Italian lender UniCredit‘s “very aggressive, very opaque” bid for Commerzbank has been criticized by Germany’s Finance Minister Jörg Kukies, who stressed that hostile takeovers don’t usually work.
“In the government, we need to protect the safety and stability of a systemic banking sector,” Kukies told CNBC Thursday at the World Economic Forum in Davos. “Hostile takeovers in systemic banks don’t tend to be successful.”
UniCredit now owns a direct 9.5% stake and a 18.5% stake via derivatives in Commerzbank, after building a surprise stake in September and subsequently increasing its position.
Armed with a sturdy 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 euro zone’s largest lenders, to increase its Commerzbank stake to 29.99%.
The abrupt and accelerated pace of UniCredit’s pursuit has sparked market speculation that CEO Andrea Orcel – a veteran Merrill Lynch mergers and acquisitions dealmaker — is ultimately targeting cross-border consolidation.
The move by UniCredit, which is already present in Germany through its HypoVereinsbank branch, has so far enjoyed a cool reception from the fractured Berlin government, with outgoing Chancellor Olaf Scholz criticizing that “unfriendly attacks, hostile takeovers are not a good thing for banks.”
A December schism in domestic politics and upcoming elections could stall the German administration from closely stewarding the transaction.
“In this specific case, the behavior of the potential acquirer was very aggressive, very opaque, untransparent,” Kukies told CNBC’s Karen Tso and Steve Sedgwick. “Hostile takeovers are not a good thing in systemic banks. So it is all about the specifics of this case, it is not a general statement that Germany is not open for business for global investors.”
CNBC has reached out to UniCredit for comment.
Speaking to CNBC back in November, just months after its surprise stake build, 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 over the Italian banking group’s commitment to the deal by simultaneously launching an ambitious formal takeover offer for Italian peer Banco BPM in late November.
For its part, Commerzbank has been advocating its case to stand alone, with a board member warning of significant job losses as a result of integration, if the two banks were to combine.
The appetite for cross-border consolidation in Europe has waned somewhat since the contentious 2007 takeover and later carve-up of Dutch lender ABN Amro by a consortium led by Royal Bank of Scotland, which ultimately saw the banks collapse during the financial crisis. UniCredit’s Orcel, then a senior investment banker at Merrily Lynch, advised on the transaction.
Yet analysts describe banking consolidation in the region — and Germany in particular — as “long overdue.” Commerzbank was previously targeted for takeover by the country’s largest lender Deutsche Bank, before the brusque collapse of initial talks in 2019.
“The statement that there is no consolidation and no change in the German banking sector is absolutely wrong,” Kukies said Thursday.
UniCredit and Commerzbank are due to release their fourth-quarter results on Feb. 11 and Feb. 13, respectively.
Correction: This article has been updated to reflect that UniCredit’s earnings will be published on Feb. 11.
