federal election scheduled for February, before making significant investment decisions. "We can sit on it for now. It will remain there, not distracting management and not requiring immediate decisions," Orcel conveyed back on November 25, shortly before UniCredit pursued a significant bid for Banco BPM, another Italian bank. This previously hinted at the idea of shifting focus away from Commerzbank.
Even with this recent purchase of Commerzbank shares, UniCredit has insisted it will not change its intentions toward Banco BPM. The spokesperson for the German government underscored their efforts to find viable solutions amid the confusion stirred by UniCredit's actions, but details surrounding this remained vague.
UniCredit's buildup also presents practical challenges due to European Central Bank regulations, which limit its physical stake to 9.5% without obtaining regulatory approval—which it claims to have activated. This means it must await the European Central Bank's decision within 90 days as it seeks to convert its derivatives to actual shares. Notably, gaining more than 30% would compel UniCredit to make formal takeover offers, including cash bids.
Financial analysts have weighed in, with JPMorgan’s Delphine Lee pondering the hurdles UniCredit might face. She noted, "While the German government cannot entirely block the deal like Italy can, their support seems to be key for the deal to happen." The nuances of German politics, along with opinions from various parties, suggest building enough consensus may prove challenging.
UniCredit’s stake increase positions it to exert greater influence over Commerzbank’s management as Berlin looks toward safeguarding the lender's operational independence. The German government still holds about 12% of Commerzbank’s shares, due to legacy issues from the 2008 global financial crisis and is committed to maintaining its influence over the bank’s strategic direction. The merging of UniCredit's banking strategies with those of Commerzbank raises the potential for significant shifts within the German banking sector.
Overall, this situation is emblematic of the broader themes of international banking relations and the complex dynamics involved when banks straddle different national interests.
