UniCredit cranks up Commerzbank stake as BPM bid faces hurdles

UniCredit seeking authorisation for stake of up to 29.9%

By Reuters

Published: Wed 18 Dec 2024, 4:19 PM

Italy’s UniCredit said on Wednesday it had raised its stake in Commerzbank to 28 per cent, ratcheting up the pressure on the German lender while at the same time it pursues a bid for smaller domestic rival Banco BPM.

UniCredit, which angered the German government when it emerged as Commerzbank’s biggest private investor in September, has sought European Central Bank clearance to get to 29.9 per cent, just below the level that triggers a mandatory takeover offer.

“The (Commerzbank) position remains at this time solely an investment and does not have any impact on the public exchange offer with Banco BPM,” UniCredit said in a statement.

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UniCredit has said that while a combination with Commerzbank would be the best outcome, it can also remain purely an investor and drive an improvement in Commerzbank’s performance, or even sell its stake and pocket gains.

“This move reinforces UniCredit’s view that substantial value exists within Commerzbank that needs to be crystallised,” UniCredit said.

A Commerzbank spokesperson said it continues to focus on its strategy, which it will present to investors on Feb. 13. Shares in Germany’s second-largest bank were up 3.3 per cent at 0934 GMT.

UniCredit said that the ECB authorisation process, which can take up to 90 working days from when the central bank receives the documents, is ongoing and it was in touch with supervisors.

The ECB declined to comment.

Given the complexity of the evaluation, the ECB’s assessment is expected to take close to the entire period the supervisor has at its disposal. UniCredit applied in September. On Friday it said it was also applying for clearance of the BPM bid.

UniCredit now holds 9.5 per cent of Commerzbank directly and 18.5 per cent through derivatives. It had previously raised its stake in Commerzbank, also with the use of derivatives, to near 21 per cent.

“UniCredit’s average entry price for the entire position is below current trading levels,” the Italian bank said, indicating it would be able to liquidate the investment in Commerzbank at a profit if it chose to.

UniCredit is under pressure in Italy to improve its BPM bid, which is at a 14 per cent discount to the market price as of Monday.

Announcing the BPM bid, UniCredit CEO Andrea Orcel said his bank could not afford to be side-lined in accelerating consolidation in its home market.

He said he was pausing expansion efforts in Germany until a new government was in place because of a rule that would force UniCredit to pay cash - and above a certain price - if it launched a full bid for Commerzbank within six months of acquiring at least 5 per cent.

UniCredit has owned Bavarian bank HVB since 2005. Since taking over as CEO in 2021, Orcel has tightened its grip on HVB and improved its performance by cutting staff, particularly senior roles, and automating processes.

This provides a template to improve Commerzbank’s returns, UniCredit has said.