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Commerzbank is open to talks about a possible tie-up with German rival UniCredit, after the bank said it had bought a 9 percent stake in the German lender and was taking regulatory steps to increase its stake further, according to people familiar with the talks.
UniCredit paid up to 1.4 billion euros to become Commerzbank’s second-largest shareholder after the German government, acquiring a 4.5 percent stake from the FSA on Tuesday night and the same amount on the open market.
The move by UniCredit Chief Executive Andrea Orsel, Europe’s most prominent dealmaker, could open the door to much-needed banking consolidation on the continent.
The German government said last week it plans to sell the 16.5 percent stake in Commerzbank it has held since bailing out the bank during the 2009 financial crisis.
UniCredit said on Wednesday it would apply to regulators for permission to increase its stake in Commerzbank above 9.9 percent “if necessary.” The German government, whose stake has fallen to 12 percent, has promised to impose a 90-day lock-up period before it can sell any more shares in Commerzbank.
UniCredit said any future decisions would “depend on whether the investment meets the company’s strict financial criteria, which have been clearly and consistently communicated to the market.”
A person familiar with internal affairs at Commerzbank told the Financial Times that the bank had not previously been contacted by UniCredit and only learned about the deal through a regulator’s statement on Wednesday morning.
But the person added that Commerzbank would evaluate UniCredit’s plans without prejudice.
In a brief statement midday on Wednesday, the German bank said it had “taken note of UniCredit’s announcement this morning” and that the move was “a validation of the progress made so far and of Commerzbank’s position.”
The bank said its board “will continue to act in the best interests of all shareholders and key stakeholders, including employees and customers,” but declined to comment further.
UniCredit will “work with Commerzbank to explore value creation opportunities for all stakeholders of both banks,” it said in a statement on Wednesday morning.
The German bank’s shares jumped 16 percent in early trading in Frankfurt on Wednesday, giving it a market capitalization of 17.3 billion euros, its highest since July. UniCredit’s shares rose 1.95 percent in Milan, giving it a market capitalization of nearly 60 billion euros.
UniCredit’s move for Commerzbank highlights a growing appetite for integration in Europe that has been stalled until now by political and regulatory obstacles.
Mr. Orcel told the Financial Times in May that “most of the rumors” about the bank looking for potential takeover targets were “true” and that the bank is always on the lookout for M&A opportunities.UniCredit has been one of the euro zone’s best-performing stocks this year, rising 46 percent in Milan.
The Italian bank already owns Munich-based finance company Hypo Vereinsbank and has long been seen as the leading candidate to take over Commerzbank, as a combination of the two businesses could create a German financial powerhouse.
“At first glance, a full acquisition of Commerzbank could make both financial and strategic sense for UniCredit,” analysts at Keefe, Bruyette & Woods wrote in a client note.
UniCredit completed a similar deal last year when it bought a 9% stake in Alfa Bank from the Greek government. M&A advisers saw the acquisition as a way for UniCredit to gain more information about the bank as it looks to gain greater control.
The finance ministry said the government sold its 4.49 percent stake in Commerzbank to UniCredit because the bank’s bid was “overwhelmingly” higher. The shares traded at 13.20 euros a share, nearly 5 percent higher than Tuesday’s closing price, according to a document seen by the Financial Times.
“The government is bound by the principle of economic efficiency,” the Treasury said on Wednesday.
If Hypoverreinsbank and Commerzbank merge, it will create a giant bank that can rival Deutsche Bank, Germany’s largest bank.
Hypoverreinsbank currently has a geographic focus on the southern German state of Bavaria and the Hamburg region, while Commerzbank has a presence throughout Germany, so there is limited overlap between the two banks.
Deutsche Bank walked away from merger talks with Commerzbank in 2019, citing overlapping client bases between the German companies. But insiders had predicted a foreign takeover bid for Commerzbank would likely prompt Deutsche Bank to reconsider the possibility of a merger to avoid creating a bigger rival at home.
Deutsche Bank said it “does not comment on competitors” and is “focused on our growth strategy.” [its] “We aim for a return on tangible equity of at least 10% by 2025.”
Asked last week about a possible takeover of Commerzbank by UniCredit, Deutsche Bank Chief Executive Christian Sewing told Handelsblatt newspaper that “the bank does not see any takeover possibility at all.” [such a transaction] “That in itself is critical,” he said, adding that “competition is good for business.”
The UniCredit stake purchase came hours after Commerzbank said Chief Executive Manfred Knof would not seek re-election and would step down at the end of next year. Knof has indicated he intends to stay on until December 2025, but the bank said it would begin a search for a successor “immediately.”
Additional reporting by Guy Chazan in Berlin
