Considering Commerzbank's situation.
Why is Commerzbank a Takeover Target?
The small size of Commerzbank, with a market value of approximately 18 billion euros, has made it a takeover target for years. Unicredit, on the other hand, boasts a market value of around 61 billion euros. The federal government's decision to sell some of its stake in Commerzbank has inadvertently opened the door for Unicredit to potentially increase its stake in the German bank. Recently, Unicredit has secured the option to increase its stake from 9% to 21%, and it aims to acquire even more, positioning itself as the bank's largest shareholder.
Can the Federal Government Prevent a Hostile Takeover?
Legally, the federal government, which holds around 12% of Commerzbank, has limited power to prevent a takeover. The proposal to declare Commerzbank a "critical infrastructure" to prevent a takeover is still under discussion. Should this not materialize, the federal government and Commerzbank can only express their opposition to a hostile takeover. Commerzbank would need to demonstrate to its shareholders that an independent institution would yield better returns, but this may be challenging given the significant synergies expected from a merger.
Why is Commerzbank Changing its CEO Now?
Lack of clarity during this critical phase prompted Commerzbank to change its CEO. Initial plans for CEO Manfred Knof to serve until the end of 2025 have been reconsidered, with CFO Bettina Orlopp set to take over "in the near future." Orlopp has been a long-time contender for the position and has been a member of the board since 2017. She will become the first female CEO in Commerzbank's 154-year history.
What Changes for Commerzbank Customers?
No official takeover offer has been made as yet. Unicredit's CEO has stated that he could sell his stake profitably, and regulatory approvals are still pending.
Could Deutsche Bank Step In as a White Knight?
Deutsche Bank has no intention of intervening in the battle for Commerzbank, as confirmed by its CFO. The bank is concentrating on its own operations.
What Would a Takeover Mean for the German Financial Sector?
The takeover would primarily result in a loss of influence: "Instead of having a large bank with decision-making power here, we would then have a perhaps very large and beautiful, but still a branch of Unicredit from Milan," says finance professor Grote. Key decisions would then be made from Italy.
Are There Consequences to Fear for the German Economy?
The text does not explicitly mention any potential consequences for the German economy.
As long as things are running smoothly on the international financial markets, corporate clients have little to fear from an expert's perspective. Commerzbank is strong in the SME business and, even under the roof of Unicredit, credit supply is likely to continue. However, renewed stress in the financial sector could become problematic. If, for example, Unicredit had to be supported by the state, German SME customers could be at a disadvantage, fears Grote.
How many jobs and branches are at stake?
Commerzbank's corporate restructuring, including thousands of job losses and the reduction of its branch network, has already had significant implications. In the event of a takeover by Unicredit, two-thirds of the bank's 42,000 employees could be at risk, according to the chairman of the works council, Uwe Tschaegé. The Verdi representative, Stefan Wittmann, points to HypoVereinsbank, which underwent a major job and branch slash after its takeover by Unicredit in 2005.
What role does the European Central Bank play?
The ECB must approve Unicredit's planned stake increase in Commerzbank. Responsible for banking supervision of the largest banks in the eurozone, the ECB has 60 days to issue a positive or negative signal once the documents are submitted - in this case, by Unicredit. A 30-day extension is possible. The banking supervision considers factors such as the bank's reputation, management, compliance, and the applicant's financial resources. In the case of Unicredit, there should be no major concerns. Political considerations do not play a role.
What happens next?
If the ECB approves Unicredit's application, the Italian bank can increase its stake to 29.9%. From 30%, the Italians would be legally obliged to make a public takeover offer. Commerzbank would then be tasked with reviewing this offer in the interest of its shareholders. The bank has thus far emphasized its focus on Strategy 2027, its plan to become more profitable. The incoming CEO Orlopp will face significant challenges, acknowledging that "We have a strategy that is working, but we still have great tasks ahead of us."
After the federal government's decision to sell some of its stake in Commerzbank, Unicredit has the potential to increase its stake further. Recently, Unicredit secured an option to increase its stake from 9% to 21%, and it aims to acquire even more, positioning itself as Commerzbank's largest shareholder.
Legally, the federal government's power to prevent a takeover is limited, and a proposal to declare Commerzbank a "critical infrastructure" is still under discussion.
