Commerzbank stake of UniCredit boosted to 28% as the bank readjusts its focus
UniCredit Boosts Influence in Commerzbank Without Triggering Takeover Rules
UniCredit, the Italian banking giant, has increased its stake in German lender Commerzbank to just over 20%, a strategic move that allows the bank to boost its influence without triggering a mandatory takeover bid.
According to German rules, UniCredit is required to make a bid for full acquisition if its stake surpasses 30%. However, the bank has initiated the formal approval process to convert its derivatives into physical shares, thereby avoiding the takeover offer at 30% ownership.
This move gives UniCredit a stronger voice in Commerzbank’s decisions, enabling it to push for strategic changes or a merger if desired. However, it faces strong political opposition from Germany, which sees Commerzbank as a strategic national asset and rejects hostile mergers or takeovers.
Chancellor Friedrich Merz has labelled UniCredit’s stake-building a “hostile attack” and a systemic risk for the German banking sector. Finance Minister Lars Klingbeil insists any merger involving Commerzbank must be “coordinated with management,” signalling political resistance to UniCredit’s advance.
The German government itself holds a significant 12.1% stake in Commerzbank and backs the bank to remain independent given its role in financing Small and Medium Enterprises (SMEs) and its symbolic importance to the national economy.
Commerzbank is actively defending its independence through a €1 billion share buyback and a “Momentum” growth strategy focused on cost-cutting and profitability. The bank claims UniCredit’s increased stake does not alter its strategic direction or ambitions.
The situation creates a delicate balance between UniCredit’s expansion ambitions and German political and institutional resistance aiming to preserve Commerzbank’s autonomy. The European Central Bank and Germany's financial regulator BaFin have declined to comment on the situation.
JPMorgan analyst Delphine Lee stated that the German government can't block a deal outright, but UniCredit's success may depend on government support. Marco Troiano, head of financial institutions at Scope Ratings, suggested that UniCredit's increased stake positions it to exert greater influence over Commerzbank’s management. Commerzbank labor representatives called UniCredit's stake-building "activist and hostile."
UniCredit's move may limit Commerzbank's strategic options, and the bank expects UniCredit to make use of the option to dissolve its investment in Commerzbank. A spokesperson for the German government called UniCredit's move "uncoordinated and unfriendly."
UniCredit increased its stake in Commerzbank to 28% using derivatives contracts. The position of UniCredit remains solely an investment.
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[1] Reuters [2] Bloomberg [3] Commerzbank [4] Deutsche Welle
- UniCredit's strategic investment in Commerzbank, a major real-estate and business-financing institution, has sparked debates about the future direction of the German lender, with some experts suggesting that it could lead to financial changes or even a potential merger.
- As UniCredit increases its influence in Commerzbank through its over 20% stake, there is a growing emphasis on regulation to ensure fair business practices in the realm of investing and finance, particularly in relation to takeover rules and the protection of strategic national assets.
