Scholz Condemns UniCredit’s ‘Unfriendly’ Commerzbank Move
(Bloomberg) -- Tensions between Germany and UniCredit SpA burst into the open Monday as the government said it opposes a takeover of Commerzbank AG while the Italian lender moved to raise its stake.
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“Unfriendly attacks, hostile takeovers are not a good thing for banks, which is why the German government has taken a clear position here and made it very clear that we do not consider this to be an appropriate course of action,” Chancellor Olaf Scholz told reporters in New York on Monday.
The statement came hours after UniCredit disclosed it had entered into derivative contracts that would allow it to raise its Commerzbank stake to around 21%, from 9% previously. That effectively makes UniCredit the largest shareholder ahead of the German government and puts it on course for a takeover.
Resentment within the German government has been building over the way UniCredit Chief Executive Officer Andrea Orcel made his move on Commerzbank, a lender seen as a crucial source of funding for the country’s economy, Bloomberg News has reported. Berlin, which had planned to sell down its Commerzbank stake in the market, on Friday announced that it will pause the planned disposal, with some officials apparently blindsided by Orcel’s approach.
That didn’t stop the CEO from making another move on Monday, when UniCredit said it was set to more than double its holding in the German lender, using derivatives. UniCredit had used a similar strategy to avoid tipping off investors and stakeholders before it was disclosed on Sept. 11 that it had acquired a large stake.
Scholz in his statement criticized “that without any cooperation, without any consultation, without any feedback, attempts are being made with unfriendly methods to aggressively acquire stakes in companies.”
“Commerzbank is a commercially successful bank that plays an important role in making sure that German industry, and small and medium-sized companies, get their necessary financing,” he said. “And it is able to do that well as an independent entity.”
A representative for UniCredit declined to comment.
Commerzbank shares fell 5.90% at 5:18 p.m. in Frankfurt, while UniCredit declined 3.2% in Milan. The German bank is still up about 17% since UniCredit first disclosed its stake almost two weeks ago, while the Italian rival gained about 2%.
The rare comments by Scholz underscore how much tensions have escalated between Orcel, one of Europe’s most prolific dealmakers, and the government of Scholz, which has been criticized by opposition parties over how it handled the Commerzbank stake. Friedrich Merz, the leader of Germany’s main opposition party, said Monday that the government had “lost control” of the Commerzbank transaction.
The drama now unfolding started in early September, when Germany announced a plan to sell about 4.5% of Commerzbank, in a first step toward returning the lender to full private ownership. The government had envisioned a sale to a range of institutional investors, arguing the lender had turned the corner and was strong enough to stand on its own feet.
Instead, UniCredit snapped up the entire stake by outbidding rivals, disclosing that it had previously amassed more shares of Commerzbank quietly in the market. The move irked German officials who said it lacked transparency, a person familiar with the matter has said, asking not to be identified discussing government deliberations.
Commerzbank’s management board is convening for a strategy meeting in the Taunus hills near Frankfurt. Management is scheduled to present its vision to the bank’s supervisory board there on Tuesday and Wednesday, but UniCredit’s move is expected to be the talk of the gathering, according to people familiar with the matter.
“We are astounded and angry about Orcel’s behavior,” Commerzbank works council head and Deputy Chairman Uwe Tschaege said. “He is not interested in what the government or Commerzbank says, this is not a friendly act. The mood here is even more negative than before.”
Orcel has repeatedly made clear that he remains open-minded with regard to what happens next to its stake. He has also said that at least some in Berlin were aware of his bank’s intentions, and emphasized in recent days that he’s not interested in pursuing a hostile takeover.
In its statement on Monday, UniCredit cited a recent report on European competitiveness presented by former European Central Bank President Mario Draghi, arguing that the continent needs the banking consolidation that the possible takeover bid represents.
“UniCredit believes that there is substantial value that can be unlocked within Commerzbank, either stand alone or within UniCredit, for the benefit of Germany and the bank’s wider stakeholders,” it added.
--With assistance from Iain Rogers, Sonia Sirletti and Angela Cullen.
(Updates with UniCredit declining to comment in eighth paragraph. A previous version of this story corrected the date when UniCredit’s stake was first disclosed.)
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