The potential takeover of Germany’s Commerzbank by Italy’s UniCredit has ignited a fierce political and economic debate, with German Chancellor Olaf Scholz coming out firmly against the deal.
As UniCredit raises its stake in Commerzbank from 9% to 21%, concerns over national sovereignty and economic independence have taken center stage.
The Italian bank, led by CEO Andrea Orcel, plans to increase its shareholding further, targeting up to 29.9%.
Scholz told Reuters on the sidelines of a visit to New York on Monday that “unfriendly attacks (and) hostile takeovers are not a good thing for banks and that is why the German government has clearly positioned itself.”
This move marks a critical moment in the long-simmering tensions over European banking consolidation, particularly when it involves cross-border mergers.
With the German government’s refusal to support the takeover, it’s clear that the deal faces substantial political resistance.
“We do not support a takeover, and we have informed UniCredit about this,” a German government official told the Financial Times.
National sovereignty and strategic interests
At the heart of the opposition is Germany’s deep-rooted concern about losing control over a critical financial institution to a foreign entity.
Commerzbank, a key lender to the nation’s small and medium-sized Mittelstand businesses, is considered vital to the German economy.
Any disruption to its operations, such as the potential changes in management or strategic direction under UniCredit, could have far-reaching consequences.
Labour unions have raised alarms over possible job cuts, while Commerzbank executives warn that a merger with UniCredit could undermine lending to Mittelstand companies, threatening the backbone of Germany’s economy.
Friedrich Merz, leader of Germany’s opposition party, expressed his dismay over the prospect of the takeover, calling it a “disaster for the German banking sector.”
His remarks underscore the broad-based political resistance to the deal, cutting across party lines and labor interests.
For many in Germany, this is not just a business deal but a matter of national interest.
UniCredit’s ambitions and Berlin’s resistance
UniCredit’s interest in Commerzbank is part of a broader strategy by CEO Andrea Orcel to position the Italian lender as a European banking giant.
Orcel’s vision includes using UniCredit as a vehicle to consolidate the fragmented European banking sector, with the Commerzbank deal potentially catalyzing further mergers across the continent.
A successful acquisition would mark the first significant cross-border bank deal in Europe since the financial crisis, which could lead to a wave of similar mergers.
However, Germany’s opposition to the takeover complicates this vision.
After initially acquiring 9% of Commerzbank—half of which came directly from the German government—UniCredit has met resistance from Berlin at every turn.
A person familiar with Commerzbank’s management told FT that Orcel’s latest move seems at odds with his earlier statement that he would not pursue a hostile takeover.
The German government, which still holds a 12% stake in Commerzbank, had previously planned to sell down its holdings but has since backtracked in response to domestic opposition to a takeover.
By blocking further negotiations, Berlin effectively forced UniCredit’s hand, prompting the Italian bank to raise its stake without government backing.
As one government official stated, “Berlin supports the strategy of Commerzbank which is geared towards independence.”
Germany-Italy relations at stake?
Beyond political resistance, UniCredit also faces regulatory obstacles.
To increase its stake beyond 10%, the bank requires approval from the European Central Bank (ECB), and while the 11.5% stake has been acquired, the transaction will not be finalized until all necessary approvals are in place.
If successful, UniCredit would leapfrog the German government as Commerzbank’s largest shareholder, putting even more pressure on Berlin.
The takeover attempt has not only strained relations between UniCredit and the German government but has also introduced diplomatic tensions between Italy and Germany.
Italian Foreign Minister Antonio Tajani defended UniCredit’s actions, stating they were “more than legitimate.”
Meanwhile, officials in Rome, including those close to Prime Minister Giorgia Meloni, have privately expressed frustration over Germany’s opposition, accusing Berlin of hypocrisy, Bloomberg reported.
According to sources cited in the Bloomberg report, Italian officials are frustrated that Germany promotes European integration but balks at the idea of a cross-border bank merger within the EU.
At the same time, some in Rome have also expressed frustration at Orcel for being overly aggressive in his bid for the German bank, according to the report.
They are worried that it could affect relations between the two countries.
European banking consolidation
This battle over Commerzbank could serve as a pivotal moment for the future of European banking consolidation.
While UniCredit aims to position itself as a leader in this consolidation, its attempt to acquire Commerzbank is likely to set a precedent for future cross-border deals.
Should the acquisition succeed, it could inspire other European banks to explore similar moves, consolidating a sector that has long been fragmented.
However, the UniCredit-Commerzbank saga also reveals the deep challenges facing such consolidation efforts, particularly when national interests are at stake.
Germany’s opposition highlights how political considerations, national sovereignty, and economic strategy can clash with the broader vision of a unified European banking market.
As UniCredit continues to pursue its strategic ambitions, it remains unclear whether Orcel’s vision of a cross-border banking giant can overcome the formidable resistance posed by national interests and political opposition.
For now, the battle over Commerzbank is far from over, and its outcome will have significant implications for the future of European finance.
The post German Chancellor Scholz calls UniCredit’s moves on Commerzbank ‘unfriendly’ appeared first on Invezz