The headquarters of Commerzbank AG, located in Frankfurt’s financial district in Germany, were bustling with activity on Wednesday as UniCredit, Italy’s second-largest bank, announced it has elevated its prospective stake in Commerzbank to 28%. This move has been achieved by ramping up the use of derivatives, leading to speculation that UniCredit may be considering a complete buyout of the German bank.
This announcement marks an upswing from the previous holding of 21%. At present, UniCredit’s ownership is composed of a 9.5% direct stake, supplemented by approximately 18.5% through derivative instruments.
Furthermore, the Italian banking giant has sought the European Central Bank’s approval to increase its stake up to 29.9% in Commerzbank. This development comes as UniCredit’s CEO, Andrea Orcel, is simultaneously pursuing a bid for another Italian banking institution, Banco BPM.
UniCredit’s recent move underscores the bank’s conviction that Commerzbank possesses significant untapped value that needs to be leveraged. In a press release on Wednesday, UniCredit affirmed its belief in Germany’s businesses and communities and the crucial role of a robust banking sector in bolstering Germany’s economic progress.
However, UniCredit emphasized that its current position in Commerzbank is purely an investment and does not affect its €10 billion ($10.49 billion) offer for Banco BPM. Industry insiders believe that Orcel may enhance his offer and incorporate a cash component to promote domestic consolidation.
Despite these developments, UniCredit has yet to convince its German takeover target or the Berlin administration about a potential deal. Commerzbank acknowledged UniCredit’s announcement on Wednesday but refrained from commenting further, pointing instead to its evolving strategy set to be unveiled on February 13.
The German government, which retains a 12% stake in Commerzbank, has thus far resisted Orcel’s attempts to court the bank. However, political unrest following the recent collapse of the ruling coalition and Chancellor Olaf Scholz’s defeat in a no-confidence vote might open up new possibilities.
Analysts have suggested that a merger between UniCredit and Commerzbank could create synergies in capital markets, advisory services, payments, and trade finance activities. This development resulted in a 1.1% rise in UniCredit shares and a 3.1% increase in Commerzbank stock as of 9:44 a.m. London time.
For those interested in financial trends and potential investment opportunities, this story offers a glimpse into the dynamic and intricate world of banking mergers and acquisitions.
