UniCredit's Increased Stake in Commerzbank Raises Concerns
The Italian banking giant UniCredit has made headlines by increasing its stake in Commerzbank, Germany's second-largest private bank, to 21 percent. This move has sparked significant concerns among the German government and industry leaders regarding potential economic repercussions. CEO Andrea Orcel stated that the future direction of Commerzbank will largely depend on its 'cooperation' with Frankfurt's management and supervisory boards, hinting at a potential shift in control.
On Monday, UniCredit announced that it had raised its existing nine percent stake by an additional 11.5 percent and is eyeing an increase to 29.9 percent, pending approval from the European Central Bank. This puts UniCredit in a powerful position as the largest single shareholder, leading to speculation about its intentions for Commerzbank.
Chancellor Olaf Scholz expressed his discontent during a trip to New York, labeling the move an 'unfriendly attack' and a potential 'hostile takeover.' He emphasized that such aggressive tactics are not appropriate in the European banking landscape. Scholz's government, which previously held a 12 percent stake, is now the second-largest shareholder following UniCredit's acquisition.
The situation has prompted an internal investigation within the federal government to understand the share sale process, particularly regarding a 4.5 percent stake sold directly to UniCredit, which was intended to be distributed among various investors to prevent a single entity from gaining too much power.
Finance Minister Christian Lindner defended the sale, arguing that the government should not maintain a long-term stake in private banking, while Economics Minister Robert Habeck maintained a cautious stance, advocating for a robust German and European banking sector. In stark contrast, opposition leaders criticized the government's handling of the sale, with CDU chairman Friedrich Merz calling it 'amateurish' and detrimental to the German banking market.
Concerns are mounting about the implications for German small and medium-sized enterprises (SMEs), as Commerzbank is a major financier for this sector. An insider warned that further sales or a merger could jeopardize financing for SMEs, which are vital to the German economy. Orcel's comments suggest that if Commerzbank were to merge with UniCredit, decisions might shift to Milan, potentially disadvantaging the German market.
As the market reacts, Commerzbank's stock has already seen a decline following the government's rejection of UniCredit's takeover intentions, falling more than 5% in Frankfurt. In Milan, UniCredit's shares also dipped by 3%, reflecting broader concerns in the banking sector amid speculation about potential taxes on extra profits.
