The potential acquisition of Commerzbank by Italy’s UniCredit has created a strong dynamic in the European banking sector, especially in Germany. The news that UniCredit has already acquired 9% of Commerzbank, with the aim of increasing its stake, has alarmed the market and especially Deutsche Bank, Commerzbank’s main competitor in the German market.
Deutsche Bank appears to be considering strategies to prevent a further takeover of Commerzbank by UniCredit, as this could lead to the creation of a large banking organization that will surpass it in terms of revenue and assets.
Deutsche Bank CEO Christian Sewing is reportedly in talks with the German state about buying the 12% of Commerzbank shares still owned by the government.
This possibility is important because control of these shares could give Deutsche Bank leverage to prevent a full takeover by UniCredit. However, Deutsche Bank appears to be ruling out a full takeover of Commerzbank, something that was previously discussed in 2019 but then failed to reach an agreement.
Deutsche Bank in hot coals
UniCredit’s move caused concern in the German state, as the government did not expect a single buyer to acquire 9% of the bank. The strategy of the state was to distribute this percentage to many investors, in order to maintain a greater multilateralism among the shareholders. But UniCredit made a much higher offer (€13.20 per share), beating the state’s offer which ranged from €12.48 to €12.60.
This has created additional pressure on Deutsche Bank, which sees the potential merger between Commerzbank and UniCredit as a threat to its own dominant market position. If this takeover goes ahead, it will create a banking giant on a par with Société Générale and Santander, which could destabilize competition in the European banking scene.
In addition, the whole process raises questions about the goals of the European Central Banking System (ECB), which wants to create stronger and more resilient banks across Europe. ECB Vice-President Luis de Guidos recently recalled the need for banking mergers across national borders to create institutions that can withstand adverse economic conditions and compete with international giants.
The banking balance in the EU
Deutsche Bank, despite the concerns, has yet to make a formal move, leaving its options open. However, the tension remains as UniCredit looks determined to continue buying shares. This development is expected to determine the banking balance in Europe, with many closely watching the next moves of both Deutsche Bank and UniCredit.
“We are not commenting on our competitors and are focusing on our own strategy and on achieving the equity target of reaching 10% by 2025,” a Deutsche Bank spokesman assured the Efe news agency. It seems that everything is open.
According to the German newspaper Süddeutsche Zeitung, it is not excluded that other banks such as Santander or the French BNP will enter the tender for the shares of the State which are still for sale.
A merger between Germany’s Commerzbank and Italy’s Unicredit would create a banking giant on par with Société Générale or Banco Santander and ahead of Deutsche Bank in terms of revenue and assets.
For now, Commerzbank continues to gain in market value, up 20% since last week’s UniCredit announcement.
