UniCredit defies German opposition, lifts Commerzbank stake to 21%
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The news: UniCredit has increased its stake in Commerzbank from 9% to 21% using derivative contracts, as CEO Andrea Orcel challenges Germany's stance against a takeover.
The numbers: The move, pending regulatory approval, makes UniCredit the largest shareholder, surpassing the German government's 12% stake.
The acquisition needs regulatory approval from the ECB and BaFin, Germany's financial authority, which could take up to 90 days.
Commerzbank shares fell 5.7%, while UniCredit's dropped 3%.
The context: UniCredit’s Orcel, a former financial institutions banker at Merrill Lynch, has pursued Commerzbank aggressively, covertly acquiring a 4.5% stake from the German government earlier this month.
The move caught many by surprise, triggering a backlash from the German government and unions, fearing job cuts and reduced lending to small businesses. On Monday they stood by declarations they oppose a deal.
But with UniCredit's share price up 65% in the past year, Orcel is in a strong position. Expectations are that at a minimum, he will be able to unlock substantial value in Commerzbank, and potentially create one of Europe's biggest banks.
As a key shareholder, he may now pressure Commerzbank to improve efficiency or pursue a partial or full merger, despite political pushback, banking on support from European policymakers, including the ECB, favouring cross-border consolidation.
What they said: "Unfriendly attacks, hostile takeovers are not a good thing for banks and that is why the German government has clearly positioned itself in this direction," German Chancellor Olaf Scholz said of the development on the sideliners of an event in New York.
An unnamed official from Germany's Finance Ministry had earlier told media that, “the German government supports Commerzbank's strategy of independence. "We have taken note of UniCredit's actions. We do not support a takeover. We have communicated this to UniCredit”
Stefan Wittmann, a representative of the trade union ver.di who sits on Commerzbank’s supervisory board, told Bloomberg: “We consider this to be a completely inappropriate aggressive act.”
A Commerzbank spokesperson told media the group will “examine strategic options” in the interests of its stakeholders.
Italian Foreign Minister Antonio Tajani told Class CNBC that UniCredit is “doing well” to act within the EU's internal market by pursuing Germany's Commerzbank, saying that being pro-European means allowing such cross-border acquisitions.
"This is the internal market, being pro-European only in words leaves something to be desired, UniCredit is a big Italian bank and it is doing well to act within the internal market," the minister said.
Analysts from Citi said: "The situation has taken an unexpected turn, as the market was expecting a slow timeline and no action in the short term, as well as ... a 'friendly development."
The sources: Reuters, Bloomberg, The Financial Times
