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Opposition within the German government to a potential takeover of Commerzbank by UniCredit is solidifying, amid anger at the way the Italian bank acquired its 9 per cent stake and concern over potential macroeconomic risks a merger might pose to the German economy.
Some senior figures in government were “very sceptical” about such a takeover, according to a person briefed on internal discussions, partly because of what Berlin viewed as the “stealthy way” UniCredit accumulated the stake.
Another person with direct knowledge of the matter said UniCredit’s “assault” on Commerzbank was perceived in Berlin as an “unfriendly act.” The person added it was “nonsensical” for UniCredit’s chief executive Andrea Orcel to argue the German government welcomed his bid.
They both spoke under the condition of anonymity because the government of Chancellor Olaf Scholz has yet to form an official position on a potential merger.
A spokeswoman for the German finance ministry said the government was “analysing the situation”, declining to comment further.
UniCredit became Commerzbank’s second-largest shareholder last week after disclosing a 9 per cent stake in the lender, half of which it purchased in a single block from the German government.
The Financial Times has previously reported that the move blindsided senior officials in Berlin who had not expected a strategic bidder in an auction aimed at financial investors, and had failed to appreciate until late in the process that UniCredit had already built a 4.5 per cent holding.
The negative reaction within the government suggests UniCredit’s approach may have backfired, lowering Orcel’s odds of implementing a full takeover.
UniCredit said: “The [German] government ran a fully transparent auction process for the sale of its stake . . . in which we were invited to participate.” Orcel told German newspaper Handelsblatt earlier this week that “we would not have acted had we not been welcome”.
The Commerzbank team tasked with engaging with Orcel was also concerned that UniCredit might be “overexposed to Italy”, four people briefed on internal discussions told the FT.
If UniCredit purchases Commerzbank, Berlin may find itself in the position of having to bail out the Italian-based lender in case of a financial crisis, key people involved in discussions in Berlin and Frankfurt have argued.
Commerzbank is one of the most important lenders to Germany’s export industry and Mittelstand — the small and medium-sized companies that form the backbone of the country’s economy.
The German lender is led by former Bundesbank president Jens Weidmann, who in his previous job repeatedly warned about high levels of sovereign debt in Eurozone countries.
Italy’s public debt ratio is the second-highest in the Euro area, and more than double that of Germany’s. Moody’s rates German sovereign debt at AAA, the highest possible rating, while Italy’s, at Baa3, is just one notch above junk.
Officials in Berlin are also concerned that a merger, which unions fear would lead to thousands of job losses at Commerzbank and UniCredit’s Munich-based German subsidiary HypoVereinsbank, could become an issue for next year’s election campaign, at the expense of Scholz’s unpopular coalition.
However the German government, which has yet to formulate a unified position on UniCredit’s interest in Commerzbank, is aware it needs to tread carefully as Germany has been a supporter of European integration and a capital markets union, the people said.
Germany’s powerful services sector union, Verdi, has vowed to fight any deal between the two banks “tooth and nail”, while opposition politicians from the centre-right CDU and the leftwing BSW have also voiced concerns.
Alexander Lorz, a CDU politician and finance minister of the German state of Hesse, told the FT that the state expected the federal government to strengthen Frankfurt’s status as a financial centre. “We are focused on the interests of Germany’s most important financial hub,” he said.
The Italian government is supportive of a Commerzbank takeover — provided that the headquarters of an enlarged pan-European lender remains in Italy, according to people familiar with Rome’s thinking. UniCredit needs approval from the ECB to raise its stake above 9.9 per cent. Reuters first reported the Italian government stance.
UniCredit said it had been a “strong supporter of the German economy for almost 20 years” through HypoVereinsbank, acquired in a rare cross-border deal in 2005.
“We remain convinced that Commerzbank has significantly greater potential to deliver — and if we can help them to do that — either as a shareholder or a partner — we are ready to do so.”
Commerzbank declined to comment.
Additional reporting by Silvia Sciorilli Borrelli in Milan.