Italian lender UniCredit“very aggressive, very opaque” bid for Commerzbank criticized German Finance Minister Jörg Kukies, who stressed that hostile takeovers usually do not work.
“In government, we have to protect the safety and stability of the systemic banking sector,” Kukies told CNBC on Thursday at the World Economic Forum in Davos. “Hostile takeovers at systemic banks are usually unsuccessful.”
UniCredit now owns a 9.5% direct stake and an 18.5% stake through derivatives in Commerzbank, after building a surprise stake in September and subsequently increasing its position.
Armed with a solid CET1 ratio — a measure of a bank’s strength and resilience — of 16.1% as of the third quarter, the Italian lender is seeking permission from the European Central Bank, which oversees the eurozone’s biggest lenders, to increase its stake in Commerzbank to 29.99%.
The sudden and accelerated pace of UniCredit’s pursuit has fueled market speculation that CEO Andrea Orcel – a veteran Merrill Lynch mergers and acquisitions broker – is ultimately targeting cross-border consolidation.
The move by UniCredit, which already has a presence in Germany through its subsidiary HypoVereinsbank, has so far received a cold reception from the divided government in Berlin, with outgoing Chancellor Olaf Scholz criticizing that “hostile attacks, hostile takeovers are not a good thing for banks.”
December’s rift in domestic politics and upcoming elections could prevent the German administration from carefully managing the transaction.
“In this particular case, the behavior of the potential acquirer was very aggressive, very opaque, non-transparent,” Kukies told CNBC’s Karen Tso and Steve Sedgwick. “Hostile takeovers are not a good thing in systemic banks. So, it’s about the specifics of this case, it’s not a general statement that Germany is not open for business by global investors.”
CNBC has contacted UniCredit for comment.
In an interview with CNBC back in Novemberjust a few months after the surprising construction of the stake, Orcel noted: “Let’s put it this way: we wouldn’t be here if we hadn’t been invited to buy that stake. And it all started in a way that we thought was constructive.”
Questions have been raised about the Italian banking group’s commitment to the job as it simultaneously launched an ambitious official takeover bid for Italian bank Banco BPM at the end of November.
For its part, Commerzbank advocated the independence of its case, with a warning from a board member significant job losses as a result of integration, if two banks were to merge.
Appetite for cross-border consolidation in Europe has waned somewhat since the disputed 2007 takeover and subsequent split of Dutch lender ABN Amro by a consortium led by Royal Bank of Scotland, which ultimately saw the banks fail during the financial crisis. UniCredit’s Orcel, then a senior investment banker at Merrily Lynch, advised on the transaction.
Still, analysts describe banking consolidation in the region — and especially in Germany — as “long overdue.” Commerzbank was previously a takeover target by the country’s biggest lender Deutsche Bank, before the brutal collapse of the initial negotiations in 2019.
“The statement that there is no consolidation and change in the German banking sector is absolutely wrong,” Kukies said on Thursday.
UniCredit and Commerzbank should announce their results for the fourth quarter on February 10 and February 13, respectively.
