ECB Approves Increased Unicredit Stake in Commerzbank

The European Central Bank (ECB) has granted approval for Unicredit to increase its stake in Commerzbank to just under 30 percent, marking a significant step towards a potential takeover of the German banking institution. This decision comes after months of strategic maneuvers by the Italian bank, which has been eyeing Commerzbank since late last year.

According to statements from the ECB, the decision has been communicated to Unicredit, allowing the bank to move forward with its plans. The ECB conducts thorough evaluations of investors looking to acquire a stake of 10 percent or more in banks, ensuring that they meet the criteria for suitable shareholders.

In addition to the ECB's oversight, the Bundeskartellamt, Germany's competition authority, is also scrutinizing Unicredit's entry into Commerzbank. In late February, Unicredit registered its interest in acquiring up to 29.99 percent of Commerzbank's shares for regulatory review.

Unicredit has capitalized on the German government's partial exit from Commerzbank, which was necessary following the financial crisis of 2008/2009. Currently, Unicredit controls approximately 28 percent of Commerzbank, with 9.5 percent held directly via shares and an additional 18.5 percent through financial instruments. However, converting the latter into direct shareholding will require further approvals from regulatory bodies, including the Bundeskartellamt.

Unicredit's CEO, Andrea Orcel, has been actively pursuing the acquisition, emphasizing the potential benefits of a merger between the two banks. Should Unicredit secure a 30 percent stake, it would be mandated to present a purchase offer to all remaining Commerzbank shareholders. However, Orcel has indicated that a definitive decision regarding the merger would likely not be made within the current year, citing ongoing regulatory processes and discussions with key stakeholders.

The German government still holds approximately 12 percent of Commerzbank as a result of the previous financial rescue. This ongoing involvement has led to mixed reactions from various political figures regarding Unicredit's aggressive approach.

Internally, Commerzbank has expressed its opposition to Unicredit's takeover strategy, labeling it as hostile. The head of the company's works council, Sascha Uebel, has vowed to resist the acquisition vigorously, stating that the path Orcel must navigate will be fraught with challenges.

In response, Orcel has consistently highlighted the advantages of a merger, arguing that there is untapped potential within Commerzbank. Additionally, recent communications from Unicredit raised questions about Commerzbank's future strategies, prompting the latter's CEO, Bettina Orlopp, to assert that Commerzbank is prepared to address all inquiries from potential investors.

Commerzbank is currently focused on maintaining its independence, promoting rising dividends and ambitious profit targets to its shareholders. The bank has also announced plans to streamline operations by reducing the workforce by approximately 3,900 full-time positions by the end of 2027, while simultaneously creating jobs in its Polish subsidiary, mBank, and in lower-cost regions such as Malaysia.