UniCredit’s move to acquire Commerzbank is stirring up the German cabinet.
Top German officials rebuked UniCredit’s recent move to increase its stake in Commerzbank by almost 30%. Milan-based UniCredit is now Commerzbank’s biggest shareholder, beating the German government’s stake of 12%.
Earlier this month, UniCredit purchased 9% of Commerzbank, one of Germany’s largest and most important financial institutions with over €541 billion in total assets. The Frankfurt am Main-based bank, however, is going through financial trouble as the whole consumer economy of Germany significantly weakened since the COVID-19 pandemic and the Russian invasion of Ukraine.
UniCredit seized the moment and made a bold move. On Monday, the Italian bank made an even bolder step by acquiring a total of 21% of Commerzbank’s shares. UniCredit further applied to increase its stake to 29.9%.
“UniCredit believes that there is substantial value that can be unlocked within Commerzbank, either stand-alone or within UniCredit, for the benefit of Germany and the bank’s wider stakeholders. However, as was the case for UniCredit, such potential requires action for it to be crystallized,” the bank said on Monday.
Political opposition
The German government was Commerzbank’s previous largest shareholder when it injected €18.2 billion into the bank after the 2008 financial crisis.
Since then, Commerzbank has played an even larger role in the German economy as it took upon a third of Germany’s foreign trade payments.
German Chancellor Olaf Scholz firmly opposed UniCredit’s takeover. “Unfriendly attacks and hostile takeovers are not a good thing for banks and that is why the German government has clearly positioned itself in this direction,” Scholz said.
Before UniCredit made its intentions clear, the German government sold 4.5% of its shares to the Italian bank.
Italian Foreign Minister Antonio Tajani replied to Scholz’s comment arguing that German banks have a history of taking over other European financial institutions. “This is the internal market, being pro-European only in words leaves something to be desired, UniCredit is a big Italian bank and it is doing well to act within the internal market,” Tajani said.
Many experts praised UniCredit’s move as it stirs the European banking sector to further unity. A few months ago, French President Emmanuel Macron said he would not oppose the takeover of a major French bank by a European peer.
“Dealing as Europeans means you need consolidation as Europeans,” Macron said on that occasion to Bloomberg’s Editor-in-Chief John Micklethwait.
