By Francesco Canepa
In Frankfurt, a significant development is on the horizon as sources reveal that the European Central Bank is likely to grant Italy’s UniCredit approval to increase its stake in Commerzbank, a prominent German bank. This move could potentially set the stage for the largest cross-border banking deal in Europe since the global financial crisis.
The European Central Bank (ECB) staff are expected to wrap up their assessment of UniCredit’s plan to acquire 29.9% of Commerzbank by early March. This final analysis will pave the way for the regulator’s Supervisory Board to approve the transaction later that month, according to insights from an insider.
Recent discussions involving the ECB’s supervisory experts have concluded on a positive note. Different scenarios were evaluated to gauge the stability of both banks, providing encouraging findings, as shared by the source. Meanwhile, the ECB has chosen not to comment on the matter.
Andrea Orcel, UniCredit’s CEO and a well-known figure for orchestrating major deals, stirred up the German corporate and political circles when he began acquiring shares in Commerzbank back in September. Despite facing resistance in Germany, he has persistently pursued a complete merger.
Achieving the ECB’s approval for UniCredit’s substantial ownership in Commerzbank would effectively remove a significant regulatory barrier. However, Orcel has acknowledged the necessity of gaining the German government’s backing to advance with a full acquisition—something Commerzbank’s leadership views as a “hostile” maneuver.
Bringing UniCredit and Commerzbank together would see one of Italy’s largest banks merge with Germany’s second-largest publicly listed lender, partly owned by the government since a bailout in 2008. However, hurdles such as the absence of a unified deposit insurance system and restrictions on capital transfers are frequently cited by executives and supervisors as obstacles to such mergers.
Despite these challenges, ECB’s top supervisor, Claudia Buch, along with President Christine Lagarde, has advocated for cross-border mergers, arguing that European banks are comparatively smaller and more locally focused than their U.S. counterparts.
The ECB, as the primary banking overseer in the euro zone, holds the authority to block significant investments in banks, relying on factors such as the buyer’s financial stability and the managerial reputation.
The final decision by the supervisors must be endorsed by the ECB’s Governing Council, led by Lagarde. In Germany, concerns arise over the potential loss of one of the country’s few remaining prominent commercial banks. There is apprehension over forging economic ties with heavily indebted Italy, especially as political sentiment in Berlin shifts.
Germany’s forthcoming government, likely headed by conservative leader Friedrich Merz, has expressed strong reservations about UniCredit’s acquisition efforts. In September, Merz described the move as “really devastating” for Germany and highlighted possible negative impacts on the nation’s medium-sized businesses and export financing, which significantly rely on bank loans.
As this unfolds, Commerzbank has announced plans to cut 3,900 mostly domestic jobs. This strategy, devised by the new CEO Bettina Orlopp, aims to achieve ambitious profit targets and resist UniCredit’s takeover attempts.
(Reporting by Francesco Canepa; Editing by Elisa Martinuzzi, John O’Donnell, and Hugh Lawson)
