Scholz Warns UniCredit Against Commerzbank Takeover

German Chancellor Olaf Scholz issued a stern warning to Italy’s UniCredit on Monday, following the bank’s surprising move to significantly increase its stake in Commerzbank, Germany’s second-largest lender. The Italian banking giant now holds a 21% stake, surpassing the German government, which owns 12%, and sparking fears of a potential takeover.

Speaking to German television from New York, Scholz expressed his strong disapproval, emphasising the importance of protecting Germany’s financial institutions from what he described as “unfriendly attacks” and “hostile takeovers.” The chancellor underscored Commerzbank’s critical role in supporting the German economy, particularly in providing essential funding to small- and medium-sized enterprises.

“Unfriendly attacks, hostile takeovers are not a good thing for banks,” Scholz remarked, making it clear that Berlin is opposed to any move that could jeopardize Commerzbank’s independence. A German finance ministry official echoed these sentiments, stating that the government had communicated its position directly to UniCredit, reaffirming its support for Commerzbank’s strategy of remaining independent.

Italian Response and Market Reaction

UniCredit’s rapid acquisition of shares in Commerzbank, including 9% obtained from the German government itself, has raised eyebrows both in Germany and across Europe. The Italian bank’s initial surprise purchase of a 9% stake was followed by another 11.5% obtained through financial instruments, bringing its total ownership to around 21%. UniCredit has also sought permission from the European Central Bank to raise its stake to just below 30%, a threshold that would require it to make a public offer for the entire bank.

Italian Foreign Minister Antonio Tajani defended UniCredit’s actions, dismissing the notion of hostility. “These are private but legitimate initiatives. I do not understand why an Italian company buying from the European market would be a hostile act,” Tajani told Italian media, emphasizing that UniCredit had adhered to European market rules.

Despite Tajani’s reassurances, the move has fueled speculation about UniCredit’s long-term intentions, with critics in Germany accusing the government of being caught off guard by the bank’s strategic maneuvers. Last week, UniCredit CEO Andrea Orcel denied plans for a hostile takeover, describing such a move as “an aggressive act.”

Political and Labor Opposition

The development has sparked a wave of criticism in Germany, particularly from opposition politicians and labor unions, who fear the potential consequences of a merger or takeover. The Verdi labor union, which represents Commerzbank employees, has voiced strong objections, citing concerns over job security.

In response to the growing controversy, the German government announced on Friday that it would halt further sales of its Commerzbank shares “for the time being.” The government’s decision marks a significant shift, given that it had previously begun reducing its holdings, citing Commerzbank’s improved financial health.

Commerzbank, which received a substantial bailout from Berlin during the 2009 global financial crisis, has since made a strong recovery. The bank posted its best annual net profit in 15 years in 2023 and has set ambitious targets for 2024, despite expectations of lower interest rates.

Future Uncertain

As UniCredit continues to navigate the complexities of its increased stake in Commerzbank, the situation remains fluid. The Italian bank has stated that it has “full flexibility and optionality” regarding its shareholding, indicating that future decisions will depend on ongoing discussions with Commerzbank’s management and stakeholders in Germany.

For now, the tension between Berlin and UniCredit highlights the delicate balance of power and the challenges of cross-border investments within the European Union’s financial sector. As both sides brace for what could be a prolonged standoff, the future of Commerzbank—and the broader implications for European banking—hangs in the balance.