Italian lender UniCredit increased its stake in Commerzbank to 28% on Wednesday, drawing a stiff rebuke from the German government.
"UniCredit itself emphasizes that the participation in Commerzbank has so far been a pure investment, which could also be dissolved at any time,” deputy government spokesman Wolfgang Buechner said Wednesday, according to Bloomberg. “The German government expects UniCredit to make use of this option.”
UniCredit on Wednesday said the increase “reinforces [the] view that substantial value exists within Commerzbank that needs to be crystallized.”
“The position remains at this time solely an investment,” UniCredit reiterated Wednesday.
Commerzbank, for its part Wednesday, said it had “taken note” of UniCredit’s announcement but had no comment “other than by pointing to our strategy that we continue to implement and are in the process of upgrading,” a spokesperson for the German bank said.
The bank is set to present that strategy to investors Feb. 13, the spokesperson said.
Commerzbank labor representatives on Wednesday called UniCredit’s stake-building “activist and hostile,” according to Bloomberg.
UniCredit’s buy-up, at first glance, appears to contradict assurances the bank’s CEO, Andrea Orcel, made last month — that the Italian lender was content to wait until after Germany’s federal election in February, to make a decision on its Commerzbank investment.
“We can sit on it for a while. It will remain there. It’s not diverting management, it’s not requiring from us anything,” Orcel said Nov. 25.
The comment came as UniCredit launched a €10.1 billion bid for domestic rival Banco BPM, which at the time was thought to be a strategic pivot from Commerzbank.
UniCredit said Wednesday the Commerzbank move “does not have any impact on the public exchange offer with Banco BPM.”
A spokesperson for the German government called UniCredit’s move Wednesday “uncoordinated and unfriendly,” according to Reuters. The spokesperson added the government is “working hard to find a good solution for Germany” but did not offer further details.
Germany’s newly minted finance minister, Jörg Kukies, last month said he “assumed” any attempted takeover of Commerzbank by UniCredit was dead, given the German government’s “very critical” resistance.
UniCredit quietly built a small holding in Commerzbank but doubled it in September, when the German government sought to offload its own stake in the bank. The Italian lender then used derivatives contracts to push its stake to 21%. UniCredit used some of those same instruments Wednesday to advance its holding to 28%.
UniCredit’s physical stake in Commerzbank stands at 9.5% because European Central Bank rules prevent it from increasing its holding beyond 9.9% without regulator sign-off.
The Italian bank said Wednesday, though, that it had “activated” the formal approval process, meaning regulators must give a decision within 90 days whether UniCredit can convert its derivatives into physical shares.
A UniCredit spokesperson said Wednesday “the clock has started ticking,” according to the Financial Times.
The ECB and Germany’s financial regulator BaFin declined to comment.
German rules would require UniCredit to make a bid for full acquisition if its stake goes beyond 30%. Rules would also force UniCredit to make an alternative cash bid -- above a certain price -- if it were to bid for Commerzbank within six months of acquiring at least 5%.
JPMorgan analyst Delphine Lee noted the German government can’t block a deal outright like Italy’s can.
“But for UniCredit, the government support seems to be key for the deal to happen,” Lee wrote in a Wednesday note seen by Bloomberg. “Considering the comments from key political parties in Germany on UniCredit’s move, it is difficult to envisage how the group could build enough support.”
Marco Troiano, head of financial institutions at Scope Ratings, told Reuters that UniCredit’s stake increase positions the bank to "exert greater influence over Commerzbank's management, while limiting the German lender's strategic options."
