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Germany turns up heat while UniCredit's Orcel calls for Commerzbank talks

Orcel has said all options — including walking away — are on the table

Published: Wed 25 Sep 2024, 3:50 PM

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  • Reuters

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Employees of Commerzbank protest against a potential takeover battle by UniCredit, in front of the Commerzbank headquarters in Frankfurt on Tuesday. The placard reads “Safe workplaces for Commerzbank employees.” — Reuters

Employees of Commerzbank protest against a potential takeover battle by UniCredit, in front of the Commerzbank headquarters in Frankfurt on Tuesday. The placard reads “Safe workplaces for Commerzbank employees.” — Reuters

Germany cranked up its opposition to UniCredit’s swoop on Commerzbank on Wednesday, while the Italian bank’s CEO said he would only pursue a takeover if it had broad shareholder backing and called for talks with the government.

Two weeks since UniCredit unveiled a surprise stake in Commerzbank and its CEO Andrea Orcel laid out plans for a possible cross-border merger, the battle lines are being drawn.

Berlin, which retains a 12 per cent stake in Commerzbank, the lender’s management and trade unions all oppose a deal and a top German official on Wednesday called UniCredit’s actions “aggressive” and “unwise”.

Orcel has said all options — including walking away — are on the table, while also building up UniCredit’s stake.

“Commerzbank, for us at the moment, is an investment, nothing else. There is no offer, there is no bid,” Orcel told a Bank of America investor conference in London. “We’re indeed a large shareholder, a strategic shareholder now, but it is an investment ... and people should comment and think about that as an investment and nothing else,” he said, adding UniCredit would not ask for a Commerzbank board seat.

But the UniCredit CEO also pressed for more talks, saying that the bank had spoken “repeatedly with several stakeholders of Commerzbank” before it was invited to buy a 4.5 per cent stake from the German government.

“We felt that it was a normal consequence of that process. And that’s where we are today, but we’re very keen to reopen those dialogues and have constructive dialogue with all the stakeholders,” he added.

UniCredit angered the German government this week by raising its holding in Commerzbank close to 21 per cent, conditional on European Central Bank approval, using derivative instruments.

German Chancellor Olaf Scholz slammed the move as “an unfriendly attack” and on Wednesday finance ministry state secretary Florian Toncar warned UniCredit against turning hostile, saying such takeovers harboured great risks.

“It is not wise to proceed too aggressively with a large, highly regulated, complex bank,” Toncar said after a closed-door meeting with the finance committee of Germany’s lower house of parliament. “You always need the stakeholders in the end.”

Orcel’s move is a huge test for European banking consolidation, which has long been sought by regulators and banking executives but stymied by political opposition and the weakness of many lenders to acquire rivals.

On Tuesday, Commerzbank said Bettina Orlopp will take over as its chief executive in the near future, handing the CFO the task of fending off UniCredit’s bid for Germany’s No. 2 lender.

Commerzbank’s shares have risen sharply since Orcel’s move as investors bet on a full takeover bid by UniCredit, which is flush with cash after a run of record profits and already has a presence in Germany through its ownership of HVB.

Michael Schrodi, a lawmaker from the SPD party of Social Democrats in Germany’s governing coalition, accused UniCredit of being “utterly secretive” in gaining control of 21 per cent of Commerzbank, partly through financial derivatives.



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