Caught cold by UniCredit's swoop on Commerzbank, Germany will want to avoid a national embarrassment
UniCredit’s Potential Merger with Commerzbank Stirs Controversy in Germany #
Italy’s UniCredit has made a bold move towards a potential multibillion-euro merger with Frankfurt-based Commerzbank, catching German authorities off guard and triggering a fiery response from Berlin.
The Italian bank announced it had increased its stake in Commerzbank to around 21% and submitted a request to boost that holding to up to 29.9%. This follows UniCredit’s earlier move to take a 9% stake in Commerzbank earlier this month.
The German government has firmly opposed the move, with the Chancellor criticizing UniCredit’s decision as an “unfriendly” and “hostile” attack. Commerzbank’s Deputy Chair also voiced opposition to a potential takeover, stating, “We don’t want this.”
Market observers suggest the swoop may have provoked a sense of national embarrassment among Germany’s government. There are concerns about potential job losses, with one Commerzbank supervisory board member suggesting that as many as two-thirds of the bank’s jobs could disappear if UniCredit successfully carries out a hostile takeover.
Hostile takeover bids are not common in the European banking sector, making this move particularly noteworthy. The German government and trade unions are reportedly concerned about substantial job losses that could result from the merger.
The situation raises questions about the meaning of the European banking union and the broader European project. Germany has signed up to the EU’s single market, single currency, and banking union, which could make it difficult to block the merger on grounds of national interest without contradicting these principles.
This potential merger comes at a time when the European Union is grappling with the need for additional investment to meet key competitiveness targets. The incomplete banking union has been cited as a factor hindering competitiveness for the region’s banks.
As the situation unfolds, it remains to be seen how German authorities will respond to UniCredit’s bold move and what implications this might have for the future of European banking integration.