Unicredit increases its direct stake in Commerzbank and overtakes the federal government as the largest shareholder

Recently, the scenario of a Commerzbank takeover seemed a distant prospect, but now a spectacular turnaround has occurred: The Italian Unicredit has become Commerzbank's largest shareholder, surpassing the German government, once again attracting the ire of Germany's second-largest private bank. And that's not all: Unicredit CEO Andrea Orcel is hinting at further aggressive steps that would bring the Milan-based major bank close to a takeover offer for Commerzbank.

The reaction from Frankfurt was correspondingly angry: "This step has once again not been coordinated with Commerzbank," announced the DAX-listed group, which has been trying to preserve its independence for months. Unicredit from Milan, however, which already has a presence in Germany through Hypovereinsbank (HVB), is not giving up: It wants to leverage synergies between HVB and Commerzbank, for example, with private and medium-sized business customers, through an acquisition.

Unicredit announced on Tuesday evening that it had doubled its direct shareholding in Commerzbank, and thus its voting rights, from just under 10 percent to approximately 20 percent. To this end, it converted a good half of its financial instruments into shares, overtaking the German government as Commerzbank's largest shareholder to date. The German government, which had saved Commerzbank from collapse during the global financial crisis with billions in tax revenue, now holds a good 12 percent of the shares.

Unicredit is not slowing down: According to its own statements, it also intends to convert the remaining approximately 9 percent to which the major bank has access via financial instruments into shares “in due course.”

If this were to happen, Unicredit would be close to the 30 percent threshold at which it would be legally obliged to make an official takeover offer to the remaining Commerzbank shareholders.

The Italians had acquired a large stake in Commerzbank in September following the German government's partial exit, securing access to a large stake in Commerzbank directly through shares and indirectly through financial instruments. Only in March had Unicredit received permission from the European Central Bank's (ECB) banking supervisory authority to increase its stake in the DAX-listed group to just under 30 percent.

The Federal Cartel Office also gave the green light. Unicredit would not have to fear any resistance from competition watchdogs in the event of a potential Commerzbank takeover, said Federal Cartel Office chief Andreas Mundt: "If there were a subsequent decision, I don't see how we would see it differently – the standards are always the same, it makes no difference."

Hardly anyone had anticipated Unicredit's latest move: Just recently, CEO Orcel had said that Unicredit was "far from" making a takeover offer for Commerzbank. Unicredit's future was "very bright" – with or without takeovers. The issue seemed to have been shelved: Unicredit could take its time deciding on a formal takeover offer for Commerzbank until 2027, Orcel said.

Last but not least, Commerzbank's share price has risen sharply since Unicredit's entry, which would make a takeover more expensive. The shares also rose on Wednesday, and Commerzbank now has a market capitalization of more than 35 billion euros.

Unicredit is facing fierce resistance at Commerzbank. Both management, led by CEO Bettina Orlopp, and employee representatives reject a takeover. The group is promoting an independent course with ambitious return targets and the elimination of thousands of jobs.

"The adjustment of Unicredit's position has no impact on our strategic direction or our ambitions," Commerzbank emphasizes. The recent record results demonstrate "that our independent business model is working."

Targeting Commerzbank: Unicredit CEO Andrea Orcel. (Archive photo)

Source: Roberto Monaldo/LaPresse via ZUMA Press/dpa

Political support is also coming from the political sphere. Chancellor Friedrich Merz (CDU) backed the bank in a letter to Commerzbank Group Works Council Chairman Sascha Uebel, stating that the federal government is committed to a "strong and independent Commerzbank." On Wednesday, a spokeswoman for the Federal Ministry of Finance emphasized that the federal government rejects Unicredit's "once again uncoordinated and unfriendly" approach.

Uebel, the bank's deputy chairman of the supervisory board, also reiterated his opposition: "My position and the position of the works council remain unchanged: Orcel should abandon its hostile takeover."

Just recently, Orcel had advocated for a merger in letters to Merz and Finance Minister Lars Klingbeil (SPD), offering concessions regarding the branch network and the German headquarters – but was rebuffed. Now Orcel is once again living up to his reputation as a tactician: He's going all out.

RND/dpa