Commerzbank's stocks rise as Unicredit proposes a potential takeover deal nears completion
Unicredit Moves Closer to Merger with Commerzbank
Italian banking giant Unicredit has increased its stake in German lender Commerzbank, edging closer to the 30 percent threshold that would require an official takeover offer. The move, supported by Unicredit's CEO Andrea Orcel, aims to merge Commerzbank with Unicredit's German subsidiary Hypovereinsbank.
The proposed cross-border merger has sparked concerns in Germany, with fears of potential job cuts and branch closures. Commerzbank's management and the German government are reportedly opposed to the merger plans, while the German state, which holds around 12 percent of the shares, has ruled out further sales.
Unicredit, however, sees opportunities in the German market, particularly with private and small business customers. The bank has made significant added value for its shareholders through its investments in Commerzbank and is now the largest single shareholder.
The potential acquisition of Commerzbank would mark the largest deal in the sector with German involvement in years. If Unicredit's stake exceeds 30 percent, it would be legally obligated to make an official takeover offer to Commerzbank's other shareholders.
The Federal Cartel Office and the European Central Bank have given the green light for Unicredit's stake increase up to 30 percent. Unicredit has announced plans to convert its remaining financial instruments into Commerzbank shares, which would bring its stake to approximately 29 percent.
The politically supported attempt to form a "national champion" from Deutsche Bank and Commerzbank failed in the spring of 2019. The Federal Ministry of Finance has rejected Unicredit's "uncoordinated and unfriendly" approach on behalf of the black-red coalition.
In the past, both Commerzbank and Deutsche Bank have undergone significant integrations. Commerzbank integrated Dresdner Bank in late 2008, a process that took years to digest. Deutsche Bank entered Postbank in 2008 and secured a majority by the end of 2010, with the integration process having numerous ups and downs.
Federal Chancellor Friedrich Merz (CDU) has reaffirmed that the federal government is counting on a "strong and independent Commerzbank". The German state, which saved Commerzbank from collapse with billions in taxpayer money during the 2008/2009 financial crisis, still holds around 12 percent of the shares and has recently ruled out further share sales.
Commerzbank, on the other hand, is aiming to save its independence by cutting thousands of jobs and increasing profits, aiming for a surplus of 4.2 billion euros by 2028. The management and works council of Commerzbank have repeatedly described Unicredit's actions as "hostile".
The future of Commerzbank remains uncertain as Unicredit continues to push for a merger. The bank's management and the German government will need to carefully consider the potential impacts on jobs, branches, and the overall stability of the German banking sector.
